1. HYSTERECTOMIES

TAGS: GS 2: HEALTH ISSUES

CONTEXT: In 2020, a study on Maharashtra’s cane cutters identified a widening blind spot in women’s health: the unchecked rise of hysterectomies. Laws regulating private clinics were poorly implemented, awareness about the procedure of uterus removal was dismal, gynaecological services were absent and no standard protocols existed, the authors noted.

EXPLANATION:

• As per National Family Health Survey-5 data, half of the women reportedly go through hysterectomies before they turn 35.
• This is a serious violation of the fundamental rights of the women who underwent unnecessary hysterectomies.
• After caesarean deliveries, hysterectomies are the second-most frequent procedure in women of the reproductive age group.

When and Why, it should be conducted?

• Medically, hysterectomies should be conducted in the later part of an individual’s reproductive life, or as an intervention during emergencies.
• Noted medical indications for removing a uterus include fibroids (growths around the uterus), abnormal uterine bleeding and uterine prolapse, chronic pelvic pain, and premalignant and malignant tumours of the uterus and cervix. In some cases, oophorectomy, the removal of ovaries (the primary source of estrogen), is also frequently performed, which is a form of surgical menopause and linked to several chronic conditions.

Effects of hysterectomy:

• There is evidence about the long-term effects of hysterectomy both with or without oophorectomy (removal of ovaries).
• A 2022 review of 29 studies found a correlation between hysterectomy and chronic diseases including an increased risk of cardiovascular events, cancers, depression, metabolic disorders, and dementia (Journal of Clinical Medicine).
• In India, hysterectomies in women above 45 years of age were associated with hypertension, high cholesterol, diabetes and bone disease, aching joints, back pain, depression, and insomnia, among other side effects, impairing their health and ability to work.

Government measures:

• Union Health Ministry in 2022 issued guidelines to prevent unnecessary hysterectomies by listing possible indications of when hysterectomy may be required and alternative clinical treatments for gynaecological issues.
• Government recommended setting up district, State-level and national hysterectomy monitoring committees which to collect data on age, mortality, and occupations, among other details.
• The government also proposed a grievance portal, monitored by the National Hysterectomy Monitoring Committee, for hysterectomy beneficiaries.
• Guidelines emphasise that authorities should report hysterectomies conducted for women less than 40 years of age and incorporate the reason for hysterectomy into the existing screening checklist.

Ayushman Bharat Pradhan Mantri Jan Arogya Yojana:

• The government’s flagship health insurance programme Ayushman Bharat Pradhan Mantri Jan Arogya Yojana provides health cover of ₹5 lakhs for 1,949 procedures including hysterectomies.
• The government has authorised 45,434 hospitals to conduct these operations and also developed two standard treatment guidelines for hysterectomy-related procedures.
• These guidelines, developed by the Union Health Ministry and the Indian Council for Medical Research (ICMR) in consultation with health experts, explicitly state that the procedure should be “considered only when childbearing is completed and rarely in younger patients”.

Violation of international conventions:

• Unnecessary hysterectomies violate international conventions to which India is a signatory.
• These include the International Covenant on Economic, Social and Cultural Rights (which recognises people’s right to control their health and body, including reproductive and sexual freedom), the Convention on the Elimination of All Forms of Discrimination Against Women and the International Covenant on Civil and Political Rights.

Ayushman Bharat Pradhan Mantri Jan Arogya Yojana:

2. FOUCAULT PENDULUM

TAGS: PRELIMS PERSPECTIVE

CONTEXT: One of the features of the new Parliament building in New Delhi, is a Foucault pendulum suspended from its ‘Constitutional Gallery’ area.

EXPLANATION:

• The original Foucault’s pendulum, named after 19th century French scientist Leon Foucault, is a simple experiment to demonstrate the earth’s rotation.
• When Foucault carried out this experiment for the public in 1851, it was the first direct visual evidence of the fact that the earth rotates on its axis.

How it works?

