THE INTERNATIONAL RELATIONS

1.‘RUSSIA USED PHOSPHORUS SHELLS IN DONBAS ATTACKS’

THE CONTEXT: Ukrainian officials accused Russia of using phosphorus chemical bombs in the eastern Donbas region, while a separate air strike on a monastery sheltering civilians wounded 30.

THE EXPLANATION:

International law prohibits the use of white phosphorus shells in heavily populated civilian areas but allows them in open spaces to be used as cover for troops.

What is White Phosphorus?

• White phosphorous is a colour less, white or yellow, waxy solid.
• It does not occur naturally.
• It is manufactured using phosphate rocks. It smells like garlic.
• It is a highly combustible substance that reacts with oxygen in the air.
• It can catch fire at temperatures as low as 10 to 15 degrees above room temperature.

Applications:

• Militaries across the globe use white phosphorous (WP) in mortar shells, grenades and artillery shells.
• When burnt, WP produces a large amount of smoke that can be used to provide a screen to friendly troops’ movement.
• The smoke can also be used to mark the targets so that aircraft can drop bombs at the location.
• It can also be used by troops to give the signal for attack or evacuation.
• Other applications may include as a component in fertilisers, food additives and cleaning compounds.

Chemical Weapons Convention (CWC):

• CWC is a multilateral treaty that bans chemical weapons and requires their destruction within a specified period of time.
• CWC negotiations started in 1980 in the UN Conference on Disarmament.
• The convention entered into force on April 29, 1997.
• CWC is implemented by: Organization for the Prohibition of Chemical Weapons (OPCW),
• The OPCW receives states-parties’ declarations detailing chemical weapons-related activities and relevant industrial activities.
• CWC is open to all nations and currently has 193 states-parties.
• India is a signatory and party to the CWC.
• Three states have neither signed nor ratified the convention: Egypt, North Korea and South Sudan.

Prohibitions:

The CWC prohibits:

• Developing, producing, stockpiling, or retaining chemical weapons.
• The direct or indirect transfer of chemical weapons.
• Chemical weapons use or military preparation for use.
• Assisting, encouraging, or inducing other states to engage in CWC-prohibited activity.
• The use of riot control agents as a method of warfare.

2. JAPAN TO INVEST $42 BILLION IN INDIA OVER FIVE YEARS

THE CONTEXT: India and Japan set an investment target of “five trillion yen” ($42 billion) in the next five years, the leaders announced after a meeting in New Delhi for the 14th annual summit, where several agreements were signed.

THE EXPLANATION:

• The two sides discussed various regional issues where Indian Prime Minister briefed Japan PM Fumio Kishida on the situation at the Line of Actual Control (LAC) with China, and the PLA’s attempts at “multiple transgression” on the LAC.
• The two sides also exchanged six agreements on cybersecurity, economic partnerships, waste–water management, urban development, a clean energy partnership and an agreement on promoting bamboo–based products from the northeast region.

List of Agreements/MoUs signed during the 14th India-Japan Annual Summit

1. Memorandum of Cooperation (MoC) in the field of Cybersecurity: For information sharing, capacity building programs and cooperation in the area of cybersecurity.
2. 7 JICA Loans (INR 20400 crores) for projects in connectivity, water supply and sewerage, horticulture, healthcare, and biodiversity conservation in various States.

• Dedicated Freight Corridor Project (Phase 2) (III)
• North East Road Network Connectivity Improvement Project (NH208 (Khowai – Sabroom)) Phase 6

• Bengaluru Water Supply and Sewerage Project (Phase 3) (II)
• Uttarakhand Integrated Horticulture Development Project
• Strengthening Health Systems and Excellence of Medical Education in Assam
• Tamil Nadu Biodiversity Conservation and Greening Project Phase –II
• Chennai Metro (Phase 2) (II)

3. Amendment of Article 7 (Exchange of Information) of Implementing Agreement (IA) signed between India and Japan as per Article 13 of India-Japan Comprehensive Economic Partnership Agreement (CEPA). Amend Annex 2 (Product Specific rules) of CEPA to allow the fish surimi product of India with the non-originating additive to be considered as an originating good of India.

