3 June 2024 : Daily Current Affairs

1. State Finances Report Highlights Fiscal Discipline, Capital Expenditure, and Consumption Divides

Topic: GS3 – Indian Economy
  • The recent report by economists at Bank of Baroda on the finances of Indian states for the financial year ended March 2024 highlights a significant achievement in managing fiscal deficits.
  • Most states successfully limited their fiscal deficit within budgeted levels, which is crucial because over-borrowing by states adds to the Centre’s borrowings, ultimately reducing available funds for the private sector.
  • This containment helps in keeping borrowing costs lower for various loans, from personal to industrial. Notably, large states like Gujarat, Maharashtra, Odisha, and Tamil Nadu managed to undershoot their budgeted borrowings by over 30%, demonstrating fiscal prudence.
Analysis of News:

Everything You Need To Know About

Capital Expenditures:

  • Capital expenditures (capex) are vital for creating productive assets like roads and bridges, which boost economic activity.
  • However, the report found that states managed to spend only 84% of their capex budget. This underperformance in capital spending can undermine the economic growth potential of states.
  • There were notable exceptions such as Uttar Pradesh, Telangana, Bihar, and Sikkim, which met or exceeded their capex targets, while states like Punjab, Chhattisgarh, and Nagaland spent less than 50% of their capex budget, indicating a need for better financial management in these regions.

Everything You Need To Know About


Tax Revenues:

  • The analysis of tax revenues revealed that own tax revenues (OTR) accounted for about 61% of states’ total tax revenues, with GST being the largest contributor.
  • States with a higher share of OTR, such as Telangana, Haryana, Karnataka, Kerala, Maharashtra, and Tamil Nadu, exhibit more fiscal resilience.
  • The heavy reliance on GST, state excise, and sales tax underscores the importance of robust state-level tax administration in ensuring fiscal health.

Consumption Divide:

  • The report highlights significant consumption divides across states, reflected in per capita GST collections. GST, a consumption-based tax, serves as a proxy for income levels and consumption patterns. The data reveals two prominent divides:
  • North-South Divide: Northern states generally fall below the national average in per capita GST collections, while southern states significantly exceed it. For instance, per capita GST in Karnataka and Telangana is nearly 3-4 times that of Madhya Pradesh and Jharkhand, indicating higher prosperity in southern states.
  • East-West Divide: Western states like Maharashtra and Gujarat have much higher consumption levels compared to eastern states like Odisha, West Bengal, and Assam. This divide highlights regional disparities in economic well-being and consumption capacity.

Everything You Need To Know About

Political Significance:

  • The upcoming vote counting on June 4 will be critical for both the Indian economy and state economies.
  • The political landscape shows that the BJP-led NDA is stronger in the lower-consumption states of the North, while the Congress-led INDIA bloc is better positioned in the higher-consumption states of the South.
  • This alignment is intriguing given the economic ideologies of the parties, with the BJP advocating for “minimum government” and the Congress favoring larger government involvement.
  • Despite these ideological differences, the BJP’s implementation of efficient social welfare measures has garnered significant electoral support in poorer states.
  • In the East-West context, the NDA has performed better in richer states, while opposition parties have seen success in poorer states.
  • Key battlegrounds like Maharashtra in the West and West Bengal and Odisha in the East will be closely watched to see if economic well-being influences voting decisions.


  • This comprehensive analysis of state finances and political implications provides valuable insights into the fiscal health and economic disparities across Indian states, setting the stage for strategic planning and policy-making in the future.
PYQ: In the context of governance, consider the following: (2010)

1) Encouraging Foreign Direct Investment inflows

2) Privatization of higher educational Institutions

3) Down-sizing of bureaucracy

4) Selling/offloading the shares of Public Sector Undertakings

Which of the above can be used as measures to control the fiscal deficit in India?

(a) 1, 2 and 3

(b) 2, 3 and 4

(c) 1, 2 and 4

(d) 3 and 4 only

Ans: D

Practice Question:  Discuss the significance of the fiscal deficit management by Indian states as highlighted in the recent report by the Bank of Baroda. (250 words/15 m)

(Source: Indian Express; Section: Explained; Page: 12)

2. Tonga volcano could cause unusual weather for rest of decade: study

Topic: GS1 – Geography – Important Geophysical phenomena – Volcanic activity.
●  The eruption of Hunga Tonga-Hunga Ha’apai in 2022 sent shockwaves globally, triggering a tsunami and intriguing scientific inquiry.

