03-02-2022

03-FEBRUARY-2022

The Hindu News Analysis – 03rd February 2022 – Shankar IAS Academy
S. Page Number*
News Articles
No. C B D H T

1 Bird watch (Picture) 1 - 1 - -

2 Dip in population of waterbirds - - - - 2

3 Ink India-Britain free trade, unlock new opportunity (Editorial) 8 6 6 8 6

4 Budget moots tweaks to GST law to tighten input tax claims 14 12 12 14 12

5 Greater capital expenditure is the highlight of the Budget 14 12 12 14 12

6 Fitch Ratings flags high fiscal deficit target 1,10 8 1, 8 1,10 8

7 Aluminium sector says coal stocks critically low 14 12 12 14 12

8 Prelims Practice Questions

@ end of the video
9 Mains Practice Question
*C – Chennai; B – Bengaluru; D – Delhi; H – Hyderabad; T – Thiruvananthapuram

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Pg: 1 - C, D.

World Wetlands Day

• Celebrated each year on 2 nd February - to raise global awareness about the

vital role of wetlands for people and planet.

 Convention on Wetlands or Ramsar convention was on 2 February 1971.

• Theme for 2022 - Wetlands Action for People and Nature

 To ensure the conservation and sustainable use of wetlands for humans and
planetary health..

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Wetland RAMSAR CONVENTION

• Areas where water is the primary factor controlling

• “Wetlands are areas of marsh, fen, peatland
the environment, associated plant and animal life. or water, whether natural or artificial,
permanent or temporary, with water that is
• Occur where the water table is at or near the static or flowing, fresh, brackish or salt,
surface of the land, or where the land is covered by including areas of marine water the depth of
which at low tide does not exceed six
water.
metres”.
• Wetlands (Conservation and Management) Rules, 2017 • Include a wide variety of inland habitats such
as marshes, peat-lands, floodplains, rivers
 Does not include river channels, paddy fields, and lakes, and coastal areas such as
human-made water bodies/tanks specifically saltmarshes, mangroves, intertidal mudflats
and seagrass beds, and also coral reefs and
constructed for drinking water purposes and
other marine areas no deeper than six metres
structures specifically constructed for aquaculture, at low tide, as well as human-made wetlands
salt production, recreation and irrigation purposes. such as dams, reservoirs, rice paddies and
wastewater treatment ponds and lagoons.

Waterbird

• Bird that frequents water - habitually

wades or swims in fresh water.

• Spend life cycles in wetlands - habitat

and food source.

 Prefers swamps, lagoons, mudflats,

estuaries, bays and open beaches,
freshwater and saltwater lakes,
rivers, floodplain wetlands and dams.

• Indicators of wetland health.

• Population trends over time -

biodiversity trends and ecosystem health
in the wetlands.

Pg: 2 - Thiruvananthapuram Edition.

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 Includes waterfowls, pelicans, ibises and Asian Waterbird Census

spoonbills, egrets and herons, waterhens, terns
• Part of the global International Waterbird
and gulls, shorebirds (waders).
Census (IWC).

 Global waterbird monitoring programme -

supports the conservation and management
of wetlands and waterbirds worldwide.

• Initiated in 1987 in the Indian subcontinent.

• Now covers major region of Asia

(Afghanistan to Japan), Southeast Asia and
Australasia.

• Covers entire East Asian - Australasian

Flyway and a large part of the Central Asian
Flyway.

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News

• Drop in the number and species of waterbirds in

Kerala.

 30% reduction in wetlands of Trivandrum.

 11 wetlands - 3,077 birds belonging to 56

• Takes place every January - citizen-
species.
science event.
 Reason for reduction - anthropogenic activities.
• Benefit:
 Solid waste dumping.
 Used to identify wetlands of high
 Shift from paddy cultivation to vegetable
importance for waterbirds.
cultivation and application of chemicals.
 Designation as Ramsar Sites and Flyway
 Noise from crackers.
Network Sites, or priority wetlands
within national programmes.  Disturbances from photographers &
videographers.

Pg: 8 - C, H;
Pg: 6 - T, B, D.

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India-U.K. Relations Economic relations

• Strong ties of history and culture since centuries.
• Merchandise trade - US$ 15.45 billion in 2019-20.
• Strategic Partnership in 2004.
• Trade balance was in favour of India.

Image source: https://www.hindustantimes.com/

• India invested in 120 projects Education, Research and Innovation

 Created 5,429 new jobs in the UK. • UK - favoured destinations for Indians.

 India become the second-largest • India is a beneficiaries of UK’s new liberalised point-
source of FDI. based immigration system.

