News Snippet
News 1: Purchasing Manager’s Index signals deceleration in pace of manufacturing expansion – (PMI gives an idea about present and future industry conditions which helps Central banks and investors regarding business sentiment)
News 2: MGNREGS to fund work to reverse desertification of land across the States – (Combining MGNREGS and PMKSY so as to achieve the objective of restoring degraded land. Desertification is one of the biggest challenges being faced by humans. Related question came in UPSC prelims 2016)
News 3: Centre plans cutting coal supply to plants that don’t comply on biomass co-firing (Biomass co-firing will ensure achievement of clean energy targets while reducing costs)
News 4: Houses under PMAY (To provide affordable housing for all and its importance in women empowerment)
News 5: Induction of indigenously built Light Combat Helicopter marks a new chapter (New and Indigenous defense technology which will bolster nation’s security)
News 6: Nobel Prize in Medicine (Genome mapping of extinct hominins. It is important as Denisovan term has been asked in UPSC prelims 2019)
News 7: UNCTAD: India’s GDP growth to fall to 5.7% in 2022 (Organization to promote trade and development in developing countries)
News 1: Purchasing Manager’s Index signals deceleration in pace of manufacturing expansion
Background
India’s manufacturing sector saw its slowest expansion since June, according to S&P Global India Manufacturing Purchasing Managers’ Index (PMI).
Purchasing Managers’ Index (PMI)
PMI or a Purchasing Managers’ Index (PMI) is an indicator of business activity – both in the manufacturing and services sectors.
It is a survey-based measures that asks the respondents about changes in their perception of some key business variables from the month before. It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
PMI Reading
A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction.
Implications for the economy
- The PMI is usually released at the start of the month, much before most of the official data on industrial output, manufacturing and GDP growth becomes available. It is, therefore, considered a good leading indicator of economic activity.
- Economists consider the manufacturing growth measured by the PMI as a good indicator of industrial output, for which official statistics are released later.
- Central banks of many countries also use the index to help make decisions on interest rates.
What does it mean for the markets?
- The PMI also gives an indication of corporate earnings and is closely watched by investors.
News 2: MGNREGS to fund work to reverse desertification of land across the States
Background
With limited funds to deal with the gargantuan task of restoring degraded land and reversing desertification in the country, the government is now planning to bring convergence between the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY).
Desertification and MGNREGS
- According to the Desertification and Land Degradation Atlas published by the Environment Ministry in 2021, at least 30% of India’s total geographical area is under the category of “degraded land”.
- Jharkhand, Rajasthan, Delhi, Gujarat and Goa have more than 50% of land area undergoing desertification or degradation, while States with less than 10% land degradation are Kerala, Assam, Mizoram, Haryana, Bihar, Uttar Pradesh, Punjab and Arunachal Pradesh.
- In 2019, the government raised its target of restoration of degraded land from 21 million hectares to 26 million hectares by 2030 following a commitment made during the UN Convention to Combat Desertification (COP14). Nearly three years on, the government is nowhere near this target.
- Though the Ministry has been making efforts to contribute towards meeting the international commitment, the constraints posed on economy by the pandemic restricted the target to 4.95 million hectares by 2025-26.
- Therefore, there is a compelling reason for the Ministry to explore alternative opportunities to fulfil the commitment.
- The Rural Development Ministry is now hoping that by making use of the MGNREGS, which for the financial year 2022-23 has a budget of ₹73,000 crore, the government can scale up the area to be covered.
MGNREGA/MGNREGS
PMKSY
UPSC 2016 prelims
What is/are the importance/importance of the ‘United Nations Convention to Combat Desertification’?
- It aims to promote effective action through innovative national programs and supportive inter-national partnerships.
- It has a special/particular focus on South Asia and North Africa regions, and its Secretariat facilitates the allocation of major portion of financial resources to these regions.
- It is committed to bottom-up approach, encouraging the participation of local people in combating the desertification.
Select the correct answer using the code given below.
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer – Option C (Official UPSC Answer Key)
News 3: Houses under PMAY
Background
Over 69% of houses constructed under the Prime Minister’s special housing scheme are either wholly or jointly owned by women in rural areas.
Pradhan Mantri Awas Yojana – Gramin
Objective
The Pradhan Mantri Awas Yojana (Gramin) was launched by the Prime Minister in 2016 with the aim to provide pucca house to all who are houseless and living in dilapidated houses in rural areas. The overall target is to construct 2.95 crore pucca houses with basic amenities by March 2024.
Funding
Under PMAY, the cost of unit assistance is to be shared between Central and State Governments in the ratio 60:40 in plain areas and 90:10 for Northeastern and hilly states.
Target group: Identification of beneficiaries eligible for assistance and their prioritization to be done using information from Socio Economic and Caste Census (SECC) ensuring total transparency and objectivity.
News 4: Pradhan Mantri Ujjwala Yojana
Background
Two schemes are helping the “dignity aspect of women” – SBM and PMUY
- Over 9.4 crore LPG connections have been released under the Ujjwala Yojana.
- This scheme also received global recognition from International Energy Agency, which has described it as a major achievement in improving the environment and health of women.
