Daily News Simplified - DNS

23 01 19
Notes
SL. THE HINDU
TOPICS
NO. PAGE NO.

1 India can lead the world on solar grid, says PM Modi 01

2 Centre’s debt-to-GDP falls, States’ rises 13

3 Inflation conundrum 08

4 ILO urges universal labour guarantee 07

5 Buried in the sands 08

6 India stares at water scarcity 08

Dated: 23.Jan.2019 DNS Notes

Title 1. India can lead the world on solar grid, says PM Modi (The Hindu Page 01)
Syllabus Mains: GS Paper II – International Relations under Indian Diaspora
Theme Pravasi Bharatiya Diwas
Highlights About Pravasi Bharatiya Diwas:
 Pravasi Bharatiya Divas (PBD) is celebrated once in every two years to
strengthen the engagement of the overseas Indian community with the
Government of India and reconnect them with their roots.
 During the Convention, selected overseas Indians are also honoured with the
prestigious Pravasi Bharatiya Samman Award to recognize their contributions
to various fields both in India and abroad.
 The 15th PBD Convention is being held on 21-23 January 2019 in Varanasi,
Uttar Pradesh. The theme of PBD Convention 2019 is "Role of Indian
Diaspora in building New India" to converge with Kumbh Mela and Republic
day parade.

Earlier PBD:
 Pravasi Bharatiya Divas has been celebrated since 2003, and used to be held
on 9th January.
 It was held on this particular date since Mahatma Gandhi returned to India
from South Africa on 9th January, however it has been changed this year to
converge PBD with Kumbh mela.
 Apart from this, from 2015 the Pravasi Bharatiya Diwas was decided to be
held every two years and in the intervening period theme based discussions
will be held with diaspora community.

About International Solar Alliance:

 PM Modi has highlighted at PBD of India's potential to lead in sustainable
development with International Solar Alliance being one such platform to
lead in Solar Energy.
 International Solar Alliance (ISA) is a treaty-based inter-governmental
international organization of solar resource rich countries lying fully or
partially between the Tropic of Cancer and the Tropic of Capricorn.
 ISA was launched at the United Nations Climate Change Conference in Paris
in 2015 by Narendra Modi, Prime Minister of India and François Hollande
former President of France
 International Solar Alliance will be the 1st International and inter-
governmental organisation to have headquarters in India. ISA shall be based
in India, at the National Institute of Solar Energy, Gurugram, Haryana.
Personal Notes
Dated: 23.Jan.2019 DNS Notes

Title 2. Centre’s debt-to-GDP falls, States’ rises (The Hindu – Page 13)
Syllabus Prelims: Economic Development
Mains: GS III in Economic Development
Theme UDAY Scheme
Highlights Context
 The Central Government has released the Eighth Edition of the Status Paper on
the Government Debt, which provides a detailed analysis of the Overall Debt
Position of the Government of India.(Debt indicates the total outstanding
liabilities of the government, while the fiscal deficit indicates new borrowings
made in the year)
 This report presents a mixed picture of the debt position in India. On one hand,
the debt of the central government has reduced while the debt of the state
governments has increased in the last 4-5 years.

What does the Report say?

 It is to be noted that the N.K. Singh-headed FRBM Review Committee report had
recommended the debt ratio to be 40% for the Centre and 20% for the States,
respectively, by 2023.
 The Centre’s total debt as a percentage of GDP has reduced to 46.5% in 2017-18
from 47.5% as of March 31, 2014.
 However, the total debt of the States has been rising over this period to 24% in
2017-18 and is estimated to be 24.3% in 2018-19.
 The outstanding liabilities of the state governments have increased on the account
of issuance of UDAY Bonds.

Understanding UDAY Bonds

 The state owned power distribution companies (discoms) have been accumulating
huge losses leading to increase in NPAs. The discoms have been supplying
electricity at tariffs which are far below the operating cost due to political
compulsions.
 Further, inefficiencies in power distribution such as large transmission and
distribution losses on power have further strained the finances of the discoms,
who have been borrowing heavily from banks leading to higher NPAs.
 Hence, in order to solve this problem, UDAY Scheme was launched in November
2015 to help loss-making discoms turn around financially, with support from their
State governments.
 Under the scheme, States will take over 75% of the debt of their respective
Dated: 23.Jan.2019 DNS Notes

discoms. The governments will then issue ‘UDAY bonds’ to banks and other
financial institutions to raise money to pay off the banks. The remaining 25
percent debt will be financed by bonds issued by DISCOM.
Personal
Notes

Title 3. Inflation conundrum (The Hindu, Page 08)

Syllabus Prelims: Economic Development
Mains: G.S. III in Economic Development
Theme Inflation
Highlights Context
 The inflation in India as measured by CPI and WPI has reduced significantly as per
the measurements in December 2018. The CPI at 2.19% in is at an 18-month low,
while the WPI at 3.8%, is at an eight-month low
 In this regard, this editorial highlights that the decline in the inflation poses an
interesting challenge for policymakers and the RBI.