4. Memorandum of Cooperation (MoC) on Decentralized Domestic Wastewater Management: To introduce Johkasoutechnology in India by Japanese companies for decentralized waste water treatment. It is used in areas where sewage infrastructure has not yet been developed.
5. India-Japan Industrial Competitiveness Partnership Roadmap: To implement the Memorandum of Cooperation (MoC) on India-Japan Industrial Competitiveness Partnershipthat was signed in November 2021. It seeks to seeks to address issues that Japanese companies currently face in India through a fast-track mechanism. Working Groups on logistics and textiles have been established and in other sectors as needed. It includes cooperation in Micro, Small and Medium Enterprises (MSME) sector and supply chain matters.
   6. Memorandum of Cooperation on Sustainable Urban Development: Builds on the 2007 Memorandum of Understanding (MoU) on Urban Development to include smart cities development, affordable housing, urban flood management, wastewater management, Intelligent Transport Management System etc.

For other Announcement during Summit

• Clean Energy Partnership (CEP): For cooperation in areas such as electric vehicles, storage systems including batteries, electric vehicle charging infrastructure, development of solar energy; hydrogen; ammonia; etc. The objective is to encourage manufacturing in India, creation of resilient and trustworthy supply chains in these areas as well as fostering collaboration in R&D. It will be implemented through the existing mechanism of Energy Dialogue.
• 5 trillion yen investment target (TBC): This follows from the Investment Promotion Partnership of 2014 when both sides had agreed for JPY 3.5 trillion investment during 2014-19. That target has been met, taking into account both ODA and Investments from Japan. The new ambitious target would provide a scope for greater involvement of Japanese companies in our economy.
• Sustainable Development Initiative for the Northeastern Region of India: Includes both ongoing projects and possible future cooperation in various States in the NER in areas such as connectivity, healthcare, new and renewable energy, as well as ‘Initiative for Strengthening Bamboo Value Chain in the North East’.

THE ENVIRONMENT AND ECOLOGY

3. THE VULTURE HOLOCAUST IN ASSAM

THE CONTEXT: According to forest officials, as many as 100 endangered vultures and an eagle have died in Assam’s Chaygaon region. The cause of death is being conjectured to be insecticide poisoning.

 THE EXPLANATION:

• As per reports, the area where they were found is located close to a village where at least 10 endangered vultures died after feeding on a pesticide-laced cattle carcass in February 2020. The vultures belonged to the Himalayan Griffon species while the eagle was a Stepee Eagle. Both birds are listed in Schedule 1 of the Wildlife Protection Act, 1972.
• There have been several instances of vultures dying after consuming carcass of poisoned animals in Assam in the past few years. In January and February 2021 , 56 vultures died in Tinsukia district in two separate incidents after consuming poisoned carcasses of cows.
• In April 2020, 19 vultures had died on a single day in Sivasagar district after consuming meat of a dead cow. In March 2019, 39 vultures had died in the same district after consuming poisoned meat.

VALUE ADDITION:

About Vultures:

• It is one of the 22 species of large carrion-eating birds that live predominantly in the tropics and subtropics.
• They act an important function as nature’s garbage collectors and help to keep the environment clean of waste.
• Vultures also play a valuable role in keeping wildlife diseases in check.

Why is the vulture population so significant?

• Vultures clear the carcasses of dead animals (nature’s cleanup crew) playing a crucial role in maintaining the health of the ecosystem
• Vultures have a highly acidic stomach that helps them kill disease-causing bacteria
• Reduces the health hazards associated with feral dogs that consume carcasses

What efforts have been taken for their conservation?

National Efforts

• India banned diclofenac for veterinary use in 2006.
• Action Plan for Vulture Conservation 2020-25  was released by MoEFCC.
• Vulture Conservation Breeding Programme (VCBP) was established by Central Zoo Authority and Bombay Natural History Society (BNHS)  for captive breeding.
• Vulture Safe Zones are declared when no toxic drugs are found in undercover pharmacies and cattle carcass surveys for two consecutive years.
• Vulture restaurant has been established at Phansad wildlife sanctuarynear Murud in Maharashtra.

International Efforts

• Saving Asia’s Vultures from Extinction (SAVE) – A consortium of like-minded, regional and international organizations for conservation of south Asia’s vultures.

THE GOVERNMENT SCHEMES/NEWS IN NEWS

4. NIPUN BHARAT SCHEME

THE CONTEXT: The Department of School Education and Literacy, Ministry of Education, Government of India has launched the National Mission on Foundational Literacy and Numeracy called National Initiative for Proficiency in Reading with Understanding and Numeracy (NIPUN Bharat) on 5^thJuly 2021 under the aegis of Centrally Sponsored Scheme of SamagraShiksha.

