8th January Current Affairs

1.Central Sector scheme for Jammu & Kashmir

News: The Cabinet Committee on Economic Affairs in its meeting considered and approved the proposal of Department for Promotion of Industry and Internal Trade for Central Sector Scheme for Industrial Development of Jammu & Kashmir. The scheme is approved with a total outlay of Rs. 28,400 crore upto the year 2037.

Background:

  • Government of India has formulated New Industrial Development Scheme for Jammu & Kashmir (J&K IDS, 2021) as Central Sector Scheme for the development of Industries in the UT of Jammu & Kashmir.
  • The main purpose of the scheme is to generate employment which directly leads to the socio economic development of the area.

The following incentives would be available under the scheme:

  • Capital Investment Incentiveat the rate of 30% in Zone A and 50% in Zone B on investment made in Plant & Machinery (in manufacturing) or construction of building and other durable physical assets(in service sector) is available. Units with an investment upto Rs. 50 crore will be eligible to avail this incentive. Maximum limit of incentive is Rs 5 crore and Rs 7.5 crore in Zone A & Zone B respectively
  • Capital Interest subvention: At the annual rate of 6% for maximum 7 years on loan amount up to Rs. 500 crore for investment in plant and machinery (in manufacturing) or construction of building and all other durable physical assets (in service sector).
  • GST Linked Incentive: 300% of the eligible value of actual investment made in plant and machinery (in manufacturing) or construction in building and all other durable physical assets (in service sector) for 10 years. The amount of incentive in a financial year will not exceed one-tenth of the total eligible amount of incentive.
  • Working Capital Interest Incentive: All existing units at the annual rate of 5% for maximum 5 years. Maximum limit of incentive is Rs 1 crore.

Key Features of the Scheme:

  • Scheme is made attractive for both smaller and larger units. Smaller units with an investment in plant & machinery upto Rs. 50 crore will get a capital incentive upto Rs. 7.5 crore and get capital interest subvention at the rate of  6% for maximum 7 years
  • The scheme aims to take industrial development to the block level in UT of J&K, which is first time in any Industrial Incentive Scheme of the Government of India and attempts for a more sustained and balanced industrial growth in the entire UT
  • Scheme has been simplified on the lines of ease of doing business by bringing one major incentive- GST Linked Incentive- that will ensure less compliance burden without compromising on transparency.
  • Scheme envisages greater role of the UT of J&K in registration and implementation of the scheme while having proper checks and balances by having an independent audit agency before the claims are approved
  • It is not a reimbursement or refund of GST but gross GST is used to measure eligibility for industrial incentive to offset the disadvantages that the UT of J&K face
  • Earlier schemes though offered a plethora of incentives. However, the overall financial outflow was much lesser than the new scheme.

Major Impact and employment generation potential:

  • Scheme is to bring about radical transformation in the existing industrial ecosystem of J&K with emphasis on job creation, skill development and sustainable development by attracting new investment and nurturing the existing ones, thereby enabling J&K to compete nationally with other leading industrially developed States/UTs of the country.
  • It is anticipated that the proposed scheme is likely to attract unprecedented investment and give direct and indirect employment to about 4.5 lakh persons. Additionally, because of the working capital interest subvention the scheme is likely to give indirect support to about 35,000 persons.

Way Forward

  • Considering the historic development of reorganization of Jammu & Kashmir with effect from 31.10.2019 into UT of Jammu & Kashmir under the J&K Reorganisation Act, 2019, the present scheme is being implemented with the vision that industry and service led development of J&K needs to be given a fresh thrust with emphasis on job creation, skill development and sustainable development by attracting new investment and nurturing the existing ones.

 2.First Advance Estimates of GDP

News: The National Statistical Office (NSO), Ministry of Statistics and Programme Implementation has released the First Advance Estimates of National Income at both Constant (2011-12) and Current Prices, for the financial year 2020-21 along with the corresponding estimates of expenditure components of the Gross Domestic Product (GDP).