• Nearly 600 U.K. companies in India Climate and Environment

 Employs more than 3,20,000 people. • Ministerial Energy Dialogue and Joint Working Groups.

 Barclays & Hindustan Unilever. • Green Growth Equity Fund.

 UK - 6th largest investor in

Multilateral
India.
• UK supports India's permanent membership of UNSC,
 UK - 6% of all FDI into India.
NSG, MTCR, Australia Group and Wassenar Arrangement.

• UK - member of The International Solar Alliance (ISA).

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Indian Diaspora in UK

• One of the largest ethnic minority communities (2.5%).

• Diversify supply chains.
• Contributes to 6% of the country’s GDP.
• Easier and Cheaper for more
• 16 Indian origin MPs in the UK Parliament. businesses to do business across

Free Trade Agreements (FTA) borders.

• Incentivize new small and medium-

• Arrangements - to reduce or eliminate customs tariff
sized enterprises - export.
and non tariff barriers on trade.
• Improvements in the variety and
• Cover trade in goods or trade in services.
affordability of products.
 Intellectual property rights (IPRs)
 Investment
 Government procurement and
 Competition policy

• Benefits for UK and India:

 U.K. develops on free trade.

Practice Question – Mains
 India - opportunity to transform its
economy and society. GS – II
 Offers valuable opportunities for India’s Q. The time has come for India and UK to
booming companies.
build a strong free trade agreement, that
will have a great significance for both the
 Stimulate growth and employment in both countries. Comment.
countries.
(150 Words, 10 Marks)
 FTA would add around £14.8 billion to the
GDP of India and the U.K. by 2035.

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Pg: 14 - C, H; Pg: 12 - T, B, D.

Input Tax Credit

• Feature of Goods and Services Tax (GST).

• Input credit - reduces the tax already paid News

on buying some inputs.
• Finance bill proposed changes in the Central
• Can be availed by:
GST Act - restricts input tax credits for
 Manufacturers, suppliers, agents, e-commerce manufacturers unless their suppliers have
operators, aggregators etc. covered under remitted their share of taxes.
the GST Act.

 Exceptions

 For personal use or goods that are

exempt.

 Business under composition scheme.

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Practice Question – Prelims

Q. Consider the following statements with
reference to Input Tax Credit.
1. It is one of the key features of Goods
and Services Tax.
2. It is a mechanism to enhance
cascading of taxes.
3. A business under composition scheme
cannot avail of input tax credit.
Which of the statements given above
is/are correct?
a) 1 only
b) 1 and 2 only
c) 1 and 3 only
d) 2 and 3 only

Union Budget

Revenue Expenditure
 Incurred to meet day to
day and regular needs of
government
 Will not yield any
revenue in future.
 Example – Subsidies,
Defence, Police, Pensions
and Salaries.
Capital Expenditure
 Expenditure towards
building the country.
 Incurred on long period
development programs.
 Two way transaction.
 Leads to asset creation.

Pg: 14 -
C, H;
Pg: 12 -
T, B, D.

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Significance
Capital expenditure
1. Fixed assets acquired, existing assets
• Disbursement of government funds in the form upgraded or loans repaid - enhances labour
of investments (or) development spending participation in the economy.
towards the production of long-term assets.
2. Generate demand in the economy - attracts
• Ex: money spent on railways or the private investments over a longer term and
construction of national highways and roads. sustaining economic growth.

• Current fiscal year - capital expenditure of 3. Impact multiplier effect - ₹1 spent on

₹5.54 lakh crore - 26% higher. capital expenditure is 2.45 when compared

to ₹1 spent on revenue expenditure, where

the impact multiplier effect is 0.99.

Practice Question – Prelims

Q. Consider the following statements:
1. When capital assets are put into service,
depreciation occurs, and their value
decreases throughout their useful lives.
2. Returns on Capital Expenditure are
unpredictable because even loss can occur.
3. The accounting process of identifying,
measuring, and estimating the costs
relating to capital expenditures may be
quite complicated.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 2 only
(c) 1 and 2 only
(d) 1, 2 and 3

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Part A—Preliminary Examination

Paper I - (200 marks)
 Economic and Social Development-
Sustainable Development, Poverty,
Inclusion, Demographics, Social Sector
Initiatives, etc.
Part B—Main Examination
PAPER-IV
General Studies‐III: Technology, Economic
Development, Bio diversity, Environment,
Security and Disaster Management.
 Indian Economy and issues relating to
planning, mobilization, of resources,
growth, development and employment.
Pg: 1,10 - C, H;
 Government Budgeting.
Pg: 8 - T, B;

Pg: 1,8 - D.