ABOUT THE SCHEME:

• The National Mission which has been launched under the aegis of the centrally sponsored scheme of Samagra Shiksha, will focus on providing access and retaining children in foundational years of schooling; teacher capacity building; development of high quality and diversified Student and Teacher Resources/Learning Materials; and tracking the progress of each child in achieving learning outcomes.
• The Department of School Educationand Literacy, Ministry of Education (MoE) will be the implementing agency at the national level and will be headed by a Mission Director.

Students covered

• The mission will focus on children of age group of 3 to 9 years including pre-school to Grade 3. The children who are in Class 4 and 5 and have not attained the foundational skills will be provided individual teacher guidance and support, peer support and age appropriate and supplementary graded learning materials to acquire the necessary competencies.
• The goals and objectives of the mission are required to be achieved by all Govt., Govt. Aided and Private Schools so that universal acquisition of FLN skills can be achieved by 2026-27.

THE PRELIMS PERSPECTIVE

5. INTERNATIONAL DAY OF FORESTS- MARCH 21

THE CONTEXT: International Day of Forests is observed every year on March 21 The day aims to raise awareness regarding the importance of all types of forests.

THE EXPLANATION:

• According to the UN, around 1.6 billion people depend directly on forests for food, shelter, energy, medicines and income. Forests are home to about 80 per cent of the world’s terrestrial biodiversity.
• World Forest Day theme 2022: The International Day of Forests 2022 theme is ‘Forests and Sustainable production and consumption.’
• The International Day of Forests was observed for the first time on March 21, 2013.

Why this day?

In 2012, the Food and Agriculture Organisation (FAO) and United Nations (UN) established the day to combat climate change. Every year on this day, leading government networks and private organisations come together to enlighten people about the importance of forests and the role they play in our lives.

 THE DATA SHEET

THE PRELIMS PRACTICE QUESTIONS

QUESTIONS OF THE DAY 22^ND MARCH 2022

Q. Which of the following best explains stagflation?

a) A situation in an economy when inflation and unemployment both are at higher levels.

b) A situation in an economy when inflation and employment both are at higher levels.

c) A situation in an economy when there is high inflation and low unemployment.

d) A situation in an economy when there is low inflation and high unemployment.

ANSWER FOR 21^ST MARCH 2022

Answer: C

Explanation:

• Asiatic lion’s habitat included tropical dry forests, grasslands, thickets and deserts. Today’s,its population is limited in Gir National Park in Gujarat.

1. Dharma is not rigid, it’s everchanging by nature READ MORE
2. Man’s Search For Meaning READ MORE
3. Truth about tolerance~I READ MORE

1. Groundwater depletion must be arrested READ MORE
2. Climate and Us | India needs an emergency plan for heat extremes READ MORE
3. Climate variability may explain annual spike in ozone-destroying gas: Study READ MORE

1. Shrinking the Muslim woman’s choice READ MORE
2. Driving change and inclusive growth: The aim is to adopt a multi-disciplinary approach to higher education READ MORE

1. Need for sensitivity: Instead of Pocso Act provisions, employ a sensible approach in minor girls’ cases READ MORE
2. Is Disclosure of Identity of Vctim under POCSO Act a Cognizable Offence? A three-judge SC Bench May Decide READ MORE
3. Examining the Legality of Extraneous and Irrelevant Conditions for Bail READ MORE

(Newspapers, PIB and other important sources)

Prelim and Main

1. Nipun Bharat Scheme READ MORE
2. IPCC Report on Climate Change READ MORE
3. Indian, U.S. officials discuss 2+2 ministerial, Ukraine READ MORE
4. India says oil import from Russia less than 1% of total, sees rise from US READ MORE
5. Rawat, Ghulam Nabi Azad, N. Chandrasekharan conferred Padma awards READ MORE
6. International Day of Forests: Significance of March 21 and theme for 2022 READ MORE
7. Tamil Nadu: GI tag for handmade Narasingapettai nagaswaram READ MORE

Main Exam    

GS Paper- 1

1. Shrinking the Muslim woman’s choice READ MORE

GS Paper- 1

POLITY AND GOVERNANCE

1. Need for sensitivity: Instead of Pocso Act provisions, employ a sensible approach in minor girls’ cases READ MORE
2. Is Disclosure of Identity of Vctim under POCSO Act a Cognizable Offence? A three-judge SC Bench May Decide READ MORE
3. Examining the Legality of Extraneous and Irrelevant Conditions for Bail READ MORE