The table below shows real GDP/GVA growth rates on the demand and supply side in 2020-21 (AE) as compared to 2019-20 (PE)

Details:

Demand Side GDP Real Growth(%) in2020-21 Supply Side GVA Real Growth(%) in2020-21
Private Consumption -9.5 Agriculture 3.4
Government Consumption 5.8 Mining -12.4
Fixed Investment -14.5 Utilities 2.7
Exports -8.3 Manufacturing -9.4
Imports -20.5 Construction -12.6
Services -8.8
  • The First Advance Estimates of GDP have been released in accordance with the release calendar of National Accounts.
  • The approach for compiling the Advance Estimates is based on Benchmark-Indicator method. The sector-wise Estimates are obtained by extrapolation of  indicators like
  • Index of Industrial Production (IIP) of first 7 months of the financial year,
  • financial performance of Listed Companies in the Private Corporate sector available upto quarter ending September, 2020
  • 1stAdvance Estimates of Crop production,
  • Accounts of  Central & State Governments,
  • Information on indicators like Deposits & Credits, Passenger and Freight earnings of Railways, Passengers and Cargo handled by Civil Aviation,Cargo handled at Major Sea Ports, Sales of Commercial Vehicles, etc., available for first 8 months of the financial year.
  • Projections for 2020-21 for Freight earnings of Railways, Passengers and Cargo handled by Civil Aviation,Cargo handled at major Sea Ports were also made available by the concerned agencies which were made use of in compilation of estimates of respective sectors.
  • With the introduction of Goods and Services Tax (GST) from 1stJuly 2017 and consequent changes in the tax structure, the total Tax Revenue used for GDP compilation include non-GST revenue and GST revenue.
  • For the year 2020-21, the Budget Estimates of Tax Revenue as available on the website of Controller General of Accounts (CGA) and Comptroller and Auditor General of India (CAG) have been used for estimating taxes on products at Current Prices.
  • For compiling taxes on products at Constant Prices, volume extrapolation is done using volume growth of taxed goods and services and aggregated to get the total volume of taxes.
  • Information available on Revenue expenditure, Interest payments, Subsidies etc. based on detailed analysis of budget documents of Centre and States for 2020-21 were also put to use.
  • Extrapolation for indicators like IIP were used to be done by dividing the cumulative value for the first 7 months of the current financial year by average of ratio of cumulative value of 7 months to the annual value of past years.
  • In the current pandemic led scenario, where wide fluctuations are noted in the month-wise indices with a significant drop especially in the first quarter, the usual projection techniques won’t hold good.
  • Necessary modifications were accordingly made in extrapolating the indices based on the available information. Percentage change in the main indicators used in the estimation is given in the Table.

What do the figures say?

  • Real GDP or GDP at Constant Prices (2011-12) in the year 2020-21 is likely to attain a level of ₹134.40 lakh crore, as against the Provisional Estimate of GDP for the year 2019-20 of ₹145.66 lakh crore, released on 31stMay 2020. The growth in real GDP during 2020-21 is estimated at -7.7 per cent as compared to the growth rate of 4.2 per cent in 2019-20. Real GVA at Basic Prices is estimated at ₹123.39 lakh crore in 2020-21, as against ₹133.01 lakh crore in 2019-20, showing a contraction of 7.2 percent.
  • Nominal GDP or GDP at Current Prices in the year 2020-21 is likely to attain a level of ₹194.82 lakh crore, as against the Provisional Estimate of GDP for the year 2019-20 of ₹ 203.40 lakh crore, released on 31stMay 2020. The growth in nominal GDP during 2020-21 is estimated at -4.2 per cent. Nominal GVA at Basic Prices is estimated at ₹175.77 lakh crore in 2020-21, as against ₹183.43 lakh crore in 2019-20, showing a contraction of 4.2 percent.

3.National Science Technology and Innovation Policy

News: The Department of Science and Technology has published the draft National Science Technology and Innovation Policy and has invited suggestions from the public.

Background:

  • Unlike previous STI policies which were largely top-driven in the formulation, this policy follows core principles of being decentralized, evidence-informed, bottom-up, experts-driven, and inclusive.
  • It aims to be dynamic, with a robust policy governance mechanism that includes periodic review, evaluation, feedback, adaptation and, most importantly, a timely exit strategy for policy instruments.
  • The STIP will be guided by the vision of positioning India among the top three scientific superpowers in the decade to come; to attract, nurture, strengthen, and retain critical human capital through a people-centric STI ecosystem

Overall objectives:

  • To position India among the top three scientific superpowers in the decade to come.
  • To attract, nurture, strengthen, and retain critical human capital through a people-centric STI ecosystem.
  • To double the number of full-time equivalent (FTE) researchers, gross domestic expenditure on R&D (GERD) and private-sector contribution to GERD every five years.
  • To build individual and institutional excellence in STI with the aim of reaching the highest levels of global recognition and awards in the coming decade.