Fiscal Deficit
• Government receipts - Corporation Tax,
• Excess of total disbursements, from the CFI over
Income Tax, Interest Receipts, Dividends
total receipts, during a financial year.
and Profits, etc.
 Excludes repayment of debt.
• Government expenditures - Revenue
 Excludes debt receipts. Expenditure, Capital Expenditure, Interest
Payments, etc.
 Expressed as a percentage of GDP.
• FD = Total Expenditure - (Total Receipts
except borrowings and liabilities)

 Total expenditure - Total receipts

except the debt capital receipts.

• Means country is in debt.

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• Affects country’s credit ratings.

Causes
 National governments’ credit standing - key benchmark
• Fall of Government revenue.
in the world’s capital markets.
• Increase in Government spending.
 Ex: Moody’s ratings - rate debt of over 120 sovereign
nations.

Impact of persistent increase  Match sovereign credit risk with country’s Risk.

• Lead to runaway inflation - hurts  Sovereign risk - chance of national government’s

our quality of life. treasury or central bank to default on their
sovereign debt.
 Runaway inflation - rapid rise
in the prices for goods and  Country’s credit rating - low due to high fiscal deficit.
services.
 Leads to delays in investment decisions by businesses
- affects economic growth.

 Leads to macro-economic instability.

Previous Year Question – Prelims 2020

Q. With reference to Fiscal Deficit, consider
• Lead to printing of Money - to fund deficits the following statements:

 Devalues paper money.

1. Its is equal to total receipts minus
expenditure.
• Increases government debt.
2. It may lead to printing of money.
 Large portion of the Government’s revenues 3. It results in high credit rating for the
spent towards interest payouts. Country.
 High level of debt associated with slower Which of the statements given above
growth. is/are incorrect?
a) 1 only
b) 1 and 2 only
c) 2 only
d) 1 and 3 only

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Aluminum

• A metal.

• Third most abundant

element in earth’s crust.

• Properties:

 Light

 Corrosion resistance

 Heat conductivity

 Malleability
Pg: 14 - C,
 Ability to become strong when mixed with
H;
other metals.
Pg: 12 - T,
B, D.

• Uses:
Prime factors for the location of an
 Manufacturing aircraft, utensils and wires. aluminium industry:
1. The location having regular supply
 Alternative to steel, copper, zinc, and lead.
of electricity.
• Occurs in various proportions in different 2. Availability of an assured source
materials. of raw material at minimum cost.

 Component of many igneous minerals including

mica and clays. Issue:

• Extracted from Bauxite ore. • Some industries lack regular supply of

Bauxite Ore electricity - rely on captive power plant

for continued power supply.

• Lack of coal stocks of only 3-4 days.

 Prescribed level - coal stocks of 15 days.

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Aluminium smelting plants in the country

• Odisha

• West Bengal

• Kerala

• Uttar Pradesh

• Chhattisgarh

• Maharashtra

• Tamil Nadu

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Previous Year Question – Prelims 2020

Q1. With reference to Fiscal Deficit,
consider the following statements:
1. Its is equal to total receipts minus
expenditure.
2. It may lead to printing of money.
3. It results in high credit rating for the
Country.
Which of the statements given above
is/are incorrect?
a) 1 only
b) 1 and 2 only
c) 2 only
d) 1 and 3 only

Practice Question – Prelims

Q2.Consider the following statements:
1. When capital assets are put into service,
depreciation occurs, and their value
decreases throughout their useful lives.
2. Returns on Capital Expenditure are
unpredictable because even loss can occur.
3. The accounting process of identifying,
measuring, and estimating the costs
relating to capital expenditures may be
quite complicated.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 2 only
(c) 1 and 2 only
(d) 1, 2 and 3

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Practice Question – Prelims

Q3. Consider the following statements with
reference to Input Tax Credit.
1. It is one of the key features of Goods
and Services Tax.
2. It is a mechanism to enhance
cascading of taxes.
3. A business under composition scheme
cannot avail of input tax credit.
Which of the statements given above
is/are correct?
a) 1 only
b) 1 and 2 only
c) 1 and 3 only
d) 2 and 3 only

Practice Question – Prelims

Answers

Q1. Option (d) – 1 and 3 only

Q2. Option (d) – 1, 2 and 3
Q3. Option (c) – 1 and 3 only

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Practice Question – Mains

GS – II
Q. The time has come for India and UK to
build a strong free trade agreement, that
will have a great significance for both the
countries. Comment.
(150 Words, 10 Marks)

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