News & Editorial Analysis 11 March 2023
The Hindu News Analysis
1 – Fiscal Deficit:
GS III Topic Indian Economy
The definition of a fiscal deficit is:
The fiscal deficit is the difference between all of the government’s expenditures and all of its receipts (excluding borrowing). A fiscal imbalance occurs when this expense outweighs the money received.
When a government’s overall spending exceeds its revenue, there is a fiscal deficit (excluding money from borrowings).
The deficit is not the same as the debt, which is an accumulation of annual deficits.
The fiscal deficit is a sign of how the government manages its finances.
An ongoing large budget deficit indicates excessive government spending.
The fiscal deficit is prevalent in almost every economy, whereas the budgetary surplus is relatively rare. If the money is used to construct infrastructure, such as roads, airports, and other things that will eventually bring in money, the enormous budget deficit is not always a negative thing.
Governments (at the national and sub-national levels) employ fiscal consolidation programmes to lower their deficits and debt accumulation.
How the fiscal deficit is covered:
Two sources are used to pay for the budgetary deficit. They are the following:
obtaining loans from a commercial bank or other sources like the IMF, other governments, etc.
Creating new money through deficit financing entails borrowing funds from the RBI in exchange for its securities (so, RBI prints new currency).
Since borrowing is used to cover the fiscal deficit, it may be claimed that a government’s entire borrowing requirements for a year are equal to the fiscal deficit for that year.
India’s fiscal policy framework:
Important information regarding India’s fiscal policy strategy includes the following:
A Finance Commission (FC) must be constituted every five years, under the Indian Constitution.
In light of the fact that the states’ taxation authority may not always be adequate in relation to their spending responsibilities, this will serve as the basis for transferring a portion of the center’s income to the state governments and give medium-term fiscal guidance.
The Union Budget, which the government must submit to the Parliament for approval and discussion of its proposed taxing and spending initiatives, is another aspect of fiscal policy.
The Fiscal Responsibility and Budget Management Act (FRBM) 2003 is a statute that addresses economic constraint.
2 – Forex Reserve:
GS III Topic Indian Economy
Foreign exchange reserves:
A central bank may hold assets in foreign currencies as reserves, such as bonds, treasury bills, and other government securities.
It should be emphasised that the majority of foreign exchange reserves are held in US dollars.
Currency reserves in India include:
foreign currency holdings
With the International Monetary Fund serving as reserves, unique drawing rights (IMF).
Objectives for Maintaining Foreign Exchange Reserves:
Fostering and maintaining confidence in monetary and exchange rate management strategies.
Permits taking action to protect the national or union currency.
Reduces external vulnerability by maintaining foreign currency liquidity to absorb shocks during times of crisis or when access to borrowing is restricted.
The significance of increasing foreign reserves:
The government and the RBI are in a good position as they manage the nation’s external and domestic financial challenges thanks to rising foreign reserves.
Crisis management serves as a safety net in the event of a balance-of-payments (BoP) crisis in the economy.
The rupee has appreciated versus the dollar as a result of increasing reserves.
Market Confidence: Reserves will provide some reassurance to markets and investors that a government can uphold its international commitments.
3 – National Commission for Women:
GS II Topic Statutory and Non-Statutory Bodies
What are the origins and goals of NCW?
The Committee on the Status of Women in India (CSWI) proposed establishing an NCW nearly 50 years ago to perform oversight responsibilities, facilitate the resolution of disputes, and speed the socioeconomic advancement of women.
Numerous committees, commissions, and programmes, notably the National Perspective Plan for Women, have recommended the establishment of an apex body for women (1988-2000).
In accordance with the National Commission for Women Act of 1990, the NCW became a statutory body in January 1992.
The First Commission was created on January 31, 1992, with Mrs. Jayanti Patnaik acting as chair.
The commission consists of a chairperson, a member secretary, and five other members. The NCW’s chairperson is chosen by the central government.
Mission and Objectives:
By means of appropriate policy creation, legislative action, etc., it aims to protect women’s legal rights and entitlements, enabling them to achieve equality and equitable participation in all spheres of life.
Its responsibilities include investigating the constitutional and legal safeguards for women.
Recommend adopting corrective legislation.
aid in getting grievances resolved.
Advice should be given to the government on all matters of policy that affect women.
It has received several complaints, and in a number of situations, it has acted independently to bring about speedy justice.