• The pendulum consists of a heavy bob suspended at the end of a long, strong wire from a fixed point in the ceiling.
• As the pendulum swings, the imaginary surface across which the wire and the bob swipe is called the plane of the swing.
• A Foucault pendulum is not a simple matter of setting up a pendulum with large parts. It must be designed, installed, and set swinging in such a way that the bob’s motion is influenced to the extent possible only by gravity.
• If the pendulum is installed at the North Pole, the pendulum will basically be swinging as the earth rotates ‘below’. But someone standing on the earth’s surface doesn’t notice the planet’s rotation without e.g. looking up at the sky from time to time; instead, to them, the plane of the swing will seem to rotate by a full circle as the earth completes one rotation.
• If the pendulum is installed over the equator, the plane won’t appear to shift at all because it will be rotating along with the earth. On any other latitude, the plane will shift through 360º in “one sidereal day divided by the sine of the latitude of its location”.

How was the pendulum made for Parliament?

• It has been designed and installed by the National Council of Science Museums (NCSM), Kolkata.
• The Central Research & Training Laboratory (CRTL) is the R&D unit of NCSM, which in turn, functions under the aegis of the Ministry of Culture.
• The piece, made using gunmetal, has been fixed with an electromagnetic coil to ensure hassle-free movement.
• On the symbolism of the pendulum and its prime place in the hallowed building it demonstrates the Article 51A of the Constitution enshrines every citizen “to develop the scientific temper, humanism, and the spirit of inquiry and reform”.

3. SHENZHOU-16

TAGS: PRELIMS PERSPECTIVE

CONTEXT: China launched a spacecraft carrying three astronauts, including its first civilian, to its Tiangong space station on May 30. This is the China’s fifth manned mission to a fully functional space station since 2021.According to state media, the spacecraft, the Shenzhou-16, was launched atop a Long March-2F rocket from the Jiuquan Satellite Launch Centre in the Gobi Desert in northwest China at 9:31 am.

EXPLANATION:

• The crew of Shenzhou-16 includes Jing Haipeng as the leading commander on the mission, as well as Zhu Yangzhu and Gui Haichao, the first Chinese civilian to travel to space. The three astronauts will replace the crew of Shenzhou-15 aboard the Tiangong space station, who have been there since November last year.
• The new crew will stay there for the next five months and will carry out “large-scale in-orbit tests and experiments in various fields as planned. They are expected to make high-level scientific achievements in the study of novel quantum phenomena, high-precision space time-frequency systems, the verification of general relativity, and the origin of life.

What is the Tiangong space station?

• It is operated by China Manned Space Agency (CMSA), the Tiangong space station was built by China after the USA barred NASA from working with the Asian country, citing a high risk of espionage.
• The permanently inhabited space station’s first module entered orbit in 2021 and two more modules were added to it in the following years.
• The Tiangong space station, expected to become the sole in-orbit outpost for scientific research after the end of operations for the International Space Station in 2030, is China’s ambitious project to achieve its space dreams.

International Space Station:

• The International Space Station is a large spacecraft in orbit around Earth. It serves as a home where crews of astronauts and cosmonauts live.
• The first piece of the International Space Station was launched in November 1998. A Russian rocket launched the Russian Zarya (zar EE uh) control module.
• It orbits Earth at an average altitude of approximately 250 miles.
• It travels at 17,500 mph. This means it orbits Earth every 90 minutes.
• NASA is using the space station to learn more about living and working in space.

4. DIGITAL PAYMENT

TAGS: GS 3: ECONOMY

CONTEXT: Reserve Bank of India (RBI) has conceptualised a lightweight payment and settlements system, which it is calling a “bunker” equivalent of digital payments, which can be operated from anywhere by a bare minimum staff in exigencies such as natural calamities or war.

EXPLANATION:

Objective:

• Such a lightweight and portable payment system could ensure near zero downtime of the payment and settlement system in the country.
• It will keep the liquidity pipeline of the economy alive and intact by facilitating uninterrupted functioning of essential payment services like bulk payments, interbank payments and provision of cash to participant institutions.
• The system is expected to process transactions that are critical to ensure the stability of the economy, including government and market related transactions.
• Having such a resilient system is also likely to act as a bunker equivalent in payment systems and thereby enhance public confidence in digital payments and financial market infrastructure even during extreme conditions.

How will it work?

