Topic 1: Nutrient Based Subsidy (NBS) Scheme
Context: The Central government approved Nutrient Based Subsidy for Nitrogen(N), Phosphorus(P), Potash(K) and Sulphur(S) for the 2023 kharif Season
- On the proposal of the Department of Fertilisers, the central government has revision of the NBS rates for Kharif Season (April-September) 2023 and for Rabi Season (January-March, 2023).
- Rs 70,000 crore will be spent for urea subsidy during kharif season 2023 and Rs 38,000 crore for DAP subsidy, taking the total fertilizer subsidy to Rs 1.08 lakh crore during the kharif season.
- Currently, the price of urea is ₹276 per bag and the price of DAP is ₹1,350 per bag.
- For Kharif Season rate of subsidy has been fixed at:
- Rs 76 per kg for Nitrogen (N)
- Rs 41 per kg for Phosphorus(P)
- Rs 15 per kg for Potash(K)
- Rs 2.8 per kg for Sulphur (S)
- This decision by the Cabinet brings two significant benefits:
- It ensures the availability of diammonium phosphate DAP and other P&K fertilizers to farmers at subsidized, affordable, and reasonable prices during the Kharif season.
- It rationalizes the subsidy on P&K fertilizers, ensuring effective and efficient utilization of government resources.
Source: The Indian Express
Topic 2 : Liberalization Remittance Scheme (LRS)
Context: Government amends the rules under the Foreign Exchange Management Act, to bring in the international credit card spends outside India under the Liberalized Remittance Scheme (LRS).
Why the move was required?
- The usage of an international credit card to make payments towards meeting expenses during a trip abroad was not covered under the LRS.
- The spendings through international credit cards were excluded from LRS by way of Rule 7 of the Foreign Exchange Management (Current Account Transaction) Rules, 2000.
- With the latest notification, Rule 7 has now been omitted, paving way for the inclusion of such spendings under LRS.
- The move comes in the backdrop of surge in spending in overseas travel.
- Indians spent $12.51 billion on overseas travel between April-February of fiscal 2022-23, a rise of 104 percent compared to the same period of the last year.
What would be the consequences?
- The notification brings transactions through credit cards outside India under the ambit of the LRS with immediate effect, which enables the higher levy of TCS, as announced in the Budget for 2022-23, from July 1.
- This will also help track high-value overseas transactions and will not apply on the payments for purchase of foreign goods/services from India.
Source: The Indian Express
Topic 3: PLI Scheme for IT hardware
Context: The Central Government approved Rs. 17,000cr PLI scheme For IT hardware
- Government approved the second phase of the Production Linked Incentive or PLI scheme for IT hardware
- The move is aimed to accelerate domestic manufacturing of hi-tech electronics, building on efforts that catapulted India to become the second-largest mobile phone manufacturer in the world.
- The PLI will cover the production of high-tech electronics such as laptops, PCs, all-in-one computers, servers and ultra-small form factor devices.
- India is moving from the mindset of ‘import substitution’ to ‘catering to the global demand’.
- The scheme is expected to add production worth ₹3.35 lakh crore, draw in new investments worth ₹2,430 crore, and lead to 75,000 new jobs over the six-year period.
- Following the PLI Scheme’s success in establishing a robust, globally recognized foundation for smartphone manufacture, PLI 2.0 will strengthen India’s electronic and IT hardware industry further and its presence in the global value chain.
The IT hardware sector of India:
- Electronics manufacturing in India has witnessed consistent growth with 17% compound annual growth rate in last 8 years.
- The annual Electronics manufacturing in India has crossed major benchmark in production i.e., ₹9 lakh crore.
- The global electronics manufacturing ecosystem is coming to India, and India is emerging as a major electronics manufacturing country.
- Over the past three years, India has attempted to capitalize on a global disillusionment with China’s manufacturing industry.
- The first PLI scheme helped sweeten the deal for a number of tech giants, including companies such as Apple.
- Under the new scheme, companies will get an incentive of up to 5% and an optional incentive of 4% if they use domestically-produced components.
Source: The Economic Times
- WHO in a recent report has recommended against using artificial sweeteners to achieve weight loss and prevent lifestyle diseases such as diabetes.
- The report emphasized that while there was a need to cut intake of sugar, it should not be replaced by artificial sweeteners.
- Many diabetics use the sweeteners in their tea and coffee. However, there is a growing market for packaged foods and beverages using these sweeteners to offer low-calorie options.
