Current Affairs Reverse Engineering – CARE (24-05-2024)
| News at a Glance |
| Economy: RBI to transfer Rs 2.11 lakh crore as surplus to government for 2023-24 |
| Environment: Half of world’s rangelands are degraded, UN study finds |
| Science and Technology: Prototype models towards world’s largest radio telescope obtains ‘first light’ |
| Index: India’s global travel and tourism index rank up at 39th: WEF index |
| Awards: Jenny Erpenbeck’s ‘Kairos’ wins the International Booker Prize 2024 |
RBI to transfer Rs 2.11 lakh crore as surplus to government for 2023-24
Source: Indian Express
https://indianexpress.com/article/business/rbi-transfer-surplus-government-9344923/
UPSC Syllabus Relevance: GS 3 (Economy)
Context: The surplus transfer to the government is a 141 per cent jump over the last year’s (2022-23) dividend of Rs 87,416 crore.
Why in News
In a big boost to the fiscal position of the government, the central board of the Reserve Bank of India (RBI) approved a transfer of Rs 2.11 lakh crore as surplus, or dividend, to the Central Government for the year accounting year 2023-24.
Key Highlights
- This surplus transfer to the government is a 141 per cent jump over the last year’s (2022-23) dividend of Rs 87,416 crore.
- The Board thereafter approved the transfer of Rs 2,10,874 crore as surplus to the Central Government for the accounting year 2023-24.
- The decision to surplus transfer was taken during the 608th meeting of the Central Board of Directors of Reserve Bank of India, held at Mumbai.
- The RBI normally pays the dividend from the surplus income it earns on investments and valuation changes on its dollar holdings and the fees it gets from printing currency, among others.
- The rupee depreciation against the dollar also weighs on the surplus transfer.
- As per the interim budget estimates for fiscal year 2024-25, the government had budgeted for a dividend of Rs 1.02 lakh crore from the central bank, state-run banks and other financial institutions.
- In 2021-22, the RBI transferred surplus of Rs 30,307 crore, which was the lowest in 10 years.
- The RBI transferred Rs 99,122 crore in 2020-21 to the government.
- During the accounting year 2019-20, the RBI transferred Rs 57128 crore of surplus to the government.
How RBI generate profit?
- The RBI, serving as India’s central banking pillar, boasts a multifaceted framework for profit generation. Central to its earnings are:
- Borrowing management for both central and state governments.
- Regulation of banks and non-banking financial bodies.
- Profits derived from foreign currency assets like bonds, treasury bills, and central bank deposits.
- Earnings from local, rupee-based government securities and short-term bank lending.
- Commission from overseeing government transactions and specific underwriting endeavours.
Drivers of the Record surplus payout by the RBI
- The central bank would have earned higher income from its foreign exchange holdings.
- It would have also earned a higher interest income on domestic as well foreign securities it holds, in the wake of high interest rates in India and abroad.
- Higher interest rates both on domestic and foreign securities, significantly high gross sale of foreign exchange along with limited drag from liquidity operations compared to the previous year have probably led to such a whopping dividend.
- The increase in the price of gold also added to the overall expansion in RBI balance sheet.
- While all other things in the balance sheet are either steady or increasing as per trend, however, foreign investments have increased sharply.
- Therefore, nearly 60-70 per cent year-on-year increase in RBI’s income is expected to be from interest income from foreign securities as well as exchange gain from foreign exchange.
Impact of Finances
- The higher than budgeted dividend transfer by RBI bodes well for India’s fiscal dynamics and will provide a boost to the government’s effort towards fiscal consolidation.
- In the interim budget on February 1, Finance Minister Nirmala Sitharaman had set a fiscal deficit target of 5.1 per cent of GDP in 2024-25 down from 5.8 per cent last financial year.
- The windfall to help the government ease fiscal deficit by 0.4 per cent this year.
- The higher-than-budgeted RBI surplus transfer would help to boost the government’s resource envelope in FY2025, allowing for enhanced expenditures or a sharper fiscal consolidation than what was pencilled into the interim budget for FY2025.
- The government can reduce its dependence on market borrowings, which are currently budgeted at a gross Rs 14.13 lakh crore and help lower borrowing costs, according to Mazumdar.