●  A subsequent study in the Journal of Climate revealed its unique climate impacts, notably its contribution to ozone depletion and altered weather patterns predicted by climate models.

 Analysis of the news:

Everything You Need To Know About

  • The 2022 eruption of Hunga Tonga-Hunga Ha’apai in Tonga caused a tsunami and sent sound waves globally.
  • A study published in the Journal of Climate explores its climate impacts.
  • Unlike typical volcanoes, Hunga Tonga emitted vast amounts of water vapour into the stratosphere.
  • This water vapour affected ozone depletion and acted as a potent greenhouse gas.
  • Climate models predict its impact: enlarged ozone hole, altered weather patterns including colder winters for Australia and Scandinavia, and warmer winters for North America until 2029.
  • While global temperatures rose slightly, they cannot solely be attributed to the eruption.
  • Further research is needed to fully understand the long-term consequences.
Impact of volcanic eruption on surrounding environment:
Air Quality: Volcanic eruptions release gases, ash, and particulate matter into the atmosphere, impacting air quality and visibility.

Climate Change: Volcanic gases, particularly sulphur dioxide, can contribute to short-term cooling by reflecting sunlight, but long-term effects depend on the eruption’s scale and duration.

●  Health Risks: Ashfall and volcanic gases pose health risks to humans and animals, causing respiratory issues, eye irritation, and skin problems.

Ecosystem Damage: Volcanic ash can smother vegetation, disrupt ecosystems, and contaminate water sources, affecting biodiversity and agriculture.

Infrastructure Damage: Ash deposition can damage buildings, roads, and infrastructure, leading to economic losses and disruption of services.

Lahars and Flooding: Volcanic eruptions can trigger lahars (mudflows) and flooding, posing additional hazards to communities downstream.

Tourism and Economy: Volcanic eruptions can impact tourism and local economies, affecting livelihoods and businesses dependent on the affected area.

Long-term Recovery: Recovery from volcanic eruptions involves cleanup, rebuilding infrastructure, and rehabilitation of ecosystems, which can take years or decades.

PYQ: Mention the global occurrence of volcanic eruptions in 2021 and their impact on the regional environment. (150 words/10m) (UPSC CSE (M) GS-1 2021)
Practice Question:  How do volcanic eruptions, like the 2022 eruption of Hunga Tonga-Hunga Ha’apai, influence the Earth’s atmosphere, such as ozone depletion and global weather patterns? Discuss with relevant examples and scientific evidence. (250 Words /15 marks)

(Source – The Hindu, International Edition – Page No. – 7)

3. Does inequality lead to growth?

Topic: GS2 – Social Justice

GS3 – Indian Economy – Inclusive Growth

● Recent statements by Rahul Gandhi and Prime Minister Narendra Modi have sparked discussions on inequality in India.

●  Researchers from the Paris School of Economics have highlighted that modern India exhibits greater inequality than during colonial times, adding fuel to the ongoing debate on the socio-economic implications of inequality.

 Inequality in Modern India:

  • Rahul Gandhi and Narendra Modi’s recent statements have reignited discussions on inequality in India.
  • Researchers from the Paris School of Economics have highlighted that modern India exhibits greater inequality than during colonial times.

Debate on Inequality:

  • Some argue that inequality is detrimental to democratic processes, while others view it as incentivizing entrepreneurship, leading to economic growth and job creation.

Negative Economic Effects of Inequality:

  • Concentration of monopoly power among capitalists can result in negative effects on consumption, welfare, and growth.
  • Monopolies lead to higher mark-ups and prices, reducing real wages and purchasing power, ultimately resulting in lower levels of output and investment.

Impact of Inequality on Growth:

  • In economies with monopolies, higher prices and mark-ups lead to lower real wages and consumption, weakening the multiplier effect of investment on income growth.
  • Unequal distribution of income reduces consumption power, hindering the expansion of the economy.

Redistribution and its Effects:

  • Some argue that redistribution measures may deter entrepreneurs due to reduced incentives for wealth accumulation and investment.
  • However, taxing wealth does not necessarily affect investment, as it depends on future profit expectations rather than accumulated wealth.
  • Redistribution can strengthen the multiplier effect by increasing purchasing power and incentivizing investment in regions with strong demand.

Thomas Piketty’s Proposal:

  • Thomas Piketty’s suggestion of taxing billionaire wealth and implementing basic income could encourage entrepreneurship and innovation.
  • Redistribution, when used in conjunction with other policy measures, can lead to a healthier economy by curbing inequality.


