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2-February-2024- Top News of the Day

Stay updated with the Latest 2nd February 2024 Current Affairs. Covering topics: US Approves $4 Billion Sales of Armed Drones to India, Interim Budget 2024-2025, 5.8% Fiscal Deficit in 2024-2025, Pradhan Mantri Suryodaya Yojana, Three services in defense allocation, male child sexual abuse, and problem of moving attention away from services.

1. US State Department Approves $4 Billion Sale of Armed Drones to India, Signifying Advancement in Strategic Cooperation

Topic: GS3 – Internal Security – Defence Technology
This topic is relevant for both Prelims and Mains in the context of a significant defense deal which reflects India’s defense and security policy.
Context:
  • The US State Department has granted approval for the potential sale of 31 armed MQ-9B Sky Guardian drones, along with missiles and supporting equipment, to India for an estimated USD 4 billion.
  • The approval comes seven months after India expressed its intention to purchase these drones during Prime Minister Narendra Modi’s visit to Washington DC.
More about the news: Pentagon’s Announcement:
  • The Pentagon officially announced the approval, stating that the Defense Security Cooperation Agency delivered the required certification to notify the US Congress of this potential sale.
  • The State Department has made a determination approving a Foreign Military Sale to the Government of India for MQ-9B Remotely Piloted Aircraft and related equipment at an estimated cost of $3.99 billion.
Components of the Sale:
  • The proposed sale includes
    • 31 MQ-9B Sky Guardian aircraft,
    • 161 Embedded Global Positioning & Inertial Navigation Systems (EGIs),
    • 35 L3 Rio Grande Communications Intelligence Sensor Suites,
    • 170 AGM-114R Hellfire missiles,
    • various other equipment such as GBU-39B/B Laser Small Diameter Bombs (LSDB),
    • ground control stations,
    • missile launchers,
    • tactical training rounds,
    • high-frequency radios,
Objectives and Benefits of the Sale:
  • The Pentagon emphasizes that the proposed sale aims to support foreign policy and national security objectives by strengthening the US-India strategic relationship.
  • It is expected to enhance India’s capability to address current and future threats through unmanned surveillance and reconnaissance patrols in sea lanes of operation.
  • The sale is seen as contributing to the political stability, peace, and economic progress in the Indo-Pacific and South Asia region.
Impact on Military Balance:
  • The statement assures that the proposed sale, including equipment and support, will not alter the basic military balance in the region.
  • It notes India’s commitment to modernizing its military and suggests that the country will smoothly integrate the provided articles and services into its armed forces.
What are MQ-9B Armed Drones?
  • The MQ-9B drone is a variant of the MQ-9 “Reaper” which was used to launch a modified version of the Hellfire missile that eliminated al-Qaeda leader Ayman al-Zawahiri in Kabul.
  • The MQ-9B has two variants SkyGuardian and its sibling SeaGuardian. The Indian Navy has been operating the MQ-9B Sea Guardian since 2020.
  • The drone can operate at over 40,000 feet, giving the Indian military surveillance capacity in the high-altitude Himalayan border areas.
  • The Predator also has the maximum endurance of 40 hours, making it useful for long-hour surveillance.
  • MQ-9B drones are equipped with advanced features such as automatic take-off and landing, detect and avoid system, anti-spoofing GPS, and encrypted communication links.
PYQ: How is S-400 air defence system technically superior to any other system presently available in the world? (150 words) S-400? (UPSC CSE (M) GS-3 2021)
Practice Question:  Analyze the potential impact of the armed drone defense deal on regional stability, focusing on the Indo-Pacific and South Asia regions. Consider how the acquisition may influence the balance of power and diplomatic dynamics in these areas. (250 words/15 m)

2. Interim Budget 2024-25: Muted GDP Outlook, Fiscal Consolidation, and Sectoral Concerns Unveiled by Finance Minister Nirmala Sitharaman