- If the government borrowings are lower, it will soften yields, bringing in respite in the bond market.
- The government can also choose to deploy the additional resources for higher spending, preferably for capital expenditure.
- How do the transfer mechanics work?
- The RBI’s inception in 1935 saw it as a private entity with shareholders and a modest Rs. 5 crores in capital.
- A transformational shift in 1949 led to its nationalisation, making the government its principal stakeholder.
- This structural change means that instead of typical dividends, the RBI channels its net income to the government, rooted in Section 47 of the Reserve Bank of India Act, 1934.
- This surplus transfer is essentially the residue post various financial provisions.
- Guidelines suggest that the RBI should maintain a Contingent Risk Buffer, primarily sourced from the Contingency Fund (CF), amounting to 5.5-6.5 percent of its balance sheet.
- Amounts exceeding this threshold are viewed as surplus, eligible for government transfer. On the front of the RBI’s economic capital levels — which is essentially the CGRA, the committee recommended keeping them in the range of 20-24.5 percent with the surplus channelled to the Centre.
Global Perspective
- Surplus transfers aren’t unique to India. However, the approach varies.
- While countries like the UK and the US have the central bank and government jointly decide the surplus distribution, in Japan, the government takes the lead. On average, these transfers hover around 0.5 percent of the GDP.
- In essence, the RBI’s surplus transfer isn’t just a financial transaction.
- It’s a testament to the institution’s role in economic stability and a window into the dynamic relationship between the central bank and the government.
| CARE MCQ | UPSC PYQ |
Q1. Which of the following is sources of Reserve Bank of India’s Income?
Select correct code (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3 |
Q1. If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do (2020)
Select the correct answer using the code given below: (a) 1 and 2 only (b) 2 only (c) 1 and 3 only (d) 1, 2 and 3 Ans: (b) |
| Answer 1- D
Explanation
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Half of world’s rangelands are degraded, UN study finds
Source: The Hindu
UPSC Relevance: GS 3- Environment and Ecology
Context: Rangelands cover over 50% of the world’s terrestrial area. They also support an estimated 500 million pastoralists who play a crucial role in livestock production and allied occupations.
Why in News
- About half of the world’s rangelands are degraded and need policy interventions, and communities depending on them need focused support, according to a new report of the United Nations Convention on Combating Desertification (UNCCD).
What are Rangelands?
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- The UNCCD report defines rangelands as natural or semi-natural ecosystems that are grazed by livestock or wild animals.
- Rangelands contain vegetation such as grasses, shrubs, bushes, open forests, and agroforestry systems (land which contains trees and crops or pastures).
- The exact nature of rangelands’ vegetation is influenced by rainfall, temperature, and other climate phenomena, according to the Rangeland Atlas, prepared by a consortium of international non-profits and United Nations agencies.
- Currently, rangelands cover 80 million sq km of Earth’s terrestrial surface area (over half of Earth’s land), and are thus the largest land cover or land use type in the world, the UNCCD report said.
- They act as carbon sinks (which absorb more carbon from the atmosphere than they release), storehouses of freshwater, and prevent desertification of land.
Significance of Rangelands
- Millions of people worldwide depend on rangelands for food security, and livelihoods.
- Rangelands generate 16% of global food production and 70% of feed for domesticated herbivores, most significantly in Africa and South America,” the UNCCD report stated.
- In India, rangelands occupy about 1.21 million sq km, from the Thar Desert to Himalayan meadows, as per the UNCCD report.
Findings of UNCCD Report
- The UNCCD report found that nearly 50% of the world’s rangelands can be considered “degraded” and are facing a “silent demise”.
- Climate change, unsustainable land and livestock management practices, biodiversity loss, and the conversion of rangelands to farmlands are some of the primary drivers of rangeland degradation.
- Uncertainty over land rights among pastoralist communities, who depend on rangelands for their livelihood, also leads to their degradation.
- This severely affects the communities dependent on rangelands as their deterioration impacts soil fertility and biodiversity, leading to a dip in incomes and rise in conflicts with authorities over grazing rights.
Who are pastoralists?
- Pastoralism is a livelihood system based on livestock production, according to the UN’s Food and Agriculture Organization (FAO).
- This includes livestock rearing, dairy production, meat production, wool production, and leather production.