SOCIAL ISSUES

1. Driving change and inclusive growth: The aim is to adopt a multi-disciplinary approach to higher education READ MORE

INTERNATIONAL ISSUES

1. A Ukraine peace plan that needs a U Thant: The elements of viable peace exist, and all that is required is for someone to step forward and pursue it with urgency READ MORE   
2. Realising the potential of ‘maitri’ and ‘mateship’: Deepening investments in Australia-India strategic, economic, and community ties highlight their stronger relationship READ MORE
3. On South Asia, US must reorient itself READ MORE
4. UNSC is not fulfilling its primary mandate READ MORE
5. The future of India-Japan ties READ MORE

GS Paper- 1

ECONOMIC DEVELOPMENT

1. The pandemic’s income inequality surprise READ MORE
2. PLI plus: India’s supply side policies for EV and battery manufacturing are too inward looking READ MORE
3. RBI, banks up against new challenges READ MORE
4. Edible oils, incredible prices: Incentivise Punjab farmers to reduce imports READ MORE

ENVIRONMENT AND ECOLOGY  

1. Groundwater depletion must be arrested READ MORE
2. Climate and Us | India needs an emergency plan for heat extremes READ MORE
3. Climate variability may explain annual spike in ozone-destroying gas: Study READ MORE

SCIENCE

1. Tech companies have a road out of China. It lies with the EV industry READ MORE

GS Paper- 1

ETHICS EXAMPLES AND CASE STUDY

1. Dharma is not rigid, it’s everchanging by nature READ MORE
2. Man’s Search For Meaning READ MORE
3. Truth about tolerance~I READ MORE

Questions for the MAIN exam

1. Discuss the possible geo-political solutions to the Ukraine-Russia military conflict.
2. ‘Self-sufficiency in edible oil production is a distant dream, but there is ample scope for drastically lowering the dependence on imports and minimising the damage caused by global shocks’. Analyse the statement.

QUOTATIONS AND CAPTIONS

• Establishing lasting peace is the work of education; all politics can do is keep us out of war.
• Australia knows that in India we have a natural partner who will help build a region where every nation can prosper.
• Washington could seize the current opportunity, amid Ukraine crisis, to elevate US’s salience, limit the traditional economic and military weight of China and Russia in the Subcontinent.
• There is no clear pattern between growth or poverty on the one hand, and inequality on the other. The policies should focus on growth and poverty. While inequality is problematic, it is a more elusive target.
• The hijab ban in the classroom is not only a ban on identity but also on female expression, choice, development and the ability to break away from the shackles of chauvinists, whether judges or religious fundamentalists.
• Institutional reform in the form of creating water user groups, besides pricing water realistically, should be seriously pursued to address the issue of groundwater depletion.
• The Security Council’s objective was to stop a conflict by addressing its cause. But, for years now, it has taken on the subsidiary pursuit of being a humanitarian council. India needs to consider if this is the change it wants
• Self-sufficiency in edible oil production is a distant dream, but there is ample scope for drastically lowering the dependence on imports and minimising the damage caused by global shocks.
• The sovereignty, independence and territorial integrity of any country should be respected and safeguarded because this is a basic norm of international relations. It is consistent with the purposes and principles of the UN Charter and is the consistent position of the Chinese Government. Ukraine is no exception.
• As far as education at the tertiary level is concerned, NEP’s approach appears to set out a very clear way forward by getting the mentors fully involved in new techniques and developing challenging strategies to meet the need of all categories of students.
• Bail conditions in the nature of planting trees, community service, and distribution of free food, while certainly contributing towards social good, are entirely disconnected with the purpose of administration of ‘justice’ or effectiveness of the trial.

50-WORD TALK

• The value of praise depends on who gives it. So Pakistani Prime Minister Imran Khan’s shabaash for India’s foreign policy is a cause for anxiety, not satisfaction. Khan simultaneously undermined his country’s relationship with the West, China and Saudi Arabia. Pats on the back like this, India can do without.
• Supreme Court panel’s year-old report on now-repealed farm laws, made public by a member, is a year too late. Modi government’s fear of political damage was misplaced and exaggerated. A silent majority supported them. It’s unfortunate that SC sat over the report. Timely judicial response may have saved these laws.