Topic: GS3 – Indian Economy – Government Budgeting
This topic is relevant for both Prelims and Mains in the context of India’s economic scenario, government policies, and their implications.
Context:
  • Finance Minister Nirmala Sitharaman presented the Union Budget for the next financial year (2024-25), marking her sixth budget presentation.
  • This budget stands out as an interim budget, prompting the FM to focus on recapping the achievements of the past decade under Prime Minister Narendra Modi rather than introducing major new initiatives.
More about the news: Muted Outlook on GDP Growth:
  • The nominal Gross Domestic Product (GDP) projection indicates a tepid growth rate for the upcoming year.
  • The nominal GDP, crucial for budgetary considerations, is expected to grow by just 10.5%, translating to a real GDP growth rate of approximately 6-6.5% in 2024-25.
  • The slower growth in nominal GDP raises concerns about India’s real growth rate.
Reduction in Fiscal Deficit:
  • The fiscal deficit, representing the government’s borrowing from the market to bridge the gap between expenses and income, is projected to decrease.
  • The government has successfully brought down the fiscal deficit to 5.8% in the current year, surpassing the target of 5.9%.
  • Ambitious targets for FY25 (5.1% of GDP) and FY26 (4.5% of GDP) aim to further consolidate fiscal discipline, positively impacting private sector borrowing.
 Capex Target Not Met:
  • Government expenditure, categorized into revenue and capital, witnessed a reduction in capital expenditure (capex) compared to the announced targets.
  • Despite the emphasis on raising capex in previous budgets, the revised estimates for the current year reveal that the capex target of Rs 10 lakh crore was not met, standing at Rs 9.5 lakh crore.
  • This raises concerns about the overall growth momentum of the economy.
Health and Education Spending Cuts:
  • Key sectors like health and education experienced budget cuts. The allocations for education and health were lower than planned, reflecting historical trends of underinvestment in these critical areas.
  • The government’s expenditure on education was Rs 1,08,878 crore against the budgeted Rs 1,16,417 crore, while health spending was Rs 79,221 crore compared to the budgeted Rs 88,956 crore.
Cuts in Core Schemes:
  • Several core schemes targeting disadvantaged sections, such as SCs, STs, and minorities, witnessed cuts in expenditure.
  • The Revised Estimates for schemes aimed at these sections fell short of the Budget Estimates, indicating reduced allocations for the most vulnerable populations.
Income Tax as the Leading Revenue Source:
  • The budget estimates for the upcoming financial year highlight a shift in the composition of government resources.
  • Traditionally dominated by market borrowings, income tax collections are projected to be the leading contributor, accounting for 19% of all government resources in FY25.
  • Corporate tax, GST, and borrowings also play significant roles in revenue generation.
Conclusion:
  • The interim budget for 2024-25 reflects a nuanced approach, balancing fiscal consolidation and addressing the challenges faced by key sectors.
  • While reductions in fiscal deficit are commendable, the disparities in allocations for critical areas raise concerns about the government’s commitment to inclusive and sustainable growth.
  • The budget’s impact on economic recovery and social development remains a subject of scrutiny.
What is Interim Budget?
  • Interim Budget is a statement that comprises detailed documentation of every expense that the government will incur and every penny that the government will make in the coming few months until the new government comes into power. It also includes income and expenses, made in the previous fiscal year.
  • It is different from the regular budget on the following aspects:
    • The interim budget includes documentation of expenses until the upcoming elections are held, whereas a regular budget includes estimates of expenditure for the full year.
    • Also generally, major policy changes are not announced in the interim budget. 
  • An outgoing government presents only an interim Budget or seeks a vote on account.
  • A ‘Vote on Account’ is not the same as an interim budget. An interim budget is a comprehensive set of accounts that includes both expenditure and receipts, whereas a “Vote on Account” simply addresses the expenditure side of the government budget.
PYQ: Distinguish between capital budget and revenue budget. Explain the components of both these Budgets. (150 words/10m) (UPSC CSE (M) GS-3 2021)
Practice Question:  Discuss the implications of the muted GDP outlook, reductions in fiscal deficit, and sectoral spending cuts on India’s economic growth and social development. (150 words/10 m)

3. Robust Tax Revenue Growth Sets Foundation for Fiscal Consolidation as Government Targets 5.8% Fiscal Deficit in 2024-25