- The communities and groups, both indigenous and non-indigenous, who are involved in livestock production are known as pastoralists.
- These communities rear sheeps, goats, cattle, horses, donkeys, camels, yaks, llamas, alpacas, and pigs. Some pastoralist communities also rear ducks and chickens.
- Their livelihood is highly dependent on the quality of pasture (or rangelands) they have access to, and their rights over them.
- However, since they still remain on the margins of society, they have little say in policy-making.
- In India, while there are no official figures, research and advocacy groups peg their population at around 13 million people, across 46 groups including Gujjars, Bakarwals, Rebaris, Raikas, Kurubas, and Maldharis, to name a few.
What are pastoralists’ economic contributions in India?
- India is home to 20% of the world’s livestock population.
- Around 77% of these animals are reared in pastoralist systems, meaning they are either herded or left to range on common lands, according to the Accounting for pastoralists in India (2020) report.
- Pastoralists also protect indigenous livestock breeds, and protect traditional knowledge about animal rearing.
- Currently, India is the largest producer of milk in the world, accounting for 23% of global dairy production.
- It is also the largest producer of buffalo meat and largest exporter of sheep and goat meat, according to the Department of Animal Husbandry and Dairying.
- Pastoralists are a major contributor in this sector.
United Nations Convention to Combat Desertification (UNCCD)
- The United Nations Convention to Combat Desertification (UNCCD) is the only legally binding international agreement linking environment and development to sustainable land management.
- There are currently 197 parties to the convention.
- This includes the United Nations, the European Union, the Cook Islands, and Niue. Australia ratified the convention in 2000.
- This includes:
- desertification
- land degradation
- sustainable development
- sustainable land management
- drought mitigation
- adaptation to climate change.
| CARE MCQ | UPSC PYQ |
Q2. Consider the following statements with regards to United Nations Convention to Combat Desertification (UNCCD):
Which of the statements given above is/are correct? A. 1 and 3 only B. 1 only C. 3 only D. 1, 2 and 3 |
Q. What is/are the importance/importances of the ‘United Nations Convention to Combat Desertification’? (2016)
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 Ans: (c) |
| Answer 2 – A
Explanation –
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Prototype models towards world’s largest radio telescope obtains ‘first light’
Source: Indian Express
UPSC Relevance: GS 3- Science and Technology
Context: Square Kilometre Array (SKA) Observatory
Why in News
- The first prototype dish antenna which will be replicated towards building the world’s largest radio telescope has achieved results from the first light.
Square Kilometre Array (SKA) Observatory
- Square Kilometre Array (SKA) Observatory is the proposed telescope which is being planned to be constructed across the two continents, in South Africa and Australia.
- SKAO is a new intergovernmental organisation dedicated to radio astronomy and is headquartered in the UK.
- At the moment, organisations from ten countries are a part of the SKAO.
- These include Australia, Canada, China, India, Italy, New Zealand, South Africa, Sweden, the Netherlands and the UK.
- A total of 1.31 lakh low-frequency antennas will form the SKA-Low telescope in western Australia, which will help scientists to study the first billion years and the evolution of the Universe.
- Whereas, there are 197 mid-frequency antennas proposed for the SKA-Mid telescope in South Africa.
- SKAO will be the most powerful radio telescope cable of peering upto 3,000 trillion km into the Universe to study galaxies and stars in greater detail, test theories of gravity and more.
- Including the telescope hosting countries, there are over ten countries — Canada, China, Germany, France, India, Italy, the United Kingdom are among others participating in this multi-billion-dollar mega science project.
What will SKA do?
- SKA will be a group of radio telescopes operating out of South Africa and Australia in two different ranges of radio frequency.
- Its headquarters are at the Jodrell Bank Observatory in the UK.
- The project aims to answer a wide variety of long-standing questions in physics and cosmology, by observing the universe.
- It will study the Milky Way in great detail. Since our home galaxy’s view is better from the Southern Hemisphere, the arrays are being constructed there.
- Once constructed, the SKA will be the most powerful telescope ever built, and is expected to make unanticipated discoveries of the unknown.
- It will also be one of the world’s largest collaborative research projects, involving thousands of researchers and the world’s fastest supercomputers.
Important Development
- In December last year, India joined the international consortium and has committed to contribute a sum of Rs. 1,250 crore.