Types of Monetary Policy Stances

Accommodative Neutral Stance Calibrated Tightening

Stance
Accommodative stance Neutral stance means the RBI Calibrated Tightening stance
means RBI may reduce would have the flexibility to means the RBI would either
the policy rates to either increase or decrease keep the rates constant or
increase the money the policy rates by taking into increase the rates.
supply in the economy. account the macroeconomic
conditions.
Under this stance, Under this stance, key policy Under this stance, key policy
Dated: 23.Jan.2019 DNS Notes

policy rates normally rates would move in either rates either remain
decrease. direction. unchanged or increase.
Decrease in policy rates is
ruled out.
Usually, this policy is Usually, this policy is adopted Usually, this policy is adopted
adopted when there is when the inflation rate is when there are concerns of
slowdown in the stable. higher rate of inflation.
economy.

Headline and Core Inflation

 The headline inflation simply refers to the inflation in the CPI covering all the
categories of goods and services.
 On the other hand, the core inflation excludes the volatile categories such as food
and fuel in order to measure the increase in the prices of goods and services.
 Hence, a drastic fall in the food and fuel prices can bring down the headline
inflation by a large extent. However, the core inflation may remain unaffected.

Nominal and Real rate of Interest

 Nominal interest rate is the interest rate that is usually charged / paid by a bank. It
is often referred as the market interest rate as it is the prevailing interest rate in
the economy. The Nominal Interest rate is usually closer to benchmark policy rate
i.e. repo rate. As the repo rate increases or decreases, the nominal interest rate
also undergoes changes accordingly.
 The real interest rate is the interest rate adjusted for inflation.
 It is calculated as Real rate of interest = Nominal rate of interest – inflation.

What are the Challenges?

Dilemma before the MPC
 The decline in the rate of inflation along with the contraction of the manufacturing
sector may prompt the RBI to change its monetary policy stance from “Calibrated
tightening” to “Neutral”.
 However, there has been divergence between CPI headline and Core inflation. The
headline CPI inflation is trending lower. However, the core inflation is still higher at
close to 6%.
 Hence, on one hand, the decline in the rate of inflation calls for cut in the policy
rates. However, the growing divergence between headline and core inflation
suggests that the MPC should desist from policy cuts. Hence, this has thrown up
an interesting challenge before the MPC with respect to its monetary policy stance.

Weak Monetary policy Transmission

 The nominal interest rates in the economy should change in accordance with the
changes in the benchmark policy rate i.e. repo rate. This shows that the banks
change the rate of interest on loans/deposit in accordance with the changes in the
Repo rate and hence point to an efficient monetary policy transmission.
 However, the editorial has highlighted that the monetary policy transmission in
India has been weak. It is evident in the fact that even though the CPI inflation has
moderated from around 10% in 2012-13 to 3.6% in 2017-18, the nominal rate of
interest has not changed significantly. It has remained quite high leading to higher
real rate of interest.
 This shows that the interest rate structure has lagged behind the structural change
in inflation.
Dated: 23.Jan.2019 DNS Notes

Personal
Notes
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Title 4. ILO urges universal labour guarantee (The Hindu, Page 07)
Syllabus Prelims: Social Development
Mains: GS II in Social Justice in Human Resources
Theme ILO report on Future of Work
Highlights Context
 This article is based on the "Future of Work" report prepared by the Global
Commission on the future of work which was established by International Labour
Organization in 2017.
 Let us look at some important highlights and recommendations of the report.

Increasing Pressure on Labour Force

 Technological advances such as artificial intelligence, automation and robotics –
will create new jobs, but those who lose their jobs in this transition may be the
least equipped to seize the new opportunities. For example, according to World
Bank, two-thirds of jobs in the developing world are susceptible to automation
 Further, today’s skills will not match the jobs of tomorrow and newly acquired
skills may quickly become obsolete. Apart from that, the greening of our
economies will create millions of jobs as we adopt sustainable practices and clean
technologies but other jobs will disappear as countries scale back their carbon-
and resource-intensive industries.
 Expanding youth populations in some parts of the world and ageing populations in
others may place pressure on labour markets and social security systems.
 In such a situation, the countries should “place people at the centre of economic
and social policy” in order to ensure a strong and responsive social protection
system.

