DNA (Daily News Analysis) – 22 Sept 2022

News 1: ADB pares India FY23 GDP growth forecast to 7%, from 7.5%

Background:

• The lender also raised its inflation projection for India for this year to 6.7% and widened the current account deficit (CAD) estimate to 3.8% of GDP.
• The ADB sees the CAD narrowing to 2.1% of GDP in 2023-24, while inflation is anticipated to slow to 5.8% as demand pressures from strengthening economic activity are seen offset by easing supply bottlenecks.

Case of India:

• India’s first-quarter growth of 13.5% reflected strong growth in services, but GDP growth forecasts were being revised downward as price pressures were expected to adversely impact domestic consumption and sluggish global demand and elevated oil prices would likely be a drag on net exports, the bank said. The ADB pegs FY24 growth at 7.2%.
• Observing that inflation had turned out to be more persistent than expected, and led to a sharp tightening in monetary policy, the ADB said price gains were eroding consumers’ purchasing power. “Sticky core inflation will adversely impact spending over the next two years if wages fail to adjust,” it warned.
• “Subsidised fertiliser and gas, the free food distribution programme, and the excise duty cuts will help offset some of the effects of high inflation on consumers, but the tax on packaged food products will likely be a burden on consumers already dealing with rising inflation,” the ADB noted in its update.

Asian Development Bank:

• • Established: 1966
  • Headquarter: Manila, Philippines
  • Members: 68 members (49 are from Asia and Pacific and 19 are from outside)
  • The Asian Development Bank (ADB) envisions a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty in the region.
  • ADB is an official United Nations Observer
  • Type: Multilateral development bank

Voting:

• The ADB was modeled closely on the World Bank, and has a similar weighted voting system where votes are distributed in proportion with members’ capital subscriptions.
• As of 31 December 2020, Japan and the United States each holds the largest proportion of shares at 15.571%. China holds 6.429%, India holds 6.317%, and Australia holds 5.773%

Mission and Function:

• ADB assists its members, and partners, by providing loans, technical assistance, grants, and equity investments to promote social and economic development.
• ADB maximizes the development impact of its assistance by facilitating policy dialogues, providing advisory services, and mobilizing financial resources through co-financing operations that tap official, commercial, and export credit sources.
• The bank admits the members of the United Nations Economic and Social Commission for Asia and the Pacific and non-regional developed countries.

News 2: Bank GNPAs may hit decadal low of 4% in FY24: Crisil Ratings

Background:

• The gross non-performing assets (GNPAs) of banks is expected to improve 90 basis points (bps) to 5% this fiscal year-on-year, and another 100 bps to a decadal low of 4% by March 31, 2024 , riding on post-pandemic economic recovery and higher credit growth, Crisil Ratings said.
• The asset quality of the banking sector would also benefit from the proposed sale of NPAs to the National Asset Reconstruction Company Ltd. (NARCL), it said.

NARCL:

• NARCL has been incorporated under the Companies Act and will work as an asset reconstruction company.
• NARCL will pick up bad loans above a certain threshold from banks and would aim to sell them to prospective buyers of distressed debt.
• NARCL will be responsible for valuing bad loans to determine at what price they would be sold and would provide government receipts to banks as it takes on non-performing assets from their books.
• State owned banks will hold 51% stake, while FIs or debt management companies will hold 49%.

Non-performing assets:

• An asset becomes non-performing when it ceases to generate income for the bank.
• A non-performing asset (NPA) is a loan or an advance where.
  • interest and/ or instalment of principal remains overdue for a period of more than 90 days in respect of a term loan,
  • the account remains ‘out of order’, in respect of an Overdraft/Cash Credit (OD/CC),
  • the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,
  • the instalment of principal or interest thereon remains overdue for two crop seasons for short duration crops,
  • the instalment of principal or interest thereon remains overdue for one crop season for long duration crops,
  • the amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitization transaction undertaken in terms of the Reserve Bank of India (Securitization of Standard Assets) Directions, 2021.
  • in respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment.

News 3: With ₹19,500-crore PLI plan, sun shines on solar cell units

Background:

• The Cabinet on Wednesday cleared a ₹19,500-crore production-linked incentive (PLI) scheme to incentivise manufacture of domestic solar cell modules to reduce the industry’s reliance on Chinese-made panels.

