Direct Monetisation

Why in News

The government’s (both centre and state) fiscal deficit is expected to shoot up to around 15% of Gross Domestic Product (GDP) when the permissible limit is only 6% according to Fiscal Responsibility and Budget Management (FRBM) obligations.

• The possibility of direct monetisation to alleviate the stress is being explored.

Key points

• Fiscal Deficit :
  
  • Fiscal deficit is the total amount of borrowings required to bridge the gap between government’s spending and revenues.
  • The borrowings can be from the internal sources (public, commercial banks, central bank etc.) or the external sources (foreign governments, international organisations etc.).
  • At this time, for the government to borrow the money, the market should have it as savings.
    
    • Data show that savings of domestic households have been faltering and are not enough to fund the government’s existing borrowing needs.
    • Foreign investors have been pulling out and moving to “safer” economies like the US, and are unwilling to lend in times of such uncertainty.
• Ideal limit for government debt :
  
  • According to economists developing economies like India should not have debt higher than 80%-90% of the GDP. At present, it is around 70% of GDP in India.
  • The government should commit to a predetermined amount of additional borrowing and to reversing the action once the crisis (Covid-19 outbreak) is over.
• Direct monetisation (borrowing from the RBI):
  
  • In direct monetisation, the government asks RBI to print new currency in return for new bonds that the government gives to the RBI.
  • In lieu of printing new cash, which is a liability for the RBI (since, every currency note has the RBI Governor promising to pay the bearer the designated sum of rupees), it gets government bonds, which are an asset for the RBI since such bonds carry the government’s promise to pay back the designated sum at a specified date.
  • Now, the government would have the cash to spend and alleviate the stress in the economy via direct benefit transfers to the poor or starting construction of a hospital or providing wage subsidy to workers of small and medium enterprises etc.
  • This is different from the “indirect” monetisation that RBI does when it conducts the Open Market Operations (OMOs) and/ or purchases bonds in the secondary market.
• Direct Monetisation by other countries in the wake of Covid-19:
  
  • In the United Kingdom (UK) on April 9, 2020 the Bank of England extended direct monetisation facility to the UK government.
• Problems with direct monetisation of government deficit:
  
  • High Inflation
    
    • Ideally, the direct monetisation provides an opportunity for the government to boost overall demand at the time when private demand has fallen.
    • Thus, it fuels inflation. A little increase in inflation is healthy as it encourages business activity.
    • However, higher inflation and higher government debt provide grounds for macroeconomic instability.
  • Inefficient Spending: The governments are considered inefficient and corrupt in their spending choices— for example, whom to help and to what extent.
  • Crisis in the Past: Earlier, the direct monetisation led to the balance of payments crisis in 1991, and a near-crisis in 2013.
    
    • Until 1997, the RBI “automatically” monetised the government’s deficit.
    • In 1994, Manmohan Singh (then Finance Minister) and C Rangarajan, then RBI Governor, decided to end this facility by 1997.

Source: IE

Deep Fakes

Why in News

Recently, cybercrime officials in India have been tracking certain apps and websites that produce nude photographs of innocent people using Artificial Intelligence (AI) algorithms.

Key Points

• Deep Fake:
  
  • Deep fakes or deep nudes are computer-generated images and videos. Cybercriminals use AI softwares to superimpose a digital composite (assembling multiple media files to make a final one) onto an existing video, photo or audio.
  • Using AI algorithms a person’s words, head movements and expressions are transferred onto another person in such a seamless way that it becomes difficult to tell that it is a deep fake, unless one closely observes the media file.
• Deep fakes first came into notice in 2017 when a Reddit user posted explicit videos of celebrities. After that several instances have been reported.
• Concerns:
  
  • The technology becomes vulnerable because deep fake images, audio and videos are very realistic and can be used by cybercriminals to spread misinformation to intimidate or blackmail people, seek revenge or commit fraud on social networking and dating sites.
  • It has become one of the modern frauds of cyberspace, along with fake news, spam/phishing attacks, social engineering fraud, catfishing and academic fraud.
  • It can be used to create fake pornographic videos and to make politicians appear to say things they did not, so the potential for damage to individuals, organisations and societies is vast.
  • With the improvement in technology, deep fakes are also getting better.
    