  • While redistribution may face opposition, it can bolster economic growth by enhancing purchasing power and incentivizing investment.
  • A balanced approach to curbing inequality through redistribution, along with other policy measures, is essential for fostering a more equitable and prosperous economy.
Practice Question:  How does the contemporary debate on inequality in India, highlighted by recent statements from political leaders and research findings, reflect on the socio-economic landscape of the nation? Discuss. (250 Words /15 marks)

(Source – The Hindu, International Edition – Page No. – 10)


1. JWST Discovers Earliest-Known Galaxy: A Bright and Massive Marvel from the Universe’s Infancy
  • NASA’s James Webb Space Telescope (JWST) has made a groundbreaking discovery by identifying the earliest-known galaxy, dating back to a period when the universe was only 2% of its current age.
  • This galaxy, observed as it existed approximately 290 million years after the Big Bang, marks a significant find in the study of cosmic dawn, the era spanning the universe’s first few hundred million years.
  • The discovery was made by an international team of astronomers as part of the JWST Advanced Deep Extragalactic Survey (JADES) program and was published online before formal peer review.
Analysis of News:

Everything You Need To Know About

Details About the Galaxy:

  • The galaxy, named JADES-GS-z14-0, is surprisingly large and bright for its age. Measuring about 1,700 light-years across, it has a mass equivalent to 500 million Sun-sized stars and is rapidly forming new stars at a rate of about 20 per year.
  • This galaxy’s size and brightness present a challenge to current understanding of how such structures could form so quickly after the Big Bang. In comparison, the previously earliest-known galaxy, discovered by the same team last year, dated to about 320 million years after the Big Bang.
  • Another galaxy, JADES-GS-z14-1, was also found, dating to 303 million years post-Big Bang, with a mass of about 100 million Sun-sized stars and forming two new stars per year.
  • The discovery of JADES-GS-z14-0 raises intriguing questions about the early universe. Its significant size and brightness imply rapid growth and star formation, which contrasts with the general trend of galaxies becoming larger and brighter over time.
  • Researchers have proposed three main hypotheses to explain the luminosity of early galaxies: the presence of supermassive black holes, a higher number of stars, or stars that are inherently brighter than those found today.
  • The recent findings suggest that supermassive black holes are not the primary cause, leaving the other two hypotheses as potential explanations. Further research is required to understand the mechanisms behind the unexpected brightness and rapid formation of these early galaxies.


2) China’s Chang’e-6 Achieves Historic Landing on Moon’s Far Side
  • China successfully landed an uncrewed spacecraft, the Chang’e-6, on the far side of the moon, marking a significant achievement in its mission to collect lunar rock and soil samples from this unexplored region.
Analysis of News:

Everything You Need To Know About

Scientific Exploration:

  • This accomplishment enhances China’s status in the global space race, where countries like the United States are also aiming to utilize lunar resources for sustaining long-term astronaut missions and establishing moon bases within the next decade.
  • The Chang’e-6, equipped with advanced tools and a launcher, landed in the South Pole-Aitken Basin at 6:23 a.m. Beijing time (2223 GMT), according to the China National Space Administration (CNSA). The mission involved numerous engineering innovations and faced high risks and great difficulty.
  • The payloads on the Chang’e-6 lander are set to perform as planned, conducting scientific exploration missions. This marks China’s second successful mission on the moon’s far side, a region with deep and dark craters that complicate communication and landing operations.
3) OPEC+ Extends Deep Oil Output Cuts to Stabilize Market Through 2025
  • OPEC+ agreed to extend significant oil output cuts until 2025, aiming to stabilize the market amid weak demand growth, high interest rates, and increasing U.S. production.
  • Currently, oil prices are around $80 per barrel, below the budget needs of many OPEC+ members, partly due to slow demand from China and rising oil stocks in developed economies.
Analysis of News:
  • OPEC+ members, including Russia, have been implementing deep output cuts since late 2022, currently reducing output by 5.86 million barrels per day (bpd), about 5.7% of global demand.
  • This includes 3.66 million bpd of cuts set to expire at the end of 2024 and voluntary cuts of 2.2 million bpd expiring in June 2024. The new agreement extends the 3.66 million bpd cuts to the end of 2025 and the 2.2 million bpd cuts to September 2024, with a gradual phase-out starting in October 2024.