Topic: GS3 – Indian Economy – Government Budgeting
This topic is relevant for both Prelims and Mains in the context of economic policies and government budgets.
Context:
  • The government aims to keep the fiscal deficit at 5.8% of GDP, down from the earlier budgeted 5.9%, with a further target of reducing it below 4.5% by 2025-26.
  • This strategy is bolstered by robust tax revenue, particularly in direct taxes.
  • Income tax is expected to surpass the current fiscal year’s budget estimate by 13.5%, contributing to a total direct tax collection of Rs 19.45 lakh crore, a 17.2% YoY increase for 2023-24.
  • The surge in Securities Transaction Tax (STT) revenue, exceeding the budget estimate by 15.8%, further fortifies the fiscal position.
More about the news: Outlook for Next Fiscal Year:
  • For the upcoming financial year (2024-25), direct tax collections are projected to grow by 13.1% to Rs 21.99 lakh crore.
  • The government anticipates STT revenues to reach Rs 36,000 crore.
  • These optimistic estimates contribute to an estimated growth of 5% in the gross tax revenue, totaling Rs 38.31 lakh crore for 2024-25.
  • The Centre’s net tax revenues are expected to grow by nearly 12% to Rs 26.02 lakh crore.
Tax Buoyancy and Fiscal Deficit Target:
  • The buoyancy in tax revenue, evident in the tax-to-GDP ratio, is calculated at 2 in the revised estimates for 2023-24, exceeding the previous year’s ratio of 1.0.
  • Despite the ambitious fiscal deficit target of 1% of GDP for the next fiscal year, analysts believe it is achievable, given the historical trend of the government surpassing its fiscal deficit/GDP ratio targets due to conservative revenue estimates.
Indirect Taxes and Overall Revenue:
  • On the indirect taxes front, Central Goods and Services Tax (CGST) collections are estimated to grow by 13% to Rs 9.18 lakh crore in 2024-25.
  • The overall indirect tax collections, including customs, excise duties, and GST, are expected to contribute Rs 16.22 lakh crore to the government’s revenue in the next fiscal year.
  • Notably, revised estimates for customs and excise duty collections in the current fiscal year have been adjusted, while GST collections are anticipated to meet the budgeted level.
Conclusion:
  • This revenue resilience suggests a positive fiscal outlook, supported by buoyant direct and indirect tax collections, potentially aiding the government’s fiscal consolidation efforts.
What is Tax Buoyancy?
  • Tax buoyancy explains the link between changes in government tax revenue growth and changes in GDP.
  • It refers to the sensitivity of tax revenue growth to changes in GDP.
  • Tax buoyancy measures the response of tax mobilization to economic growth. It is measured as the trend happening over a longer period of time, as there can be some lag effects of taxation policies.
  • Tax Elasticity: It refers to fluctuations in tax revenue as a result of tax rate adjustments. Tax elasticity may be shown in how tax revenue fluctuates when the government decreases corporate income tax from 30% to 25%.
  • Elasticity vs Buoyancy: Tax elasticity takes into account the natural reaction of revenues to changes in income while the tax structure remains constant. Tax buoyancy, on the other hand, represents both the effects of income and discretionary changes on revenue earnings.
PYQ: Explain the rationale behind the Goods and Services Tax (Compensation to States) Act of 2017. How has COVID-19 impacted the GST compensation fund and created new federal tensions? (UPSC CSE (M) GS-3 2020) (250 words/15m)
Practice Question:  Examine the fiscal policy measures outlined in the interim budget for the financial year 2024-25, with a focus on the government’s approach to fiscal consolidation, tax revenue growth, and expenditure priorities. Analyze the potential implications of these measures on India’s economic stability and growth. (250 words/15 m)