Why is it important to enlarge the NCW’s remit?
The relationship between women’s skills and the development of the country has been made clear by the Atmanirbhar Bharat (self-sufficient India) campaign.
Women make up over 70% of Pradhan Mantri MUDRA Yojana grantees, which makes this transition clear.
The number of women’s self-help groups nationwide has risen during the last six to seven years.
Similar to this, there is at least one woman director in 45% of the more than 60 000 new enterprises that have emerged since 2016.
Old Social Thinking: The advancement of the textile and dairy sectors has been aided by the skills and influence of women.
India must promote female entrepreneurs because the country’s economy is dependent on Micro, Small, and Medium Enterprises.
However, traditionalists assume that women’s tasks are restricted to domestic duties.
The NCW reports that there has been a 46% increase in complaints of crimes against women in the first eight months of 2021 compared to the same period the previous year.
Among the crimes that harm women are domestic violence, dowry harassment, sexual harassment at work, attempted rape, and cybercrimes.
4 – Pradhan Mantri Garib Kalyan Anna Yojna:
GS II Topic Government Schemes and Interventions
The PMGKAY initiative, part of the Pradhan Mantri Garib Kalyan Package (PMGKP), supports the disadvantaged in their fight against COVID-19.
The initiative aimed to provide an additional 5 kg of free grains (rice or wheat) to each person covered by the National Food Security Act of 2013 on top of the 5 kg of subsidised foodgrain that was being distributed under the Public Distribution System (PDS).
80 lakh ration card holders would be impacted over the course of three months, according to an earlier announcement (April, May, and June 2020). Later, the cutoff date was extended to September 2022.
Its nodal Ministry is the Ministry of Finance.
By transferring their benefits to any of the roughly 5 lakh ration shops throughout the nation, any migrant worker or ONORC programme recipient may benefit from the free ration.
Cost: PMGKAY will have a total cost of Rs. 3.91 lakh crore for all stages.
Challenges: The most recent census is used to identify who is eligible under the National Food Security Act (2011). Since that time, there are now more people who lack access to food.
Costly: The cost of maintaining it makes it more desirable for there to be an abundant supply of affordable grains. India was compelled to impose export limitations on wheat and rice as a result of a poor harvest in 2022 that put additional pressure on food prices and rattled the global agricultural markets due to unpredictably bad weather.
Increasing the budget deficit could make it more difficult for the government to reach its target of keeping it at 6.4% of GDP.
Inflation: The programme decision may have an effect on inflation. Rice and wheat prices are rising as a result of lower production driven on by a heatwave and a sporadic monsoon. About 10% of India’s retail inflation can be attributed to these two goods.
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The Hindu Editorial Analysis
Logistics Sector In India:
The Union Budget for 2023 planned an allocation of 2.4 lakh crore for the Indian Railways while tripling the PM Gati Shakti National Master Plan (NMP) to States. A “transformative approach for economic growth and sustainable development depends on the engines of roads, trains, airports, ports, public transportation, waterways and logistics infrastructure,” the plan states.
Buying railroad shares:
Considering their enormous network throughout India, the railroads offer a practical and economical means of transporting goods, and they may play a significant role in a coordinated and integrated logistics system.
The goal established by PM Gati Shakti is to enhance the railroads’ share of freight movement from 27% to 45% and to increase freight movement from 1.2 billion tonnes to 3.3 billion tonnes by 2030 in order to address the infrastructure problems that have hampered the transportation of freight by rail.
Choosing convenience over cost:
Currently, 65% of freight is transported by road, heavily tilting the balance of modes for freight transportation in that direction. More traffic on the roads leads to severe congestion, increased pollution, and growing logistics costs. The usage of the railways for cargo transportation needs to increase if India is to improve its competitiveness in logistics.
It is evident from comparing the costs of various modes of transportation that transporting freight by road is significantly more expensive than by rail. Yet, India’s railways have been losing out on freight to other, more flexible modes of transportation because road travel is more convenient than it is expensive.
The volume of containers has increased:
While Indian Railways updates its infrastructure, the goals for rail freight flow can be met (PM Gati Shakti National Master Plan). This can be achieved by continually identifying new priority locations and monitoring ongoing projects. Compared to countries like China and the United States, they are currently substantially lower.