About OPEC+

Everything You Need To Know About

  • It is a group of oil-exporting countries which meets regularly to decide how much crude oil to sell on the world market.
  • Origin: These nations came to an accord towards the end of 2016 “to institutionalize a framework for cooperation between OPEC and non-OPEC producing countries on a regular and sustainable basis.”
  • These nations aim to work together on adjusting crude oil production to bring stability to the oil market.
  • OPEC+ controls about 40% of global oil supplies and more than 80% of proven oil reserves.
  • At the core of this group are the members of OPEC (the Organization of the Oil Exporting Countries), which are mainly Middle Eastern and African countries.
  • Members: It comprises OPEC countries plus Azerbaijan, Bahrain, Brunei, Kazakhstan, Russia, Mexico, Malaysia, South Sudan, Sudan, and Oman.

 What is the Organization of the Petroleum Exporting Countries (OPEC)?

Everything You Need To Know About

  • It is a permanent intergovernmental organization of oil-exporting countries.


  • To coordinate and unify the petroleum policies of its member countries.
  • Ensure the stabilization of oil prices in the international oil markets, with a view to eliminating harmful and unnecessary fluctuations.


  • It was founded in Baghdad, Iraq, with the signing of an agreement in September 1960 by five countries, namely the Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
  • Currently, it has 12 members, including Algeria, Congo, Equatorial Guinea, Gabon, Libya, Nigeria, and the United Arab Emirates.

Headquarters: Vienna, Austria.

4. India to participate in Red Flag, RIMPAC exercises

●  The Indian Air Force and Indian Navy are participating in major multinational military exercises hosted by the U.S.

●  The IAF is deploying Rafale jets for Red Flag in Alaska, and the Navy is deploying INS Shivalik for RIMPAC in Hawaii, enhancing interoperability with global forces.

 Exercise Red Flag:

  • Advanced aerial combat training exercise hosted by the U.S. Air Force.
  • Takes place at Eielson Air Force Base in Alaska.
  • Involves realistic training in a simulated combat environment.
  • Features participation from multiple nations, with approximately 3,100 service members and over 100 aircraft.
  • Aims to improve interoperability and combat readiness among allied air forces.

RIMPAC (Rim of the Pacific):

  • World’s largest international maritime warfare exercise.
  • Held biennially in Hawaii, hosted by the U.S. Navy.
  • Focuses on enhancing interoperability among Pacific Rim nations’ navies.
  • Involves a wide range of naval operations, including humanitarian missions and disaster relief.
  • Includes participants from over 20 countries, featuring warships, submarines, and aircraft.

(Source – The Hindu, International Edition – Page No. – 6)


5. In fight against Nipah, scientists find new way to generate virus-like particles in lab

●  Scientists at the Institute of Advanced Virology (IAV) in Thonnakkal have developed non-infectious Nipah virus-like particles (VLPs) for safe research in BSL-2 labs. This innovation facilitates the development of neutralizing antibodies and antivirals, advancing Nipah virus research and vaccine development.

 Nipah Virus (NiV):

  • A zoonotic virus, highly pathogenic paramyxovirus.
  • Identified in 1999 during an outbreak in Malaysia and Singapore.
  • Natural hosts are fruit bats (Pteropus species).
  • Transmission to humans via direct contact with infected bats, pigs, or contaminated food.
  • Human-to-human transmission is also documented.
  • Symptoms range from asymptomatic infection to acute respiratory illness and fatal encephalitis.
  • Incubation period: 4-14 days.
  • Fatality rate: up to 80%.
  • No specific treatment; supportive care is the mainstay.
  • Requires Biosafety Level-4 (BSL-4) containment for handling due to its high virulence.

(Source – The Hindu, International Edition – Page No. – 6)


  1. Carnian pluvial episode: bounty in rain
●  The Carnian Pluvial Episode, a million-year period of intense rainfall 230 million years ago, significantly impacted Earth’s evolution.

●  It helped in fostering increased species diversity and marking the beginning of the age of dinosaurs following extensive volcanic activity and extinctions.


Carnian Pluvial Episode:

  • Occurred around 230 million years ago during the late Triassic Period.
  • Characterised by over a million years of continuous, heavy rainfall.
  • Named after the Carnian stage of the Triassic.
  • Linked to extensive volcanic activity in the Wrangellia Province, now on the western coast of North America.
  • Volcanism released greenhouse gases, causing climate change and heavy rainfall.
  • Resulted in significant environmental changes, including the extinction of about one-third of marine species and substantial terrestrial life.
  • Post-episode, saw an increase in biodiversity, marking the rise of dinosaurs and shaping future terrestrial and marine ecosystems.

(Source – The Hindu, International Edition – Page No. – 7)


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