4. Pradhanmantri Suryodaya Yojana: Free Solar Electricity for One Crore Households Announced in Interim Budget

Topic: GS2 – Governance – Government policies – Interventions for development in various sectors
This topic is relevant for both Prelims and Mains in the context of government schemes, renewable energy policies, and environmental initiatives.
Context:
  • Under the newly-announced ‘Pradhanmantri Suryodaya Yojana,’ individuals opting for rooftop solar systems will receive 300 units of free electricity monthly.
  • Finance Minister Nirmala Sitharaman highlighted that this initiative aims to enable households to save up to Rs 15,000-18,000 annually.
  • This includes the benefit of accessing free solar electricity and the ability to sell surplus power to distribution companies.
More about the news: Integration with Electric Vehicles (EVs):
  • Sitharaman emphasized that the scheme would contribute to the adoption of electric vehicles (EVs) by facilitating home charging stations.
  • Additionally, the program is anticipated to create entrepreneurship and employment opportunities in the supply, installation, and maintenance of solar systems.
Scope and Targets:
  • The scheme builds upon the ongoing rooftop solarization program and aligns with Prime Minister Narendra Modi’s announcement of installing rooftop solar systems in “one crore houses.”
  • While specific details are yet to be unveiled, experts suggest that the scheme, aiming at households rather than generation capacity, could significantly boost solar capacity.
  • Experts estimated the potential installation of 20-25 GW of new capacity if one crore households adopt rooftop solar systems.
Potential Savings and Climate Leadership:
  • The scheme’s potential impact extends beyond individual savings, as it could lead to discoms saving approximately Rs 2 lakh crore over the next 25 years, considering subsidized electricity to residential consumers.
  • With about 25 crore households having the potential for 637 GW of rooftop solar energy, incentivizing individuals to sell surplus electricity can position India as a climate leader in anticipation of COP33, slated for 2028.
Conclusion:
  • This scheme marks a significant step toward harnessing solar energy at the grassroots level, promoting sustainability and economic benefits.
India’s Surging Energy Demand
  • India is projected to experience the highest energy demand growth globally over the next three decades, as per the International Energy Agency.
    • Despite an increase in coal production, India is committed to achieving 500 GW of renewable energy capacity by 2030.
  • Also, the country aims for 50% of electricity generation from non-fossil fuel sources by 2030, having already reached 43%, with renewables contributing 30% to the total installed capacity.
    • Rapid growth in renewable capacity, especially in solar energy, is essential to meet the surging electricity demand.
PYQ: To what factors can the recent dramatic fall in equipment costs and tariff of solar energy be attributed? What implications does the trend have for the thermal power producers and the related industry? (200 words/12.5m) (UPSC CSE (M) GS-3 2015)
Practice Question:  Examine the potential socio-economic and environmental implications of the ‘Pradhanmantri Suryodaya Yojana,’ announced in the interim budget. (150/10 m)

5. Govt. to consolidate the demand of three Services in defence allocation

Topic: GS2 – Governance – Government Policies
Critical for UPSC: Examining government measures in joint defense procurement, financial flexibility, and modernization for national security and strategic planning.
Context
  • The Indian government introduces a significant measure, consolidating the demand of the three armed forces in the defense budget for joint procurement, aiming at financial flexibility and modernizing capabilities.
  •  Additional information on this news:
  • The Indian government consolidates the demand of the three armed forces in the capital head of the defense budget for joint procurement.
  • The total allocation for the Ministry of Defence (MoD) in the interim Budget for 2024-25 is ₹6.2 lakh crore.
  • This measure enhances financial flexibility, allowing the MoD to reappropriate funds among the three Services based on inter-services priority.
  • The capital allocation is ₹1.72 lakh crore, indicating a 5.78% increase from the Budget Estimates (BE) of the previous year.
  • The capital allocation aims to address critical capability gaps through the modernization of the armed forces, including the Su-30 fleet, MiG-29 jets, C-295 transport aircraft, and missile systems.
  • The allocation also supports socio-economic development and promotes tourism in the region.
Possible Implications Of This Move
  • Enhanced Financial Flexibility: Consolidating defense budget demands facilitates efficient fund reallocation among the three armed forces, promoting flexible financial management.
  • Jointness in Procurement: The move promotes collaborative procurement efforts, ensuring synchronized acquisitions across the armed forces, potentially optimizing resources and avoiding duplication.
  • Addressing Capability Gaps: Allocation of ₹1.72 lakh crore for capital expenditure supports the modernization of armed forces, addressing critical capability gaps through the acquisition of advanced equipment, aircraft, and missile systems.
  • Strategic Preparedness: The measure enhances the Chief of Defence Staff’s authority in prioritizing major capital procurements, contributing to improved strategic preparedness and coordinated defense capabilities.
  • Socio-Economic Development: Budget provisions supporting regional modernization projects aim to boost socio-economic development and tourism, demonstrating a holistic approach to national security.