Due to severe operational, connection, and infrastructure issues with the national transporter, freight traffic has shifted to highways. Longer transit durations and procedural delays that happen before and after the actual movement, such those brought on by waggon placement, loading and unloading operations, multimodal handling, etc., are obstacles to rail freight transportation.
The maintenance of proper sheds and warehouses, the availability of waggons at unpredictable times, and the absence of necessary terminal infrastructure are only a few of the infrastructure problems that customers face. As a result, the network is severely congested, service quality suffers, and transit times increase. The cost of inventory storage and the danger of damage from repeated handling increase when first- and last-mile rail connectivity is not connected.
A distinct entity is needed:
Upcoming Dedicated Freight Corridors (DFCs) and multimodal logistics parks along India’s eastern and western corridors will increase train synchronisation and reduce capacity constraints on overloaded lines. The Indian Railways must modernise the infrastructure, supported by appropriate legislative tools, and encourage private participation in the management and operation of terminals, containers, and warehouses in order to efficiently allocate resources.
A new organisation under the railways will be established to manage multimodal logistics in cooperation with the business sector in order to address the first and last mile problem. Customers may use the company as a one-stop shop to move cargo and make payments.
There are two freight waggons on every passenger train. Industry experts advise increasing the use of one of the two freight waggons by adopting an Uber-like business model that allows users to reserve the waggon online.
The Indian Railways may continue to operate the other waggon in the same manner until the viability of the suggested technique is demonstrated. This might enhance freight traffic right away without additional infrastructure spending.
An integrated logistics infrastructure with first- and last-mile links is required to make rail transit competitive with roads and to facilitate the shipment of products by railway to neighbouring countries like Bangladesh and Nepal.
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The Indian Express Editorial Analysis
Linking Pan With Aadhar:
The Central Board of Direct Taxes recently requested that all taxpayers link their permanent account number (PAN) with their Aadhaar by March 31, 2023. (CBDT). Starting on April 1, 2023, the PAN will become useless for any noncompliance.
According to SEBI, the capital markets regulator, investors must link their PAN with their Aadhaar by the end of this month in order to continue transacting in the stocks market.
The Income-tax Department announced the linking of PAN with Aadhaar in response to instances when several permanent account numbers (PANs) were allocated to one person or when one PAN was assigned to more than one person.
In order to have a dependable technique of de-duplicating the PAN database, Aadhaar quoting was made obligatory for taxpayers who are qualified to get them in the PAN and income return application forms.
Who requires linking their PAN with Aadhaar?
According to a CBDT circular issued in March 2022, every person who received a PAN as of July 1, 2017, is required by the Income-tax Act to provide the IRS with their Aadhaar number so that Aadhaar and PAN can be linked.
The PAN shall terminate on March31, 2023 in the event that this is not fulfilled.
Who is not required to have a PAN-Aadhaar link?
For a small subset of persons, this relationship is not essential.
someone who is at least 80 years old.
a non-resident under the Income Tax Act.
one who does not possess Indian citizenship.
If PAN and Aadhaar are not connected, what will happen?
A person’s PAN will stop functioning if they don’t link it to their Aadhaar, according to CBDT.
If the individual fails to submit, divulge, or quote their PAN in this circumstance, they will be subject to all penalties under the Income-tax Act.
Many negative outcomes of non-compliance exist, including:
The person is not allowed to submit a tax return with an invalid PAN.
There won’t be any processing of pending refunds.
Unused PANs are not eligible for outstanding refunds.
Current processes, such as those concerning defective returns, cannot be concluded after the PAN becomes inactive.
Tax will need to be withheld at a higher rate if PAN is no longer operational.
In addition to these negative consequences, the person can also have trouble carrying out other financial transactions, like those with banks, because PAN is a fundamental KYC criterion for those transactions.
For what reason did SEBI require investors to link their PAN and Aadhaar?
Because PAN is the crucial identification number and a component of the KYC criteria for all transactions in the securities market, all SEBI-registered companies and Market Infrastructure Institutions (MIIs) are required to ensure that all participants have proper KYC.
All current investors shall ensure that their PAN and Aadhaar are connected before to March31, 2023 in order to execute continuous and seamless securities market transactions and prevent the adverse impacts of non-compliance with KYC standards. Transactions involving securities and other items may be limited until the PAN and Aadhaar are linked.
SEBI and CBDT made a big move to promote transparency and accountability in the financial sector, which will help to stop tax evasion and money laundering.
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