• Infrastructure for this system will be independent of the technologies that underlie the existing systems of payments such as UPI, NEFT, and RTGS.
• The central bank has not offered a timeline for the launch of this payments system yet.
• In its Annual Report for 2022-23 published on May 30, RBI says that the lightweight and portable payment system is expected to operate on minimalistic hardware and software and would be made active only on a “need basis”.

How will the lightweight system be different from UPI?

• According to the RBI, existing conventional payments systems such as RTGS, NEFT, and UPI are designed to handle large volumes of transactions while ensuring sustained availability. As a result, they are dependent on complex wired networks backed by advanced IT infrastructure.
• However, catastrophic events like natural calamities and war have the potential to render these payment systems temporarily unavailable by disrupting the underlying information and communication infrastructure. Therefore, this new system is designed to be prepared to face such extreme and volatile situations.

Unified Payments Interface(UPI):

• Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.
• It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience.

NEFT and RTGS:

5. EMISSION FROM AVIATION SECTOR

TAGS: PRELIMS PERSPECTIVE

CONTEXT: Last week, France announced a ban on all short-haul domestic flights. A month earlier, the Schiphol airport in Amsterdam, one of the busiest in Europe, banned private jets and small business planes. There is a growing clamour in Europe for a bigger crackdown on private aviation sector.

EXPLANATION:

• As the world continues to fall behind in the race against time to curb global warming, desperate and non-conventional measures seem to be beginning to kick in.
• Aviation is a relatively small contributor to global greenhouse gas emissions and attempts to curtail these have not been very fruitful till now.
• Air transport, globally, accounts for just about 2 per cent of global carbon dioxide emissions every year, and less than two per cent of greenhouse gas emissions.
• Though the airline industry’s contribution to the overall greenhouse gas emissions has been rather modest, it is still considered a big worry, mainly due to two reasons it is generated by a very small fraction of global population, and it is projected to grow at a very fast pace.
• Also, airplanes produce non-CO2 emissions as well, and their impact on global warming is equally significant. According to the UN Climate Change, if the non-CO2 emissions, like water vapour, are also accounted for, the airline industry would be responsible for causing almost five per cent of historical global warming.
• Emissions from international aviation falls in a grey area. The emissions from planes flying within the boundaries of a country are attributed to that country. But emissions from airlines making international flights are not attributable to any country.
• Along with international shipping, international aviation forms a separate class of emissions those from bunker fuel. It also means that no country has any responsibility to curtail these emissions. These are not covered under the Paris Agreement.

Offset mechanism:

• In 2016, the International Civil Aviation Organisation (ICAO) put in place an offset mechanism to ensure that any increase in emissions over 2020 levelsis compensated for by the airline industry through investment in carbon saving projects elsewhere.
• It is called Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA, the offset plan is supposed to run from 2021 to 2035.
• Reducing aviation emissions through other means has not proved to be easy. Unlike road or rail travel, aviation does not have viable technology alternatives for shifting to cleaner fuels. Biofuels have been tried and so have hydrogen fuel cells. Solar powered planes have also made trips. But use of these alternative fuels for flying large commercial airliners is still some distance away.

International Civil Aviation Organization (ICAO)

• It was created in 1944 to promote the safe and orderly development of international civil aviation throughout the world.
• It is a specialized agency of the United Nations.
• It sets standards and regulations necessary for aviation safety, security and facilitation, efficiency, economic development of air transport as well as to improve the environmental performance of aviation.
• The organization serves as the forum for cooperation in all fields of civil aviation among its 192 Member States.

Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA:

• CORSIA is the first global market-based measure for any sector and represents a cooperative approach that moves away from a “patchwork” of national or regional regulatory initiatives.
• It offers a harmonized way to reduce emissions from international aviation, minimizing market distortion, while respecting the special circumstances and respective capabilities of ICAO Member States.
• CORSIA complements the other elements of the basket of measures by offsetting the amount of CO2 emissions that cannot be reduced through the use of technological improvements, operational improvements, and sustainable aviation fuels with emissions units from the carbon market.
• CORSIA is considered a breakthrough, but it is not very ambitious. It only seeks to offset emissions that are over and above 2020 levels. It does not deal with total emissions.