6. Addressing the issue left in the closet: male child sexual abuse

Topic: GS2 – Social Justice – Vulnerable Section
Critical for UPSC: Examining the under-researched issue of child sexual abuse, its gendered impacts, societal responses, and evolving research perspectives.
Context
  • The news highlights the under-discussed issue of child sexual abuse, particularly focusing on the often-overlooked aspect of abuse against boys, its impact, coping mechanisms, and the evolving understanding of disclosure.
Additional information on this news: Child Sexual Abuse (CSA) – A Silent Issue:
  • CSA remains evasive and under-discussed, with an exacerbated challenge when it comes to the sexual abuse of boys.
  • One in six boys globally experiences sexual abuse during childhood, yet this area is under-researched and under-addressed.
Impact on Mental and Physical Health:
  • CSA can have profound and long-lasting impacts on survivors’ mental and physical health.
  • Older men continue to experience significant physical, mental, and sexual health issues, with variations in the severity of adverse effects.
Gendered Responses and Coping Mechanisms:
  • Male survivors’ responses are shaped by patriarchal notions and socio-cultural norms.
  • Women tend to internalize experiences, while men may externalize, leading to struggles with substance use, alcohol dependence, fidelity, sexual compulsivity, or addiction.
Patriarchal Societal Permissiveness:
  • Patriarchal societies permit men to talk about sex and engage in sexual activity more openly.
  • Survivors may perceive damage to their masculinity, leading to overcompensation through hyper-masculine activities, including violence or bodybuilding.
Evolution of Research on Male CSA:
  • Over the last 20 years, global research on male child sexual abuse has gained attention.
  • In India, prevalence studies establish the widespread nature of CSA, often approached from a biomedical standpoint.
Disclosure as a Healing Step:
  • Disclosure is considered a powerful step towards healing.
  • Shame and guilt often hinder disclosure, but understanding it as a process, evolving over years, can influence survivors’ ability to share their experiences.
Qualitative Impact of Support:
  • The support received during disclosure significantly influences the survivor’s subsequent ability and willingness to disclose.
  • Recognizing disclosure as an ongoing process is crucial for understanding survivors’ experiences and supporting their healing journey.
PYQ:  Examine the main provisions of the National Child Policy and throw light on the status of its implementation. (200 words/12.5m) (UPSC CSE (M) GS-2 2016)
 

7. The problem of moving attention away from services

Topic: GS3 – Indian Economy – Government Budgeting Critical for UPSC: Evaluating Union Budget’s economic claims, income trends, social sector allocations, and their impact on inequalities and aspirations.
Context
  • The article analyzes the Union Budget, highlighting claims of poverty reduction, income disparities, and social sector allocations, emphasizing concerns about neglecting essential services and perpetuating inequalities.
Additional information on this news: Budgetary Focus and Economic Outlook:
  • The Budget, a vote on account, outlines the government’s achievements over the last decade, hinting at potential future expenditures if the NDA retains power.
  • Unlike the 2019 interim Budget, there are no major announcements, reflecting the government’s view of an upward trajectory in the economy.
Poverty and Income Claims:
  • The Finance Minister asserts that 25 crore people have been lifted from multidimensional poverty in the last 10 years.
  • Criticisms include the limitations of Multidimensional Poverty Index (MPI) in gauging income poverty trends and misleading claims of a 50% increase in average real income.
Income Disparities and Employment Trends:
  • Real per capita income increased similarly from 2003-04 to 2013-14 and 2013-14 to 2023-24, but real wages show stagnation.
  • The growth in private final consumption expenditure is poor, and structural changes in employment indicate a rise in agriculture’s share, implying a lack of jobs outside agriculture.
Social Sector Allocations:
  • Budget allocations for social sector schemes remain largely unchanged, with nominal increases for school and higher education, health, and family welfare.
  • Upgradation of Anganwadi centers and PM-POSHAN (school mid-day meals) sees slight reductions in budget compared to the previous year.
Neglect of Basic Services:
  • The focus on high-profile schemes like Awas Yojana and sanitation has led to the neglect of basic education, health, and nutrition services.
  • Budget allocations for the National Social Assistance Programme have seen a nominal decrease, reflecting a broader neglect of social sector essentials.
Impact on Social Inequalities:
  • Neglecting social sectors exacerbates perpetuating inequalities, with poor infrastructure, vacancies, and inadequate resources in health, education, and social security services.
  • Continued neglect amid a looming job crisis emphasizes the urgency of addressing social sector disparities for a truly aspirational India.
Practice Question:  Examine the economic claims and social sector allocations in the Union Budget, emphasizing their impact on income trends and perpetuation of inequalities. Discuss policy implications.” (150 words/10 m)

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