Recommendations
There is a need for human-centred agenda for the future of work. This agenda consists
of three pillars of action.

Increasing investment in people’s capabilities

 There is a need for universal entitlement to lifelong learning that enables people
to acquire skills and to reskill and upskill. Governments, employers, and
educational institutions should have responsibilities in building an effective and
appropriately financed lifelong learning ecosystem.
 The future of work requires a strong and responsive social protection system and
hence there is a need to provide a universal social protection from birth to old age.

Increasing investment in the institutions of work

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 All workers, regardless of their contractual arrangement or employment status,

should enjoy fundamental workers’ rights, an “adequate living wage”, maximum
limits on working hours and protection of safety and health at work. This proposal
also allows for safety and health at work to be recognized as a fundamental
principle and right at work.
 All workers must enjoy freedom of association and the right to collective
bargaining, with the State as the guarantor of those rights.
 Further, there is a need for adopting a “human-in-command” approach instead of
artificial intelligence to ensure that the final decisions affecting work are taken by
human beings.

Increasing investment in decent and sustainable work

 There is need to provide incentives to promote investments in key areas for
decent and sustainable work. Such investments will also advance gender equality
and can create millions of jobs and new opportunities for MSMEs. The
development of the rural economy, where the future of many the worlds’ workers
lies, should become a priority
 New measures of country progress also need to be developed to account for the
distributional dimensions of growth, the value of unpaid work performed in the
service of households and communities and the externalities of economic activity,
such as environmental degradation
Personal
Notes

Title 5. Buried in the sands (The Hindu, Page 08)

Syllabus Prelims: Environment
Mains: GS III in Environment & Disaster management
Theme CRZ notification of 2018
Highlights Background
The government approved the Draft Coastal Regulation Zone (CRZ) Notification, 2018.
The CRZ consists of designated areas along the coast that are regulated by the
government and introduced the new CRZ 2018 notification as a promise of a ‘better life’
for coastal communities that would add value to the country’s economy.

Hazard Line:
 CRZ regulations were first introduced in 1991 and subsequently revised in 2011. A
coastal hazard line was established taking into account natural disasters including
the 2004 Indian Ocean tsunami. However, amendment in 2018, removed the
hazard line from the CRZ regulation.
 Formerly (in the 2011 version), the CRZ extended up to a minimum of 500 m and
up to the area of the ‘hazard line’ if it was found to be beyond 500 m. By removing
the hazard line altogether, the new notification maintains a uniform CRZ of 500 m
from the high tide line.
 Except for the most ecologically sensitive areas (CRZ-I) and water areas (CRZ-IV),
for which any development clearance requires MoEFCC approval, State
governments will be responsible for regulating urban and rural coastal areas (CRZ-
Dated: 23.Jan.2019 DNS Notes

II and III).
 The CRZ for land adjoining creeks and backwaters is reduced from 100 to 50m.
 Big hotels, restaurants, houses, coastal highways and small and large port facilities
can now be built closer to the shoreline. However, the change to Hazard line
concept leads to greater chances of disaster from cyclones, floods, etc. to coastal
areas.
Personal
Notes

Title 6. India stares at water scarcity (The Hindu, Page 08)

Syllabus Mains: GS III in Disaster management
Theme Drought due to water scarcity
Highlights Article Focus:
Dated: 23.Jan.2019 DNS Notes

 Tackling drought must be the immediate priority for administrators across the
country

Rain deficiency:
 The actual deficit last monsoon was modest — barely 10%. But the post-monsoon
rainfall (October to December, 2018) or PMR as it is called by meteorologists has
registered a 44% deficit.
 This national average deficit conceals shortages in some regions where it is much
higher. In Marathwada, according to the IMD, the deficit is 84%, in Vidarbha, 88%.

Impact:
 This low-rain and no-rain situation is going to aggravate the water crisis that we
have brought upon ourselves without the ‘help’ of a dry sky. The driven water
transfers from rural to urban, agriculture to industry, poor to rich and so on have
made our country-side chronically water-scarce.
 The failure of rains this time is so serious that ‘drought’ now means not just a farm
crisis but a national crisis that will affect towns and cities no less than villages.
 ‘Taken-for-granted’ piped water supply will falter and when water cans will cost
even more than they do, today.
Personal
Notes
Dated: 23.Jan.2019 DNS Notes