1. Cow vigilantes’ illegal activities are a threat to law and order READ MORE
2. Re-imagine ECI, make it an institution that all Indians trust and revere: Dorab Sopariwala READ MORE

1. Anger and Aspiration in Caste Society READ MORE  
2. Children with disabilities need robust policies for support READ MORE

1. New Forest Conservation Bill to Enable Corporate Take Over of Tribal Land, say Activists READ MORE
2. India’s hill states need sustainable cooling solutions to beat warming READ MORE
3. 2023 hurricane forecast: Get ready for a busy Pacific storm season, quieter Atlantic than recent years thanks to El Niño READ MORE

1. Getting rid of useless stuff is not easy READ MORE
2. My way or the highway READ MORE
3. Be Mindful of Your Surroundings READ MORE

(Newspapers, PIB and other important sources)

Prelim and Main

1. The world’s worst animal disease is killing frogs worldwide. A testing breakthrough could help save them READ MORE  
2. India’s growth momentum likely to be sustained in FY24, says RBI in Annual Report READ MORE
3. Hardening interest rates, geopolitical risks impacting FDI inflows: DPIIT Secretary READ MORE
4. Purana Qila excavations reveal pre-Mauryan era settlement READ MORE
5. Government drops plans to host SCO summit in Delhi, will now be in virtual format READ MORE
6. Indian scientists discover new exoplanet with mass 13 times that of Jupiter READ MORE
7. Will the US succeed in starving China of semiconductors? READ MORE
8. China’s Shenzhou-16 spacecraft launched: What is the new mission about READ MORE
9. Alternative to UPI, NEFT, RTGS: What is RBI’s planned ‘lightweight’ payments system for emergencies? READ MORE
10. Two Gangetic dolphins found dead in Bihar in the last 3 days READ MORE
11. World Health Assembly approves draft resolution on health action plan for indigenous people READ MORE

Main Exam

GS Paper- 1

1. New Forest Conservation Bill to Enable Corporate Take Over of Tribal Land, say Activists READ MORE
2. India’s hill states need sustainable cooling solutions to beat warming READ MORE
3. 2023 hurricane forecast: Get ready for a busy Pacific storm season, quieter Atlantic than recent years thanks to El Niño READ MORE
4. Anger and Aspiration in Caste Society READ MORE  

GS Paper- 2

POLITY AND GOVERNANCE

1. Cow vigilantes’ illegal activities are a threat to law and order READ MORE
2. Re-imagine ECI, make it an institution that all Indians trust and revere: Dorab Sopariwala READ MORE

SOCIAL ISSUES

1. Children with disabilities need robust policies for support READ MORE

INTERNATIONAL ISSUES

1. Using Buddhism as a tool of soft power READ MORE
2. Prachanda’s visit aims to boost bilateral ties READ MORE
3. Indo-Nepal ties will flourish on trust READ MORE
4. India is making its mark in the world READ MORE
5. Turning the South Pacific tides important for India READ MORE

GS Paper- 3

ECONOMIC DEVELOPMENT

1. The short history of a large note READ MORE
2. Universal cover: On the IRDA’s all-in-one insurance policy READ MORE   
3. India rising as leader of emerging economies. Now Delhi must ally with Latin America too READ MORE

ENVIRONMENT AND ECOLOGY

1. As negotiation on Global Plastics Treaty gets underway, India should reconsider contradictory stance READ MORE
2. Global warming pushes marine fish to polar waters: Study READ MORE

SECURITY

1. Cybercrime is a worry with a very wide reach READ MORE
2. Ever increasing threat of transnational terrorism READ MORE

GS Paper- 4

ETHICS EXAMPLES AND CASE STUDY

1. Getting rid of useless stuff is not easy READ MORE
2. My way or the highway READ MORE
3. Be Mindful of Your Surroundings READ MORE

Questions for the MAIN exam

1. If NITI Aayog wants to be more effective, it requires the trust of all chief ministers and their active participation. Only then a strong centre and strong states will emerge. Critically analyse in recent developments.
2. The NITI Aayog acts as the quintessential platform for the Government of India to bring states together as ‘Team India’, to work towards the national development agenda. Critically examine.