- WHO suggests that non-sugar sweeteners (NSS) not be used as a means of achieving weight control or reducing the risk of non-communicable diseases.
What WHO has recommended?
- Replacing free sugars with non-sugar sweeteners does not help with weight control in the long term.
- Artificial sweeteners provide the sweet taste with very little to no calories.
- Since artificial sweeteners reduce the number of calories consumed, there could be some weight loss and reduction in body mass index (BMI) in the shorter term.
- Analysis have shown that higher intake of NSS was linked to increase in the risk of Type-2 diabetes.
- The higher intake of these sweeteners was also linked to increase in the risk of cardiovascular disease, including risk of hypertension and mortality in the long run.
- It was also linked with a 25% increase in the risk for pre-term birth.
- The WHO has made these recommendations for everyone other than those who are already diabetic
Source: The Indian Express
Context: RBI recently stated that some financial institutions were yet to facilitate an absolute transition away from the LIBOR benchmark.
What is LIBOR?
- The London Interbank Offered Rate (LIBOR) is a global benchmark interest rate that combines individual rates at which banks opine they may borrow from each other at the London interbank market.
- It is used as a benchmark to settle trades in futures, options, swaps and other derivative financial instruments in over-the-counter markets and on exchanges globally.
- The consumer lending products including mortgages, credit cards and student loans, among others also use LIBOR as a benchmark rate.
- Before December 31, 2021, LIBOR was calculated for five currencies (U.S. dollar, Euro, Pound, Swiss Franc and Japanese Yen) for seven tenors i.e., overnight, one-week, one-month, two months, three months, six months and 12 months.
- Only U.S.-dollar LIBOR, excluding one-week and two-month tenor, were allowed to be published after U.K. Financial Conduct Authority (FCA) announced its phased rollback in March 2021.
What is the controversial story surrounding the global benchmark interest rate?
- The central flaw in the mechanism of LIBOR was that it relied heavily on banks to be honest with their reporting disregarding their commercial interests.
- Since the rates were made public, it would not be particularly useful to impress upon potential and current customers the various disadvantages in obtaining funds.
- During the 2008 financial crisis the submissions were artificially lowered (amid the crisis).
- Another observed phenomenon was the tendency to alter the submission as per the entities’ trading units’ derivative positions to acquire more profits.
- Derivates refer to financial contracts whose value is related to a specific indicator, commodity or financial instrument.
- The maintenance of the benchmark was brought under the purview of the U.K. Financial Conduct Authority (FCA) from British Bankers’ Association (BBA) in 2014.
What are the alternates to LIBOR?
- The U.S. Federal Reserve announced the Secured Overnight Financing Rate (SOFR) as a preferred alternative in 2017.
- Accordingly, in India, new transactions were to be undertaken using the SOFR and the Modified Mumbai Interbank Forward Outright Rate (MMIFOR).
- This would make it potentially less prone to market manipulation.
How India is responding to the Regime Change?
- RBI had stated in 2020 that exposure to LIBOR is from loan contracts linked to it and from Foreign Currency Non-Resident Accounts (FCNR-B) deposits with floating rates of interest and derivatives.
- The same year RBI had asked banks to assess their LIBOR exposure and prepare for the adaptation of alternatives references rates.
- However, in May 2023, RBI stated that some banks and financial institutions were yet to facilitate an absolute transition away from the London interbank offered Rate benchmark.
Source: The Hindu
Topic 6: Global temperatures set to reach new records in next five years
Context: According to World Meteorological Organization (WMO) updates lobal temperatures are likely to surge to record levels in the next five years, fuelled by heat-trapping greenhouse gases and a naturally occurring El Nino event.
- The World Meteorological Organization is the United Nations System’s authoritative voice on Weather, Climate and Water.
- For the first time ever, global temperatures are now more likely to breach 1.5°C (2.7°F) of warming within the next five years.
- It is near certain that 2023-2027 will be the warmest five-year period ever recorded, because of the combined effect of greenhouse gases and EL Nino.
- 2016 was the warmest year ever recorded.
- There is a 98% chance of at least one in the next five years beating the temperature record set in 2016, When there was an exceptionally strong El Niño.
- There are 66% chances that annual global surface temperatures will exceed 1.5 degrees Celsius above pre-industrial levels for at least one of the years 2023-2027.
- A warming EL Nino is expected in the coming months that will combine with the human induced climate change to push global temperatures into unchartered territory.
- The return to normal levels might take thousands year because we already have a high concentration of carbon dioxide and other green house gases in our atmosphere.
Source: The Hindu