- Another scheme that has helped women gain dignity and security is the Swachh Bharat Mission under which 11.5 crore toilets were constructed in the rural areas and 70 lakhs were built in the urban areas.
- The government quoted a report, “Access to toilets and the safety, convenience and self-respect of women in rural India”, to claim that after the construction of toilets, 93% of women reported that they were no longer afraid of being hurt by someone or harmed by animals while defecating.
- As many as 93% of women reported they are no longer afraid of contracting health infections; 92% of women said they were no longer afraid of going to the toilet in the dark of night, the report said.
PMUY
- Ministry: Ministry of Petroleum & Natural Gas
- Pradhan Mantri Ujjwala Yojana is a scheme for providing LPG connections to women from Below Poverty Line (BPL) households.
- The scheme was launched on 1st May 2016 in Ballia, Uttar Pradesh.
- The target under the scheme was to release 8 Crore LPG Connections to the deprived households by March 2020.
News 5: Induction of indigenously built Light Combat Helicopter marks a new chapter
Background
Induction of the indigenously designed and developed Light Combat Helicopter (LCH) adds unique capability to the combat potential of the Indian Air Force (IAF) and marks a new chapter. The 143 Helicopter Unit received the LCA ‘Dhanush’.
High altitudes
- The twin-engine LCH, designed and developed by HAL, is a 5-8 tonne class dedicated combat helicopter.
- It was conceptualised after the 1999 Kargil conflict when the need for such a dedicated platform capable of operating in high altitudes was felt.
- It is the only attack helicopter in the world which can land and take-off at an altitude of 5,000 m (16,400 ft) with considerable load of weapons and fuel significantly augmenting the firepower of the IAF and the Army in high altitude areas.
- The helicopter has a combat radius of 500 km and go up to a service ceiling of 21,000 feet which makes it ideal to operate at high altitude areas of the Siachen glacier.
- The LCH is armed with 20 mm nose gun, 70 mm rockets, anti-tank guided missile ‘Dhruvastra’ and air-to-air missile ‘Mistral-2’ of MBDA which has a maximum interception range of 6.5 km.
News 6: Nobel Prize in Medicine
Background
Swedish scientist Svante Paabo won the Nobel Prize in medicine for his discoveries on human evolution that provided key insights into our immune system and what makes us unique compared with our extinct cousins.
Mr. Paabo has created the genome sequence of Neanderthals and Denisovans. The geneticist was successful in sequencing a part of mitochondrial DNA from a 40,000-year-old bone
Genomes of extinct homonins and human evolution:
While Neanderthal bones were first discovered in the mid-19th century, only by unlocking their DNA — often referred to as the code of life — have scientists been able to fully understand the links between species.
This included the time when modern humans and Neanderthals diverged as a species, determined to be around 8,00,000 years ago. Gene flow had occurred from Neanderthals to Homo sapiens, demonstrating that they had children together during periods of co-existence.
This transfer of genes between hominin species affects how the immune system of modern humans reacts to infections, such as the coronavirus. People outside Africa have 1-2% of Neanderthal genes.
- Mr. Paabo and his team also managed to extract DNA from a tiny finger bone found in a cave in Siberia, leading to the recognition of a new species of ancient humans they called Denisovans.
- Neanderthals and Denisovan to be sister groups which split from each other around 6,00,000 years ago. Denisovan genes have been found in up to 6% of modern humans in Asia and southeast Asia, indicating that interbreeding occurred there too.
- Dr. Pääbo’s research has resulted in the rise of a new scientific disciple called paleogenomics, which is the study and analysis of genes of ancient or extinct organisms
Possible migration and inter-breeding
UPSC 2019 prelims
The word ‘Denisovan’ is sometimes mentioned in media in reference to
(a) fossil of a kind of dinosaurs
(b) an early human species
(c) a cave system found in North-East India
(d) a geological period in the history of Indian subcontinent
Answer – Option b (Official answer key)
News 7: UNCTAD – India’s GDP growth to fall to 5.7% in 2022
Background
India’s growth will likely ease to just 5.7% in 2022 from 8.2% in the previous year, as economic activity is “being hampered by higher financing costs and weaker public expenditures”, the United Nations Conference on Trade and Development (Unctad) said in its Trade and Development Report 2022. The country’s growth will further drop to 4.7% in 2023.
UNCTAD findings
- UNCTAD said, “Going forward, the government has announced plans to increase capital expenditure, especially in the rail and road sector, but in a weakening global economy, policymakers will be under pressure to reduce fiscal imbalances, and this may lead to falling expenditures elsewhere.”
- The report acknowledged that various PLI schemes is incentivizing corporate investment. However, rising import bills for fossil energy are deepening the trade deficit and eroding the import coverage capacity of foreign exchange reserves.
UNCTAD
- Established: 1964
- Headquarters: Geneva, Switzerland
- It is an intergovernmental organization intended to promote the interests of developing states in world trade.
- UNCTAD is the part of the United Nations Secretariat dealing with trade, investment, and development issues.
- The organization’s goals are to: “maximize the trade, investment and development opportunities of developing countries and assist them in their efforts to integrate into the world economy on an equitable basis”.
- It reports to the UN General Assembly and United Nations Economic and Social Council.
- It is a member of United Nations Development Group.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.