    • Initially, an individual with advanced knowledge of machine learning and access to the victim’s publicly-available social media profile could only make deep fakes.
    • Development of apps and websites capable of such editing became more frequent and easily accessible to an average user.
• Legality:
  
  • In the US, the legality of deep fakes is complicated. An affected person may claim defamation but removing such content could be considered censorship.
    
    • Then, it will be a violation of the First Amendment which guarantees Americans the freedom concerning religion, expression, assembly and the right to petition.
  • Also, 46 states in the US have revenge porn laws.
    
    • Revenge porn refers to the creation of sexually explicit videos or images that are posted on the Internet without the consent of the subject as a way to harass them.
  • However, the Right to be Forgotten, allows a user to request companies such as Facebook and Google, that have collected his/her data to take it down.
• Protection:
  
  • Ensuring strict privacy settings on social media platforms because keeping track of who downloads and misuses a user’s pictures is impossible.
  • Using freely available reverse image search tools to find images that are similar to users in case it is feared that someone is using the original user’s pictures.
  • Staying mindful of virtual interactions and checking other user’s profiles to help determine if the person is genuine or not.

Source: IE

Aerosol Levels Hit 20-year Low

Why in News

According to the data published by the National Aeronautics and Space Administration (NASA), aerosol levels in northern India at the beginning of April were significantly below the normal for this time of year.

• The levels were the lowest in 20 years of Moderate Resolution Imaging Spectroradiometer (MODIS) observations.
• MODIS is a key instrument on NASA’s satellites designed to monitor the Earth's atmosphere, ocean, and land surface. Data provided by it assists policymakers in making sound decisions concerning the protection of the environment.

Key points

• Use of Aerosol Optical Depth (AOD) : The data published with maps show Aerosol Optical Depth (AOD) in 2020 compared to the average for 2016-2019. On the day of the lockdown on March 25, 2020, it was 0.3 over north India. The AOD fell to 0.2 around April 1 and was found to be 0.1 on April 5.
  
  • Aerosol optical depth is a measure of how light is absorbed or reflected by airborne particles as it travels through the atmosphere.
  • If aerosols are concentrated near the surface, an optical depth of 1 or above indicates very hazy conditions.
  • An optical depth, or thickness, of less than 0.1 over the entire atmospheric vertical column is considered clean.
• The findings are in line with the analysis of the government's air monitoring service, System of Air Quality and Weather Forecasting and Research (SAFAR), which also found significant reduction in PM10, PM2.5 and nitrogen oxides levels in major cities, including the national capital, after the lockdown was imposed.
• Impact of lockdown
  
  • Every year, aerosols from anthropogenic (human-made) sources contribute to unhealthy levels of air pollution in many Indian cities.
  • Human activities — driving vehicles, operating coal-fired power plants and factories, etc — produce nitrates and sulphates that contribute to heavy concentration of aerosols across the Indo-Gangetic Plains, every year.
  • On March 25,2020 the Indian government placed its 1.3 billion citizens under a strict lockdown to reduce the spread of Covid-19.
  • The countrywide mandate decreased activity at factories and severely reduced car, bus, truck and airplane traffic. This has contributed to the decreased levels of aerosols.
• Similar conditions are not there in southern India:
  
  • Satellite data show aerosol levels have not yet decreased to the same extent. In fact, levels seem to be slightly higher than in the past four years.
  • The reasons are unclear but could be related to recent weather patterns, agricultural fires, winds or other factors.

Source: BS

National Panchayati Raj Day

Why in News

Recently, the Prime Minister addressed sarpanches from across the country through a video conference on National Panchayati Raj Day.

Key Points

• The first National Panchayati Raj Day was celebrated in 2010. Since then, the National Panchayati Raj Day is celebrated on April 24 every year in India.
• Prime Minister Launched two programmes:
  
  • e-GramSwaraj: For monitoring of rural infrastructure works and e-governance.
  • Swamitva programme: It involves mapping of rural housing and land holdings via technology including drones.
    