Things to Remember:

• For prelims-related news try to understand the context of the news and relate with its concepts so that it will be easier for you to answer (or eliminate) from given options.
• Whenever any international place will be in news, you should do map work (marking those areas in maps and also exploring other geographical locations nearby including mountains, rivers, etc. same applies to the national places.)
• For economy-related news (banking, agriculture, etc.) you should focus on terms and how these are related to various economic aspects, for example, if inflation has been mentioned, try to relate with prevailing price rises, shortage of essential supplies, banking rates, etc.
• For main exam-related topics, you should focus on the various dimensions of the given topic, the most important topics which occur frequently and are important from the mains point of view will be covered in ED.
• Try to use the given content in your answer. Regular use of this content will bring more enrichment to your writing.

[WpProQuiz 183]

THE CONTEXT: Over the last two years, fiscal policy has remained a significant tool for addressing the economic fallout of the pandemic. The government of India has adopted a calibrated fiscal policy approach to the pandemic, which had the flexibility of adapting to an evolving situation to support the vulnerable sections of society/firms and enable a resilient recovery. India’s unique agile policy response differed from the waterfall strategy of introducing front-loaded stimulus packages, adopted by most other countries in 2020. Such an adaptive approach has now been widely accepted in policy circles (IMF Fiscal Monitor October 2021). This chapter reviews the fiscal developments in India in the aftermath of the pandemic outbreak. It begins with fiscal policy strategy and performance of the fiscal parameters in the current year 2021-22, followed by a detailed analysis of the medium to long-term trends in Central, State, and General Government finances. The chapter concludes with a discussion on policy measures to enhance the efficiency of Government spending.

FISCAL POLICY STRATEGY IN THE AFTERMATH OF THE PANDEMIC OUTBREAK

• The agile fiscal policy response adopted by the Government of India encompassed a change in the mix of the stimulus measures amidst an uncertain evolution of the pandemic situation.
• In the initial phase of the pandemic, the fiscal policy focused on building safety-nets for the poor and vulnerable sections of society to hedge against the worst-case outcomes.
• Stimulus measures such as direct benefit transfers to the vulnerable sections, emergency credit to the small businesses, and the world’s largest food subsidy program targeting 80.96 crore beneficiaries enabled the creation of safety-nets, by ensuring that the essentials are taken care of.
• This was followed by a series of stimulus packages spread throughout the year 2020-21, driven by a Bayesian updating of information as the situation evolved.
• With the restoration of economic activities, the fiscal response focused on stimulating demand in the economy.
• During this phase of economic recovery, the stimulus mix included investment boosting measures like Production Linked Incentives (PLI), steps to encourage investment in the infrastructure sector, and enhancing capital expenditure by the Central and State Governments.
• This enhanced focus on capital expenditure in the second half of the year 2020-21 is reflective of the responsive fiscal policy which the Government of India has adopted against COVID-19.
• Due to movement restrictions in containment zones, and unwillingness or inability of contractors and workers to carry out works, the quarterly capital expenditure was restrained during the first two quarters of 2020-21.
• With the easing of movement and health-related restrictions in Q3 of 2020-21, capital spending was pushed for encouraging expenditure in sectors with the most positive effect on the economy.
• The focus on capital spending has been sustained during the current fiscal, as the capital expenditure shows an increasing trend during the first three quarters of 2021-22.
• Building on the same approach, the Union Budget 2021-22 had enhanced the budget outlays for the more productive capital expenditure.
• The Government budgeted for a 34.5 percent growth in capital expenditure over 2020-21 with emphasis on railways, roads, urban transport, power, telecom, textiles, and affordable housing amid continued focus on the National Infrastructure Pipeline.
• The National Infrastructure Pipeline covering 6835 projects was expanded to 7400 projects in Budget 2021-22.
• To unlock the domestic manufacturing potential across sectors, such as renewable energy, heavy industry, agriculture, automotive, and textiles, Budget 2021-22 launched PLI schemes for 13 sectors, with an outlay of `1.97 lakh crore, for 5 years starting from 2021-22.
• All these initiatives are expected to collectively generate employment and boost output in the medium to long term through multiplier effects.
• The stimulus measures announced during the year 2021-22 have continued the emphasis on liquidity enhancing and investment boosting measures such as the PLI Scheme, credit guarantee schemes, and export boosting initiatives to support the reviving economy, apart from providing free food grains to the poor.