QUOTATIONS AND CAPTIONS

• A country that demands moral perfection in its foreign policy will achieve neither perfection nor security.
• The geopolitical wrangling over the future of Buddhism between India and China is making the Nepal Buddhists uneasy.
• The Insurance Regulatory and Development Authority of India’s plans to expand risk protection levels need government backing.
• India is in a rare moment of equilibrium. It has begun to reap its demographic dividend.
• It is mighty clear that not only will India pursue a Nation First policy, but it will also herald a new way of thinking that echoes One Earth, One Family and One Future.
• Chinese domination of relations with the leading powers of the oil-rich Persian Gulf region is hardly a development that India can be sanguine about. The US-India exchanges with the UAE and Saudi Arabia will hopefully enhance security, stability and cooperation across India’s oil-rich western neighbourhood.
• India’s ‘Neighbourhood First’ policy appears distracted by external issue-based alignments and preoccupation as chair of G20 and the SCO.
• Unlawful activities of the vigilantes are a serious threat to law and order.
• The historicity of bilateral relations will depend on the stability of the coalition and Prachanda’s longevity as PM.
• The National Family Health Survey must include specific questions about disabilities to help formulate appropriate policy.
• Currently, under the Constitution, only the CEC enjoys the same protection from removal as a Supreme Court judge. It is imperative that the protection enjoyed by the CEC should also be extended to ECs.
• By providing PICs with a voice and support on Global South issues, including on existential aspects such as Climate Change or on UNSDGrelated themes, India has validated its humane and ‘Vasudhaiva Kutumbakam’ credentials.
• All temporary, freelance and contract workers must be properly defined and identified to ensure minimum wages, maximum working hours and social security.
• The India-Latin America partnership can work toward building digital public infrastructure, improving financial inclusion, and reducing the cost of access to data, which is critical for engagement with the digital economy.

ESSAY TOPIC

• Knowing is not enough; we must apply. Willing is not enough; we must do.

50-WORD TALK

• RBI Governor Shaktikanta Das’ caution to banks over concealment of stressed assets is an alarm bell that should be taken seriously. Banks only recently emerged from balance sheet crises caused by high NPAs over the last decade. A relapse would be disastrous for an economy that finally looks stable again.
• Dozens of bystanders casually watching and passing by a teenage girl being stabbed and bludgeoned to death exposes the infamous Delhi public apathy and the deep rot in our collective conscience. Even the most broken institutions can be fixed—only if society is willing to protect the most basic values.

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 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 476]

THE CONTEXT: The debate around the ability of Capital Expenditure (Capex) to boost long-term growth within the Indian economy, given both the pre and the post-pandemic weak economic environment, has seen a wide range of varying opinions being presented by economists and policymakers. The following article intends to analyse the implications of Capex in the Indian Economy from UPSC perspective.

RECENT CONTEXT: THE UNION BUDGET AND THE ARGUMENT FOR CAPEX

• To ramp the virtuous cycle of Investment and job creation the budget took lead again by steeply increasing the capital expenditure outlay by 37.4 % in BE 2023-24 to whooping Rs.10 lakh crore over Rs. 7.28 lakh crore in RE 2022-23.
• The targeted capital expenditure increase of 35% to ₹7.5 lakh crore in FY23 will induce demand for services and manufactured inputs from large industries and micro, small and medium enterprises (MSMEs), and help farmers through better infrastructure.
• Plans to expand highways and establish new cargo terminals under the PM Gati Shakti master plan will enhance competitiveness of Indian industry by lowering the cost of transportation and bettering connectivity between production centres and consumption markets, both domestic and global.

WHAT IS CAPEX?