PLI scheme to incentivize manufacture of domestic modules:

• Bidders for projects will be given PLI to set up and run manufacturing facilities that will span the entire production cycle of modules from making the polysilicon cells, ingots, wafers and panels to assembling modules that are used to produce electricity.
• Officials from the Ministry of New and Renewable Energy, estimate manufacturing capacity worth 65,000 MW of fully and partially integrated solar PV modules to be installed over five years.
• The bulk of the allocation, of nearly ₹12,000 crore, is to incentivise the setting up of integrated manufacturing facilities because there is no installed capacity in India to manufacture polysilicone and wafers (the raw material for solar panels).
• This would bring in a direct investment of around ₹94,000 crore, directly employ about 1, 95,000 persons and indirectly around 7, 80,000 persons.
• It would save India close to ₹1.37 trillion in imports.
• India has committed, as part of climate commitments, to a target of installing 5, 00,000 MW of electricity capacity from non-fossil fuel-based sources by 2030 and this translates to 280,000 MW to 300,000 MW from solar electricity alone.

Reason for PLI scheme for domestic manufacture of solar pv cells:

• Large imports of solar PV panels pose risks in supply-chain resilience and have strategic security challenges considering the electronic nature of the value chain.
• It will also incentivize domestic and global players to build large scale PV capacity in India and help India leapfrog in capturing the global value chains for solar PV manufacturing.

Production Linked Incentive scheme:

• The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has given its approval to introduce the Production-Linked Incentive (PLI) Scheme in the following 10 key sectors for Enhancing India’s Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat.
• The PLI scheme will be implemented by the concerned ministries/departments and will be within the overall financial limits prescribed. The final proposals of PLI for individual sectors will be appraised by the Expenditure Finance Committee (EFC) and approved by the Cabinet.
• The PLI scheme across these 10 key specific sectors will make Indian manufacturers globally competitive, attract investment in the areas of core competency and cutting-edge technology; ensure efficiencies; create economies of scale; enhance exports and make India an integral part of the global supply chain.

PLI in 10 sectors:

• Advance Chemistry cell battery, Electronic/Technology products, Automobiles and auto components, pharmaceutical drugs, Telecom and networking products, Textile products, Food products, High efficiency solar PV modules, White Goods and speciality steel.

News 4: ISRO successfully tests hybrid propulsion system, to aid future technologies

Background:

• The Indian Space Research Organisation (ISRO) said on Wednesday that it successfully demonstrated a hybrid propulsion system that used a solid fuel and liquid oxidiser.
• The hybrid system is more efficient, “greener” and safer to handle, and paves the way for new propulsion technologies for future missions.

ISRO:

• Formed: 1969
• Founder: Vikram Sarabhai
• Type: Premier space agency of India under Department of Space
• ISRO is India’s primary agency for performing tasks related to space-based applications, space exploration, and the development of related technologies.
• ISRO is one of six government space agencies in the world which possess full launch capabilities, deploy cryogenic engines, launch extraterrestrial missions, and operate large fleets of artificial satellites.
• India decided to go to space when Indian National Committee for Space Research (INCOSPAR) was set up by the Government of India in 1962.
• With the visionary Dr Vikram Sarabhai at its helm, INCOSPAR set up the Thumba Equatorial Rocket Launching Station (TERLS) in Thiruvananthapuram for upper atmospheric research.
• ISRO maintains one of the largest fleet of communication satellites (INSAT) and remote sensing (IRS) satellites, that cater to the ever-growing demand for fast and reliable communication and earth observation respectively.
•  ISRO develops and delivers application specific satellite products and tools to the Nation: broadcasts, communications, weather forecasts, disaster management tools, Geographic Information Systems, cartography, navigation, telemedicine, dedicated distance education satellites being some of them.

News 5: Assam and Mizoram to set up panels to study border sectors

Background:

Assam and Mizoram are in the process of forming regional committees to study the disputed sectors along the 164.6 km border between them.

Assam CM Himanta Biswa Sarma made the announcement after meeting his Mizoram counterpart Zoramthanga in New Delhi on Wednesday for resolving the four-decade-old boundary issue.

Assam – Mizoram Border dispute:

The boundary between present-day Assam and Mizoram, 165 km long today, dates back to the colonial era, when Mizoram was known as Lushai Hills, a district of Assam.

The dispute stems from a notification of 1875 that differentiated the Lushai Hills from the plains of Cachar, and another of 1933, that demarcates a boundary between the Lushai Hills and Manipur.

Mizo leaders have argued in the past against the demarcation notified in 1933 because Mizo society was not consulted. MZP’s Vanlaltana said the Assam government follows the 1933 demarcation, and that was the point of conflict.