PERFORMANCE OF FISCAL INDICATORS DURING 2021-22

• This section analyses the performance of financial indicators and their components for the period April to November 2021.
• The data on Government accounts for April to November 2021, released by the Controller General of Accounts, show that the fiscal deficit of the Central Government at the end of November 2021 stood at 46.2 percent compared to 135.1 percent during the same period in 2020-21 and 114.8 percent during the same period in 2019-20.
• During this period both fiscal deficit and primary deficit stood at levels much below the corresponding levels in the previous two years.
• The primary deficit during the period April to November 2021 turned up at nearly half of the level it had reached during April to November 2019.

REVENUE COLLECTION

• Revenue receipts have grown at a much higher pace during the current financial year (April to November 2021) compared to the corresponding periods during the last two years. This performance is attributable to considerable growth in both tax and non-tax revenue. Net tax revenue to the Centre, which was envisaged to grow at 8.5 percent in 2021-22 BE relative to 2020-21 PA, grew at 64.9 percent from April to November 2021 over April to November 2020 and at 51.2 percent over April to November 2019.

EXPENDITURE

• The expenditure policy of the government during 2021-22 has been characterized by restructuring and prioritization of spending in sectors that have a long-term impact on output. The total expenditure of the Government increased by 8.8 percent from April to November 2021 and stood at 59.6 percent of the Budget Estimate. While the revenue expenditure has grown by 8.2 percent during the first eight months of 2021-22 over the same period in 2020-21, the non-interest revenue expenditure grew by 4.6 percent over April to November 2020.

LONG-TERM TRENDS IN GOVERNMENT FINANCES: CENTRE, STATES, AND GENERAL GOVERNMENT

• During the year 2020-21, the shortfall in revenue collection owing to the interruption in economic activity and the additional expenditure requirements to mitigate the fallout of the pandemic on vulnerable people, small businesses, and the economy in general, created immense pressure on the available limited fiscal resources.
• As a result, the budgeted fiscal deficit for 2020-21 was revised from 3.5 percent in BE to 9.5 percent in RE. The fiscal deficit for 2020-21 Provisional Actuals stood at 9.2 percent of GDP i.e. lower than RE.
• The MediumTerm Fiscal Policy (MTFP) Statement presented with Budget 2021-22 envisaged a fiscal deficit target of 6.8 percent of GDP for 2021-22.
• This reduction in deficit during the current year was budgeted on account of reduction in expenditure from 17.7 percent of GDP in 2020-21 RE to 15.6 percent in 2021-22 BE; and a budgeted marginal increase in gross tax revenues to the tune of 0.1 percent of GDP.
• The data on Government accounts for April to November 2021, released by the Controller General of Accounts, shows that the Government is well on track for achieving the budget estimate for fiscal deficit in 2021-22.

TAX REVENUE

• The Provisional Actual figures released by the Controller General of Accounts for 2020-21 show that the gross tax revenue grew by 0.7 percent (YoY) during 2020-21.

DIRECT TAXES

• Within direct taxes, personal income tax has grown at 47.2 percent over April-November 2020 and at 29.2 percent over April-November 2019. The corporate income tax registered a growth of 90.4 percent over April-November 2020 and 22.5 percent over April-November 2019.

INDIRECT TAXES

• The indirect tax receipts have registered a YoY growth of 38.6 percent in the first eight months of this fiscal year. The revenue collection from customs from April to November 2021 has registered a growth of almost 100 percent over April to November 2020 and over 65 percent compared to April to November 2019.
• The revenue from excise duties has registered a YoY growth of 23.2 percent during April- November 2021. The GST collections for the Centre were 61.4 percent of BE from April to November 2021.
• Gross GST collections, Centre and States took together, were `10.74 lakh crore during April to December 2021, which is an increase of 61.5 percent over April to December 2020 and 33.7 percent over April to December 2019.

NON-TAX REVENUE

• The non-tax revenue collections up to November 2021 registered a YoY increase of 79.5 percent. This increase was driven by dividends and profits, which stood at `1.28 lakh crore against BE of `1.04 lakh crore. The key component of dividends and profits during this period was ` 0.99 lakh crore surplus transfer from RBI to the Central Government.