- In the ongoing construction phase, engineers and scientists from the SKA member countries are building prototypes of systems and technologies to perform tests and validation.
- The images have revealed a lot about the characteristic radio emission with the Milky Way in addition to the external galaxies like Centaurus A.
About SKAMPI
- One such dish prototype, named SKAMPI, obtained the ‘first light’, that is the desired results during the testing phase.
- Funded by the Max Planck Society, SKAMPI captured the images of the southern sky at 2.5GHz wavelength.
- During this prototype testing phase, SKAMPI has delivered data of high quality and it would be used to refine the design of the SKA-Mid dishes.
| CARE MCQ | UPSC PYQ |
Q3. Consider the following statements with regards to Square Kilometre Array (SKA) Observatory:
Which one of the following is correct in respect of the above statements?
|
Q. Recently, Scientists observed the merger of giant blackholes’ billions of light-years away from the Earth. What is the significance of this observation? (2019)
(a) ‘Higgs boson particles’ were detected. (b) ‘Gravitational waves’ were detected. (c) Possibility of inter-galactic space travel through ‘wormhole’ was confirmed. (d) It enabled the scientists to understand ‘singularity’. Ans: (b) |
| Answer 3 C
Explanation
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India’s global travel and tourism index rank up at 39th: WEF index
Source: Indian Express
UPSC Syllabus Relevance: GS 2- Polity and Governance
Context: India was ranked 54th in the previously published index in 2021, though changes made to the index parameters limit its comparability to earlier years.
Why in News
- India’s rank on the World Economic Forum’s Travel & Tourism Development Index 2024 has risen to 39th place, with global tourism activities returning to pre-pandemic levels, the annual report.
Key Highlights
- While the US topped the list, India is ranked highest in South Asia and among the lower-middle-income economies, the WEF said.
- India was ranked 54th in the previously published index in 2021, though changes made to the index parameters limit its comparability to earlier years.
- After the US, Spain, Japan, France and Australia figure among the top five in the 2024 list.
Findings on India
- The index, prepared in collaboration with the University of Surrey, showed India is highly price-competitive (18th) and boasts competitive Air Transport (26th) and Ground and Port (25th) infrastructure.
- In particular, India’s strong Natural (6th), Cultural (9th) and Non-Leisure (9th) Resources help drive travel, and the country is only one of three to score in the top 10 for all the resource pillars, the WEF said.
- Moreover, despite a decline compared to 2019, the country still scores well for travel and tourism demand sustainability, especially thanks to more sustainable long stays among inbound visitors.
- with many economies, travel and tourism enabling conditions in India have been impacted by global inflationary supply-side trends for the sector, with price competitiveness declining, while air transport and tourist services infrastructure are yet to recover to the 2019 level.
- As a result, the country’s overall TTDI (Travel and Tourism Development Index) score is 2.1 per cent below its 2019 level.
- High-income economies in Europe and Asia-Pacific continued to lead the index.
Other Important Findings
- International tourist arrivals and the travel and tourism sector’s contribution to global GDP are expected to return to pre-pandemic levels this year, driven by the lifting of COVID-19-related travel restrictions and strong pent-up demand.
- The Middle East had the highest recovery rates in international tourist arrivals (20 per cent above the 2019 level), while Europe, Africa and the Americas all showed a strong recovery of around 90 per cent in 2023.
- The biennial index analysed the travel and tourism sectors of 119 countries around a range of factors and policies.
- Germany was ranked 6th, followed by the UK, China, Italy and Switzerland in the top ten.
- The results highlighted that high-income economies generally continue to have more favourable conditions for travel and tourism development.
- This was helped by conducive business environments, dynamic labour markets, open travel policies, strong transport and tourism infrastructure, and well-developed natural, cultural and non-leisure attractions.
Travel and Tourism Development Index
- The Travel and Tourism Development Index is a biennial report released by the World Economic Forum (WEF). The first Index was released in 2022.
- Earlier, the WEF used to publish the Travel & Tourism Competitiveness Index (TTCI), biennially since 2007.
- The Travel & Tourism Competitiveness Index was replaced by the Travel and Tourism Development Index.
