17 June 2024 : Daily Current Affairs

1. Government looks at tax rate cut to boost demand

Topic: GS3– Government Budgeting

Context:

There is a decrease in the demand in the economy that triggers the vicious cycle, thereby decreasing investment and employment. This calls for taking measures to boost the economy. There are two options available: first is increasing welfare spending, and second is rationalizing the existing income tax structure. The government is thinking of decreasing the tax rate to boost the economy in the recent budget.

Analysis of News:

• In the most recent GDP data release for the January-March quarter on May 31, Private Final Consumption Expenditure (PFCE), an indicator of consumption demand, dropped as a share of GDP to 52.9 per cent — the lowest level in the 2011-12 base year series.
• As the Indian economy grapples with the problem of flagging consumption, policymakers in the government are in favour of rationalizing the income tax structure.

What happens with a decrease in the tax structure?

• The tax cuts may be a more efficient measure to enhance disposable income, which in turn would result in higher consumption and give a fillip to economic activities.
• A boost to consumption is being seen as crucial for reviving demand, which in turn is central to restarting the investment cycle, especially rekindling private capital expenditure in consumer-focused sectors.

Welfare spending vs. rationalizing tax structure.

• There has been debate over effective policy measures to boost the demand. There are two options available: first is increasing welfare spending, and second is rationalizing the existing income tax structure.
• Welfare spending comes with leakages; thus, it may not be an effective policy. Thus, a tax rate cut at the lower income levels often leads to higher consumption. It boosts demand, which is critical for kickstarting investment, especially by the private sector, which has remained moribund for years now.
• Further, Welfare spending is a short-term measure. Also, the deficit in the economy increases with welfare spending, which causes fiscal instability.

(Source: Indian Express; Page: 01)

2. India outs out of the Ukrainian declaration

Topic: GS2 – International relations– global groupings and agreements involving India and/or affecting India’s interests.

Context:

Recently, a Ukraine Peace summit took place where India opted out of Ukraine declaration with six other nations

Analysis of News:

What is the Ukrainian Peace Summit:

• It is a two-day summit in Switzerland dedicated to forging a path forward to end the war in Ukraine.
• It concluded with the joint communique agreed to by more than 80 other countries and international organizations.
• The document reaffirmed the signatories commitment to “refraining from the threat or use of force against territorial integrity or political independence of any state including Ukraine, the principles of sovereignty, independence, and territorial integrity of all states, including Ukraine, within their internationally recognized borders.
• Russia was not attending the summit and it gave its own peace plan.

Why India Opted out of the declaration:

• Saudi Arabia, India, South Africa, Thailand, Indonesia, Mexico and the United Arab Emirates were among countries participating at a summit on peace for Ukraine that did not sign a final communique.
• India, Saudi Arabia, South Africa and the United Arab Emirates have important trading relationships with Russia as members of the BRICS economic group.
• India called for mutually accepted negotiations with the involvement of both Russia and Ukraine. It will be a long time peace.

(Source: Indian Express; Page: 1)

3. On the size of council of ministers

Topic: GS2: Structure, Organization and Functioning of the Executive and the Judiciary—Ministries and Departments of the Government

Context

The present article discusses the size of the Council of Ministers (COM) and the issue that arises when there is too large and unwieldy COM.

Analysis of the News:

• India is a parliamentary democracy with the President as its nominal head. Article 74 of the Constitution states that there shall be a COM headed by the Prime Minister (PM) to aid and advise the President.
• In parliamentary democracy, the real power lies with the Council of Ministers (COM). The COM consists of a Cabinet minister, MoS with independent charge, MoS and a Deputy Minister.
•  The present Council includes the Prime Minister, 30 Cabinet Ministers, 5 Ministers of State with independent charge, and 36 Ministers of State.
• Governance faces various issues when there is too large and unwieldy COM. A thorny issue, even after the limit on the number of ministers, is the appointment of Parliamentary Secretaries in various States. Some states also appoint the Parliamentary Secretaries to circumvent the constitutional limit of the COM.

Constitutional limit to the size of COM

• The first COM at the time of independence had only 15 Ministers headed by Prime Minister Jawaharlal Nehru. The size of COM has been increasing. It has increased to around 50-60. In 1999, when Atal Bihari Vajpayee became Prime Minister, his COM had 74 Ministers.
• National Commission to review the working of the Constitution(NCRWC) under the Chairmanship of Justice Venkatachaliah, set up in February 2000, had suggested a ceiling of 10% of the total strength of the Lok Sabha/Legislative Assembly.
• 91st Constitutional amendment in 2003 limited the total number of Ministers, including PM/CM, in the COM, to 15% of the total strength of the Lok Sabha/State Legislative Assembly.
• Smaller States should have a minimum of 12 Ministers. For Union Territories of NCT of Delhi and Jammu & Kashmir (J&K), the maximum limit is 10% of the total strength of its Assembly.

Issue of the Permanent Secretaries:

• The office of Parliamentary Secretary (PS) also has its origin in the British system. In India, the post of PS was first created in 1951.
• Various States have appointed these to circumvent the limit on COM placed by the 91st Amendment. 
• High Courts of Punjab & Haryana, Rajasthan, Bombay, Telangana, Karnataka, etc., have quashed or questioned the appointment of Parliamentary Secretaries in the States under their jurisdiction for indirectly violating the maximum limit on COM.

PRELIMS FACTS

1. A new product of INCOIS to predict the EL Nino

Hyderabad-based INCOIS has developed a new product to predict the emergence of El Nino and La Nina conditions. It is known as Bayesian Convolutional Neural Network (BCNN)

What is BCNN

• It uses latest technologies, such as Artificial Intelligence (AI), deep learning, and machine learning (ML), to improve forecasts related to the ENSO phases.
• It observes slow changes in the ocean and how they interact with the atmosphere.
• It is a combination of dynamic models with AI. This helps it forecast the emergence of El Niño and La Niña conditions with a 15-month lead time — unlike other models, which can give a prediction up to six to nine months in advance.

2. Gandhi Sagar Wildlife Sanctuary

• It is set to become the second home for cheetahs in India, after the Kuno National Park.
• The sanctuary is spread across an area of 368.62 sq km in the districts of Mandsaur (187.12 sq km) and Neemuch (181.5 sq km) in western MP, right on the border with Rajasthan.