    • The Swamitva programme would help rural India leverage property for institutional credit and other benefits.

Panchayati Raj

• After the Constitution came into force, Article 40 made a mention o f panchayats and Article 246 empowered the state legislature to legislate with respect to any subject relating to local self-government.
• Panchayati Raj Institution (PRI) was constitutionalized through the 73^rd Constitutional Amendment Act, 1992 to build democracy at the grass roots level and was entrusted with the task of rural development in the country.
• PRI is a system of rural local self-government in India.
  
  • Local Self Government is the management of local affairs by such local bodies who have been elected by the local people.

Source: TH

Khudai Khidmatgar Movement

Why in News

It is 90 years for Qissa Khwani Bazaar massacre.

• Qissa Khwani bazar was the site of a massacre perpetrated by British soldiers against non-violent protesters of the Khudai Khidmatgar movement on April 23, 1930.

Key points

• Khudai Khidmatgar Movement
  
  • The Khudai Khidmatgar was a non-violent movement against British occupation of the Indian subcontinent led by Abdul Ghaffar Khan, a Pashtun freedom fighter, in the North-West Frontier Province.
  • Over time, the movement turned political, leading to the British taking notice of its growing prominence in the region.
  • Following the arrest of Khan and other leaders in 1929, the movement formally joined the Indian National Congress after they failed to receive support from the All-India Muslim League.
  • Members of the Khudai Khidmatgar were organised and the men stood out because of the bright red shirts they wore as uniforms, while the women wore black garments.
  • The Khudai Khidtmatgar opposed Partition, a stance that many interpreted as the movement not being in favour of the creation of the independent nation of Pakistan.
• Reasons for Qissa Khwani Bazaar massacre:
  
  • Abdul Ghaffar Khan and other leaders of the Khudai Khidmatgar were arrested on April 23, 1930 by British police after he gave a speech at a gathering in the town of Utmanzai in the North-West Frontier Province.
  • Protests spilled into the Qissa Khwani Bazaar in Peshawar on the day of Khan’s arrest.
  • British soldiers entered the market area to disperse crowds that had refused to leave and the British army vehicles drove into the crowds, killing several protesters and bystanders.

Source: IE

Urge to Suspend H-1B

Why in News

The US President has been requested to suspend the foreign workers programme, including H-1B as a huge number of Americans have lost their jobs due to the Covid-19 pandemic.

Key Points

• A lawmaker in the US has sought suspension of the H-1B, H4, L1, B1, B2, Optional Practical Training Program and guest worker admissions.
• The Congressional Select Committee on the Coronavirus Crisis has also been urged to take action to protect medical professionals holding H-1B visas because they are essential to confront and combat the current crisis.
  
  • Due to the loss of revenues, many health centres are closing down which will impact H-1B visa holders currently practicing medicine at these facilities.
• Indians and H-1B Visa
  
  • Indians are the largest beneficiaries of the H1B visas and held three out of four H1B visas as of 2018, data from the United States Citizenship and Immigration Service (USCIS) shows.
  • Indians held 309,986 H1B visas as of 2018, which was 73.9% of the total H1B visas issued.
  • Indians comprised 68% of H1B registrations for Financial Year 2020-21, followed by China, which accounted for 13.2%.
  • The latest move will hamper Indians who are working in the US on such visas by decreasing the chances of employment.
• Earlier, the US temporarily suspended approval of some Green Cards.
  
  • This step ensures the policy of America First.

H-1B Visa

• It is a non-immigrant visa that allows US companies to employ graduate level foreign workers in specialty occupations. Speciality occupations requires:
  
  • Theoretical or technical expertise in specialized fields such as in IT, finance, accounting, architecture, engineering, mathematics, science, medicine, etc.
  • Any professional level job that usually requires a bachelor’s degree or higher can come under the H-1B visa for specialty occupations.
• The US H1-B visa is designed to be used for staff in specialty occupations. H-1B has an option of green card application.
• H-1B visa holders can bring their spouse and children under 21 years of age to the US under the H4 Visa category as dependents.
  