- The Travel and Tourism Development Index benchmarks and measures the set of factors and policies that enable the sustainable and resilient development of the Travel and tourism sector, which plays a role in a country’s development.
- The 2024 Travel and Tourism Development Index was prepared in collaboration with the University of Surrey, England.
| CARE MCQ | UPSC PYQ |
| Q4. Consider the following pairs:
Index Released by 1. Travel and Tourism : World Economic Forum Development Index 2024 2. Global Competitive Index : World Bank 3. Global Innovation Index : World Intellectual Property Organization Which of the above pairs is/are correctly matched?
|
Q. The Global Competitiveness Report is published by the (2019)
(a) International Monetary Fund (b) United Nations Conference on Trade and Development (c) World Economic Forum (d) World Bank Ans – c |
| Answer 4 C
Explanation
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Jenny Erpenbeck’s ‘Kairos’ wins the International Booker Prize 2024
Source: The Hindu
UPSC Syllabus Relevance: Awards and Honours, Art and Literature
Context: Jenny Erpenbeck’s ‘Kairos’ wins the International Booker Prize 2024
Why in news
- German author Jenny Erpenbeck and translator Michael Hofmann won the International Booker Prize for fiction for “Kairos.
About Kairos
- ‘Kairos’ traces an affair from a utopian beginning to a bitter end, and draws parallels between personal lives and the life of the state.
- Kairos is a devastating story of a relationship, set against the backdrop of a seismic period in European history.
- It intertwines the personal and the political as the two lovers seemingly embody East Germany’s crushed idealism, with both holding on to the past long after they know they should move on.
- The book beat five other finalists, chosen from 149 submitted novels, for the prize, which recognizes fiction from around the world that has been translated into English and published in the U.K. or Ireland.
- The 50,000 pounds ($64,000) in prize money is divided between author and translator.
- Ms. Erpenbeck’s novel about the relationship between a student and an older writer is “a richly textured evocation of a tormented love affair, the entanglement of personal and national transformations.
- It’s set in the dying days of the German Democratic Republic, leading up to the fall of the Berlin Wall.
About Author
- Erpenbeck, 57, was born and raised in East Berlin, which was part of East Germany until the country disappeared with German reunification in 1990.
- Jenny Erpenbeck was born in East Berlin in 1967, and is an opera director, playwright and award-winning novelist.
- She first trained as a bookbinder, then worked as a theatre props manager before studying musical theatre direction and enjoying a successful career as an opera director from the late 1990s.
- She published her debut novella, Geschichte vom alten Kind, in 1999.
- Susan Bernofsky’s English translation, The Old Child, was published in 2005. Erpenbeck’s other translated works include
- The Book of Words (2008), Visitation (2010) and The End of Days (2014, winner of the Independent Foreign Fiction Prize), and Go, Went, Gone (2017, which was longlisted for the International Booker Prize in 2018) as well as Not a Novel: Collected Writings and Reflections (2020). \
- Her work has been translated into over 30 languages, and it has been said that she is better known overseas than in her native Germany.
- In 2019 her novel Visitation was named one of the 100 best books of the 21st century by the Guardian.
International Booker Prize
- The International Booker Prize is awarded every year.
- It is run alongside the Booker Prize for English-language fiction, which will be handed out in the fall.
- The International Booker Prize is awarded annually for the finest single work of fiction from around the world which has been translated into English and published in the UK and/or Ireland.
- The prize aims to promote global fiction and celebrates the work of translators.
- Prize Money: The award comes with 50,000 pounds (USD 64,000), shared equally between the author and the translator.
- In addition, the shortlisted authors and translators each receive 2,500 pounds.
| CARE MCQ | UPSC PYQ |
Q5. Consider the following statements with regards to International Booker Prize:
Which of the above statements is/are incorrect? A. None B. 1 and 2 only C. 2 only D. 1 and 3 only |
Q. Consider the following statements: (2008)
1. Orange Prize is awarded to a work of published fiction in English by a woman. 2. Pulitzer Prize is awarded by the Commonwealth Foundation to a citizen of any Commonwealth country for any literary work in English. Which of the statement(s) given above is/are correct? (a) Only 1 (b) Only 2 (c) Both 1 and 2 (d) Neither 1 nor 2 Ans. (a) |
| Answer 5 D
Explanation
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