Details:

  • It proposes an Open Science Framework,with free access for all to findings from publicly funded research.
  • One Nation, One Subscription:The idea is to democratise science by providing access to scholarly knowledge to not just researchers but to every individual in the country.
  • It suggests modification or waiver of General Financial Rules (GFR),for large-scale mission mode programmes and projects of national importance.

The Open Science Framework

  • Open Science fosters more equitable participation in science through-
  • Increased access to research output;
  • Greater transparency and accountability in research; inclusiveness;
  • Better resource utilization through minimal restrictions on reuse of research output and infrastructure and Ensuring a constant exchange of knowledge between the producers and users of knowledge

It has made recommendations such as:

  • Mandatory positions for excluded groups in academics; 30% representation of women in selection/evaluation committees and decision-making groups.
  • Addressing issues related to career breaks for women by considering academic age rather than biological/physical age. A dual recruitment policy for couples; and institutionalisation of equity and inclusion by establishing an Office of Equity and Inclusion, etc.

Funding improvements

  • At 0.6% of GDP, India’s gross domestic expenditure on R&D (GERD) is quite low compared to other major economies that have a GERD-to-GDP ratio of 1.5% to 3%.
  • This can be attributed to inadequate private sector investment (less than 40%) in R&D activities in India; in technologically advanced countries, the private sector contributes close to 70% of GERD.
  • STIP has made some major recommendations in this regard, such as the expansion of the STI funding landscape at the central and state levels.
  • It has enhanced incentivisation mechanisms for leveraging the private sector’s R&D participation through boosting financial support and fiscal incentives for industry.

4.Vertical and Horizontal Reservations

News: The Supreme Court in Saurav Yadav versus State of Uttar Pradesh case has clarified the position of law on the interplay of vertical and horizontal reservations. The case was on issues arising from the way different classes of reservation were to be applied in the selection process to fill posts of constables in the state.

Background:

  • The case was on the technicalities that form a substantial question of law.
  • Two aspirants had secured 276.5949 and 233.1908 marks respectively. They had applied under the categories of OBC-Female and SC-Female respectively. OBC and SC are vertical reservation categories, while Female is a horizontal reservation category. The two candidates did not qualify in their categories.
  • However, in the General-Female (unreserved-female) category, the last qualifying candidate had secured 274.8298 marks, a score that was lower than the two backwards.
  • The question before the court was that if the underlying criterion for making selections is “merit”.

Court’s Judgement:

  • The court ruled against the UP government. It observed if a person belonging to an intersection of the vertical-horizontal reserved category had secured scores high enough to qualify without the vertical reservation. It held that the person would be counted as qualifying without the vertical reservation, and cannot be excluded from the horizontal quota in the general category.
  • If a person in the SC category secures a higher score than the cut-off for the general category, the person would be counted as having qualified under the general category instead of the SC quota.

What was the government’s argument?

  • The government’s policy was to restrict and contain reserved category candidates to their categories, even when they had secured higher grades.
  • The court said this was tantamount to ensuring that the general category was ‘reserved’ for upper castes.

What was the court’s reasoning?

  • The court did the math by examining a number of hypothetical scenarios.
  • It concluded that if both vertical and horizontal quotas were to be applied together — and consequently, a high-scoring candidate who would otherwise qualify without any reservation.
  • On the other hand, if a high-scoring candidate is allowed to drop one category, the court found that the overall selection would reflect more high-scoring candidates.
  • In other words, the “meritorious” candidates would be selected.

What are vertical and horizontal reservations?

  • Vertical reservation:Reservation for Scheduled Castes, Scheduled Tribes, and Other Backward Classes is referred to as vertical reservation. It applies separately for each of the groups specified under the law.
  • Horizontal reservationrefers to the equal opportunity provided to other categories of beneficiaries such as women, veterans, the transgender community, and individuals with disabilities, cutting through the vertical categories.
  • The horizontal quota is applied separately to each vertical category, and not across the board.
  • For example, if women have 50% horizontal quota, then half of the selected candidates will have to necessarily be women in each vertical quota category i.e., half of all selected SC candidates will have to be women, half of the unreserved or general category will have to be women, and so on.