  • An H4 Visa holder is allowed to remain in the US as long as the H-1B visa holder remains in legal status.
  • While an H4 visa holder is not eligible to work in the US, they may attend school, obtain a driver's license and open a bank account while in the US.

Source: IE

Credit Risk Funds

Why in News

Recently, Franklin Templeton Mutual Fund (one of the largest fund houses in India) has decided to close its six credit risk funds.

• The reason behind the step was severe market dislocation and illiquidity caused by the Covid-19 pandemic.
• A fund house is a company that invests the pooled money of investors to buy financial securities like stocks, mutual funds, equities, etc.

Key Points

• Definition: Credit-risk funds are debt funds which have at least 65% of their investments in less than AA-rated (i.e. in lower-rated) papers.
  
  • Debt funds aim to generate returns for investors by investing their money in avenues like bonds and other fixed-income securities.
  • Investment grade refers to the quality of a company's credit. Anything below 'BBB' rating is considered a non-investment grade.
• They have the potential to offer 2-3% higher returns compared to risk-free higher rated papers.
• Return: Credit-risk funds make returns in two ways:
  
  • One, they earn interest income on the securities they hold.
  • Secondly, since they invest in lower-rated securities, if the rating of a security is upgraded, they have the potential to make capital gains.
• Risk:
  
  • Liquidity risk: Credit-risk funds have a higher liquidity risk. If a bond with a lower rating in the portfolio defaults or faces a further downgrade, it may be difficult for the fund manager to exit the holding.
  • Concentration risk: If the portfolio is concentrated or has high holdings in any single business group, then even a single default by business group will affect the entire portfolio.

Source: IE

World Malaria Day

• It is celebrated on 25^th April every year, to highlight the need for continued investment and sustained political commitment for malaria prevention and control.
  
  • Malaria is preventable as well as curable.
• Theme for 2020: “Zero malaria starts with me”
  
  • It is a grassroots campaign that aims to keep malaria high on the political agenda, mobilize additional resources, and empower communities to take ownership of malaria prevention and care.
• The World Health Organisation (WHO) releases the World Malaria Report.
  
  • The 2019 report showed no global gains in reducing new infections over the period 2014 to 2018.
• High burden to high impact: It is a new approach to get the malaria fight back on track, particularly in countries that carry the highest burden of disease. It is founded on 4 pillars:
  
  • Political will to reduce malaria deaths.
  • Strategic information to drive impact.
  • Better guidance, policies and strategies.
  • A coordinated national malaria response.
• WHO officially endorses disease-specific global awareness days for only four diseases including malaria:
  
  • 1^st December- World AIDS Day.
  • 24^th March- World Tuberculosis Day.
  • 28^th July- World Hepatitis Day.

Dehing Patkai Wildlife Sanctuary

Why in News

Recently, the National Board for Wild Life (NBWL) has recommended coal mining in a part of an Dehing Patkai elephant reserve in Assam.

• Dehing Patkai Elephant Reserve includes the Dehing Patkai Wildlife Sanctuary.

Key Points

• The Dehing Patkai Wildlife Sanctuary is also known as the Jeypore Rainforest.
• It is located in the Dibrugarh and Tinsukia districts of Assam.
• Dehing is the name of the river that flows through this forest and Patkai is the hill at the foot of which the sanctuary lies.
• Fauna: Rare fauna found in the region include Chinese pangolin, flying fox, wild pig, sambar, barking deer, gaur, serow and Malayan giant squirrels.
  
  • It is the only sanctuary in India which is home to seven different species of wild cats - tiger, leopard, clouded leopard, leopard cat, golden cat, jungle cat and marbled cat.
  • Assamese macaque, a primate found in the forest, is in the red list of Near Threatened species.
• Flora: Dehing Patkai is a deciduous rainforest interspersed with semi-evergreen and lush green flora.

Source: TH