EXPENDITURE

• The total expenditure of the Government increased by 8.8 percent from April to November 2021 and stood at 59.6 percent of the Budget Estimate. While the revenue expenditure has grown by 8.2 percent during the first eight months of 2021-22 over the same period in 2020-21, the non-interest revenue expenditure grew by 4.6 percent over April to November 2020.

TRANSFER TO STATES

• The Union Government has accepted the recommendations made by the Fifteenth Finance Commission (XV-FC) in its Report for the award period 2021-22 to 2025-26 relating to the grants-in-aid amounting to ` 2,33,233 crore to the States during 2021-22 for Post Devolution Revenue Deficit grant, grants to Local Bodies, Health sector grant and Disaster Management grants.

CENTRAL GOVERNMENT DEBT

• During the year, a major challenge in the aftermath of the COVID-19 pandemic was the management of debt, both for the Central and State Governments. In this milieu, conventional and unconventional measures were taken to maintain the orderly market conditions to ensure that the increased financial needs of the Governments are met smoothly while keeping in mind the major objectives of cost minimization, risk mitigation, and market development. Supported by these measures, the weighted average cost of the Government on dated securities during 2020-21 was at a 17-year low of 5.79 percent, despite a 141.2 percent jump in net market borrowings.
• The increase in total liability of central government is on account of higher borrowing resorted to due to COVID-19 pandemic as well as a sharp contraction in the GDP. The Debt-GDP is however expected to follow a downward trajectory in the upcoming years.

STATE FINANCES:

• The Gross Fiscal Deficit of States is estimated to cross the Fiscal Responsibility Legislation (FRL) threshold of 3 percent of GDP during 2020-21 RE and 2021-22 BE. The Revenue Deficit of the States also increased from 0.1 percent of GDP in 2018-19 to 2 percent of GDP in 2020-21.
• This relaxation in borrowing limits was allowed on account of the additional expenditure needs and constrained revenues of the States due to COVID-19. The net borrowing ceilings of the States were enhanced to 5 percent of GSDP of the States for the year 2020-21 and 4 percent of GSDP of the States for 2021-22.
• Both Gross Fiscal Deficit and Revenue Deficit for the States are budgeted to decline in 2021-22 from the high levels they reached in 2020-21.

POLICY MEASURES TO ENHANCE THE EFFICIENCY OF GOVERNMENT SPENDING

GOVERNMENT E-MARKETPLACE (GEM):

• The Government in 2016 had set up a dedicated e-market known as Government e-Marketplace (GeM) for the purchase of certain standard day-to-day use goods. This is a simple, transparent, and completely digital process for procurement. The General Financial Rules 2017 mandates all Ministries and Departments to procure Goods and Services available on GeM from GeM.

NEW GUIDELINES FOR REFORMS IN PUBLIC PROCUREMENT AND PROJECT MANAGEMENT:

• Apart from the purchases of common goods from GeM, the government also procures non-routine Goods, Services, and Works like construction of highways, buildings, hiring of consultants, etc.
• Keeping in mind the limitations of the earlier procurement strategy, the Government issued new guidelines for procurement and project management in October 2021, which have expanded the ambit of selecting bidders for executing government projects and procuring goods and services. The key changes in the procurement process are as follows:
• Quality and Cost Based Selection for Works and Non-consultancy Services.
• Fixing of Evaluation/ Qualification and Scoring Criteria under QCBS for Works and Non-consultancy Services.
• Stringent deadlines for making payments.
• Single bid rejection.
• Fixed Budget-based Selection for Consultancy Services.

HIGHLIGHTS

• The revenue receipts from the Central Government (April to November 2021) have gone up by 67.2 percent (YoY) as against expected growth of 9.6 percent in the 2021-22 Budget Estimates (over 2020-21 Provisional Actuals).
• Gross Tax Revenue registers a growth of over 50 percent during April to November 2021 in YoY terms.  This performance is strong compared to pre-pandemic levels of 2019-2020 also.
• During April-November 2021, Capex has grown by 13.5 percent (YoY) with a focus on infrastructure-intensive sectors.
• Sustained revenue collection and a targeted expenditure policy have contained the fiscal deficit for April to November 2021 at 46.2 percent of BE.
• With the enhanced borrowings on account of COVID-19, the Central Government debt has gone up from 49.1 percent of GDP in 2019-20 to 59.3 percent of GDP in 2020-21 but is expected to follow a declining trajectory with the recovery of the economy.