News 6: Non-communicable diseases led to 66% of deaths in India in 2019: WHO

Background:

• Every two seconds, one person under the age of 70 dies of a non-communicable disease (NCD) with 86 per cent of those deaths occurring in low- and middle-income countries.
• In India, 66 per cent of total deaths were due to NCDs in 2019, a new WHO report: ‘Invisible numbers – the true scale of non-communicable diseases’ stated.

Statistics:

• Over 60.46 lakh people died due to NCDs in India in 2019, according to the report.
• The report further revealed that there was a 22 per cent probability of death between the age of 30 and 70 due to any type of non-communicable disease, including cardiovascular diseases, cancer, diabetes or chronic obstructive pulmonary disease.
• Over 25.66 lakh deaths in 2019 in the country were due to cardiovascular diseases while 11.46 lakh deaths were due to chronic respiratory diseases.
• Cancer led to 9.20 lakh deaths while 3.49 lakh deaths in the country were attributed to diabetes.
• Diabetes is one of the most common non-communicable diseases and reduction in risk factors will help not only in preventing diabetes, but also hypertension, heart disease and even several forms of cancers.
• One in 28 deaths – 2.0 million people a year – is due to diabetes.
• As per the report, more than 95 per cent of diabetes cases globally are of type 2 diabetes.
• Addressing major risk factors that lead to these diseases – tobacco use, unhealthy diet, harmful use of alcohol, physical inactivity and air pollution – could prevent or delay significant ill health and a large number of deaths from many NCDs, according to the report.
• The report also stated that Covid-19 highlighted the links between NCDs and infectious disease, with serious impacts on NCD care. In the early months of the pandemic, 75 per cent of countries reported disruption to essential NCD services.
• In 2022, only a handful of countries were on track to meet the Sustainable Development Goal target to reduce early deaths from NCDs by a third by 2030.

Other important news

Uighurs (Uyghurs):

• Uighurs are Turkic ethnic group who speak their own language, which is similar to Turkish, and see themselves as culturally and ethnically close to Central Asian nations. They make up less than half of the Xinjiang population.
• The Uyghurs, mostly Muslims, are recognized as native to the Xinjiang Uyghur Autonomous Region in Northwest China.
• The Uyghurs in recent decades have seen a mass migration of Han Chinese (China’s ethnic majority) into Xinjiang, allegedly orchestrated by the state to dilute the minority population there.

Importance of Xinjiang:

• Xinjiang is a mostly desert region and produces about a fifth of the world’s cotton. 
• The region is also rich in oil and natural gas and because of its proximity to Central Asia and Europe is seen by Beijing as an important trade link.

PM CARES (Citizens’ Assistance and Relief in Emergency Situations Fund)

• Formed: 2020
• A dedicated fund with the primary objective of dealing with any kind of emergency or distress situation, like posed by the COVID-19 pandemic, and to provide relief to the affected, a public charitable trust under the name of ‘Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)’ was set up.

Constitution of the trust:

• Ex-officio chairman: Prime Minister
• Ex-officio trustees: Minister of Defence, Minister of Home Affairs and Minister of Finance, Government of India
• The Chairperson of the Board of Trustees (Prime Minister) shall have the power to nominate three trustees to the Board of Trustees who shall be eminent persons in the field of research, health, science, social work, law, public administration and philanthropy.
• Any person appointed a Trustee shall act in a pro bono capacity.

Objectives:

• To undertake and support relief or assistance of any kind relating to a public health emergency or any other kind of emergency, calamity or distress, either man-made or natural, including the creation or upgradation of healthcare or pharmaceutical facilities, other necessary infrastructure, funding relevant research or any other type of support.
• To render financial assistance, provide grants of payments of money or take such other steps as may be deemed necessary by the Board of Trustees to the affected population.
• To undertake any other activity, which is not inconsistent with the above Objects.

Shrinkflation:

• Shrink inflation is when a product downsizes its quantity while keeping the price the same. For example, reducing the scoops of ice cream in a container or reducing the number of chips in a packet would count as shrinkflation.
• In other words, shrinkflation occurs when goods shrink in size, but consumers pay the same price. It occurs when manufacturers downsize products to offset higher production costs but keep retail prices same.
• Shrinkflation occurs when materials or ingredients used to make products become more expensive and when there is intense competition in the market. As a result, instead of raising prices, they might just give you less of the product so as to maintain their profit margins.