• Capital Expenditure, or Capex for short, refers to the funds spent by a government, or organization on acquiring, improving, or maintaining long-term assets. These assets can include property, buildings, equipment, machinery, vehicles, technology, and infrastructure.
• Capex is typically distinguished from operating expenses (Opex), which are the day-to-day expenses of running a business or organization, such as salaries, utilities, and office supplies. Capex, on the other hand, is a long-term investment that is expected to generate benefits over a period of time, usually several years.
• Capex can be incurred for various reasons, such as expanding business operations, replacing outdated equipment, or investing in new technology. Capital expenditures can also be categorized as mandatory, such as regulatory compliance or safety requirements, or discretionary, such as investing in research and development or expanding into new markets.
• Since capital expenditures are a long-term investment, they can have a significant impact on a government’s financial health and profitability. Governments need to carefully evaluate the potential benefits of a capital expenditure against the costs of acquiring, improving, or maintaining the long-term asset.

DIFFERENTIATING REVENUE AND CAPITAL EXPENDITURES

Revenue expenditure and capital expenditure are two distinct types of expenses incurred by businesses, governments, and other organizations. The key differences between revenue expenditure and capital expenditure are as follows:

REVENUE EXPENDITURE

DEFINITION

Revenue expenditure refers to the expenses incurred by an organization on a day-to-day basis to maintain its operations.

PURPOSE

Revenue expenditure is incurred for maintaining the current level of operations.

TIME FRAME

Revenue expenditure provides benefits in the short-term

NATURE OF THE ASSET

Revenue expenditure is generally spent on consumables, such as salaries, rent, utilities, and supplies.

TREATMENT IN FINANCIAL STATEMENTS

Revenue expenditure is typically recorded as an expense in the income statement and reduces the profit of the organization.

IMPACT ON TAXES

Revenue expenditure is generally fully deductible as an expense for tax purposes in the year in which it is incurred.

CAPITAL EXPENDITURE

DEFINITION

Capital expenditure refers to the expenses incurred by an organization to acquire or improve its long-term assets.

PURPOSE

Capital expenditure is incurred for expanding or improving the organization’s future operations.

TIME FRAME

Capital expenditure provides benefits over a long period of time.

NATURE OF THE ASSET

Capital expenditure is spent on acquiring, improving, or maintaining long-term assets, such as buildings, equipment, machinery, and infrastructure.

TREATMENT IN FINANCIAL STATEMENTS

Capital expenditure is recorded as an asset in the balance sheet and depreciated over its useful life.

IMPACT ON TAXES

Capital expenditure may be deductible over a period of time through depreciation or amortization.

IMPLICATIONS OF HIGH CAPEX

• Stimulates Economic Growth: High capex can lead to increased economic growth as businesses invest in new projects, equipment, and technology. This can create new job opportunities, increase production, and improve infrastructure, resulting in higher GDP and a stronger economy overall.
  • The targeted capital expenditure increase of 35% to ₹7.5 lakh crore in FY23 will induce demand for services and manufactured inputs from large industries and micro, small and medium enterprises (MSMEs), and help farmers through better infrastructure. Plans to expand highways and establish new cargo terminals under the PM Gati Shakti master plan will enhance competitiveness of Indian industry by lowering the cost of transportation and bettering connectivity between production centres and consumption markets, both domestic and global.
• Enhances Productivity: Investment in new technology, equipment, and facilities can increase productivity and efficiency, leading to lower costs, higher profits, and increased competitiveness. This can help businesses stay ahead of the competition and increase their market share, leading to further economic growth.
• Increases Business Confidence: A high level of capex indicates that businesses are optimistic about future economic prospects and are willing to invest in long-term growth. This can create a positive sentiment in the business community and encourage further investment, leading to a virtuous cycle of economic growth.
• Multiplier effect: Capex has the maximum multiplier effect (change in rupee value of output with respect to a change in rupee value of expenditure). This multiplier effect works through expansion of ancillary industries and services and job creation.
  • A Rs 1 crore increase in capital expenditure leads to more than Rs 1 crore increase in GDP. This multiplier effect works through expansion of ancillary industries and services and job creation. On the supply side also, it can facilitate labour productivity. Thus, capital expenditure is an effective tool for countercyclical fiscal policy and acts as a macroeconomic stabilizer.

IMPLICATIONS OF LOW CAPEX

Low capex, or a lack of investment in long-term assets and infrastructure, can have several implications for businesses, governments, and the economy as a whole.

• Reduced productivity: If businesses do not invest in new machinery or technology, they may be unable to increase their productivity or efficiency, leading to lower output and profitability.
• Fewer job opportunities: Low capex may result in businesses being unable to expand their operations or create new jobs, potentially leading to higher unemployment rates and reduced economic activity.
• Increased costs: A lack of investment in infrastructure or maintenance can lead to increased repair costs or even the need for expensive emergency repairs, potentially leading to higher costs for businesses and governments.
• Decreased competitiveness: If businesses or governments do not invest in new technology, infrastructure or other long-term assets, they may become less competitive in the global market, potentially leading to lower levels of exports and reduced economic growth.
• Hindered economic growth: Low capex can result in reduced economic growth, as businesses and governments are not investing in the long-term assets and infrastructure necessary to support sustainable economic growth.
• Reduced quality of life: Low capex can impact the quality of life of citizens, as it can lead to deteriorating infrastructure, such as roads, bridges, and public buildings, as well as a lack of access to essential services such as healthcare, education, and public transportation.

Overall, low capex can have significant negative consequences for businesses, governments, and the economy as a whole. To avoid these negative implications, it is important for businesses and governments to invest in long-term assets and infrastructure that support sustainable economic growth and provide essential services to citizens.

BOTTOM LINE:

In terms of economic growth, a high capex is generally considered positive as it indicates that businesses and governments are investing in long-term assets and infrastructure that can help to increase productivity, create jobs, and drive economic growth. In contrast, a low capex may signal a lack of investment and a potential slowdown in economic growth.

Capex can also influence fiscal policies. For example, governments may use capex to stimulate economic growth by investing in infrastructure or by providing tax incentives for businesses to invest in long-term assets. Conversely, governments may choose to reduce capex in times of fiscal austerity to reduce budget deficits.

THE WAY FORWARD

• Investing in Human capital: Given the huge demographic potential that India has, the GOI must invest in enhancing the multi-dimensional capabilities of its people. This would result into lasting and sustainable opportunities of growth and development.
• Prioritize Infrastructure Investment: India needs to continue investing in infrastructure projects to support economic growth. The government should allocate a significant portion of its capex budget towards developing roads, railways, airports, ports, and other essential infrastructure.
• Focus on Health and Education: The COVID-19 pandemic has highlighted the importance of investing in health and education. The Indian government should allocate capex towards building and upgrading healthcare facilities, as well as expanding access to quality education.
• Encourage Private Investment: The government should create a favorable environment for private sector investment by reducing bureaucratic hurdles, streamlining regulatory processes, and providing incentives for businesses to invest.
• Manage Debt: The government should be careful in managing its debt to avoid a debt crisis. It should ensure that the debt taken to finance capex is sustainable, and that the benefits of investment exceed the costs.
  • For instance, capital expenditure funded by the government through heavy domestic borrowing (of the order of Rs 18 lakh crore by the Centre plus Rs 78,000 crore by 21 states towards loss in GST compensation due to the lockdown effect) has the potential of crowding out capital expenditure by the private sector, thus severely weakening the multiplier effect.
• Promote Innovation and Technology: The Indian government should encourage investment in innovation and technology to enhance productivity and competitiveness. This can be achieved by providing incentives for research and development, promoting startups, and investing in digital infrastructure.

THE CONCLUSION: Capex is an important measure of investment and growth potential, and a balanced approach is typically needed to ensure that capex levels support long-term economic growth while avoiding excessive debt and fiscal imbalances. The Indian government should prioritize investments that promote sustainable economic growth, social welfare, and technological advancement, while ensuring that the benefits of investment are shared equitably across the population.

Also, with the current impetus rightly given to capital expenditure, emphasis must also be provided on timely implementation of projects within the earmarked outlay by strengthening monitoring, redressal mechanisms and processes for controlling project delays. This would also help in ensuring quality control, which, in turn, will result in capital assets providing benefits over a longer term following the multiplier effect.

QUESTIONS

• “The creation of capital assets generates future cash flows for the economy and adds to value creation.” Discuss critically.
• “A lack of capital expenditure has often been criticised as neglecting long-term targets of economic growth and employment.” Do you agree? Suggest how should Government of India strategize capital expenditure in the aftermath of the pandemic and recent geopolitical issues?