Author: Urmila Singh

Dear Aspirants,

This Spotlight is a part of our Mission Nikaalo Prelims-2023.

You can check the broad timetable of Nikaalo Prelims here

Session Details

YouTube LIVE with Parth sir – 1 PM  – Prelims Spotlight Session

Evening 04 PM  – Daily Mini Tests

Telegram LIVE with Sukanya ma’am – 06 PM  – Current Affairs Session

Join our Official telegram channel for Study material and Daily Sessions Here

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22nd Mar 2023

Species In News

Indian Bullfrogs

• The Indian Bullfrog Hoplobatrachus Tigerinus (native to
  the Indian subcontinent) has rapidly invaded the Andaman
  islands after it was introduced there in the early 2000s.
• In human-dominated areas, it now shares space with other
  native (and often endemic) frog species.
•  The bullfrogs are prolific breeders: they have short breeding
  seasons, and each egg clutch can contain up to 5,750 eggs.
• Its tadpoles are carnivorous and eat other tadpoles (including their own species).
• The proportion of bullfrog tadpoles surviving was greater
  in the presence of both endemic frog tadpoles.
• This is worrying because other native frog species – many
  of which are only being described – could also be affected

Balsams of Eastern Himalayas

• Consisting of both annual and perennial herbs, balsams
  are succulent plants with high endemism.
• Because of their bright beautiful flowers, these groups of
  plants are of prized horticultural significance.
• The details of the new species, including several new
  records, have been highlighted in the book, recently published by the Botanical Survey of India.
• Of the 83 species described, 45 are from Arunachal Pradesh,
  24 from Sikkim and 16 species common to both states.

Threats:

• Prior to 2010, specimens of Impatiens that had potential
  of being identified as new species would be collected but
  the dried-up specimens looked identical to the species
  discovered earlier and their effort yielded no results.
• Other than high endemism, what sets Impatiens apart is
  their sensitivity to climate change.
• Most of the species of Impatiens cannot endure persistent
  drought or extended exposure to direct sunlight.
• As a result Impatiens species are typically confined
  to stream margins, moist roadsides, waterside boulders, near waterfalls and wet forests.

Miracle Plant Arogyapacha

• This ‘miracle plant’ is known for its traditional use by the
  Kani tribal community to combat fatigue.
• Studies have also proved its varied spectrum of pharmacological properties such as anti-oxidant, aphrodisiac, anti-microbial, anti-inflammatory, immunomodulatory, anti-tumour, anti-ulcer, anti-hyperlipidemic, hepatoprotective and anti-diabetic.

Dracaena Cambodiana: India’s first dragon blood-oozing tree

• A group of researchers has discovered Dracaena cambodiana, a dragon tree species in the Dongka Sarpo area of West Karbi Anglong, Assam.
•  This is the first time that a dragon tree species has been
  reported from India.
• In India, the Dracaena genus belonging to the family Asparagaceae is represented by nine species and two varieties in the Himalayan region, the northeast and Andaman and Nicobar Islands.
• But Dracaena cambodiana is the only true dragon tree species.
• The Dracaena seeds are usually dispersed by birds. But due
  to the large fruit size, only a few species of birds are able
  to swallow the fruits, thus limiting the scope of its nature
  conservation.

7 New Species Of Insects That Can Walk On Water Discovered

• The newly described species belong to the genus Mesovelia
  whose size ranges from 1.5 mm to 4.5 mm and are equipped
  with hydrophobic setae (bristles) on their legs.
• The combination of hydrophobic setae and water surface
  tension prevents them from sinking.
• The insects are pale green with silver-white wings with
  black veins on the basal half which make them stand out
  over the green mat of aquatic weeds.
• Among the new discoveries, Mesovelia andamana is from
  Andaman Islands, bispinosa and M. isiasi are from Meghalaya, M. occulta and M. tenuia from Tamil Nadu and M.brevia and M. dilatata live both in Meghalaya and Tamil Nadu.

Evolution

•  These bugs are hemimetabolous insects without having
  larval stage i.e., they go from egg to nymph to adult.
• They are found on freshwater bodies such as ponds, lakes,
  pools, streams, rocks with moss and sometimes on estuaries.
• These bugs serve as predators and scavengers (feed on
  midges, water fleas, feed on dead and dying mosquitoes),
  thereby removing organic waste and also providing a natural sanitation service.
• The females of Mesovelia are larger than males and dig
  several holes on plants and insert eggs in plant tissues with
  a specially adapted long serrated ovipositor (genital organ).

Emperor Penguin Colony In Antarctica Vanishes

• The emperor penguin (Aptenodytes forsteri) is the tallest
  and heaviest of all living penguin species and is endemic
  to Antarctica.
• Like all penguins, it is flightless, with a streamlined body,
  and wings stiffened and flattened into flippers for a marine habitat.
• Its diet consists primarily of fish, but also includes crustaceans, such as krill, and cephalopods, such as squid.
• The only penguin species that breeds during the Antarctic winter, emperor penguins trek 50–120 km over the ice to breeding colonies which can contain up to several thousand individuals.
• In 2012 the emperor penguin was uplisted from a species of least concern to near threatened by the IUCN.

Arctic Kelp Forests

• Kelp is a type of large brown seaweed that grows in shal-low, nutrient-rich saltwater, near coastal fronts around the world.
• They occur on rocky coasts throughout the Arctic.
• Kelp is a type of large brown seaweed that grows in shallow, nutrient-rich saltwater, near coastal fronts around the world.
• They occur on rocky coasts throughout the Arctic.
• The longest kelp recorded in the Arctic in Canada was 15 metres, and the deepest was found at 60-metre depth (Disko Bay, Greenland).
• Kelps function underwater in the same way trees do on land. They create habitat and modify the physical environment by shading light and softening waves.
• The underwater forests that Kelps create are used by many animals for shelter and food.More than 350 different species – up to 100,000 small invertebrates – can live on a single kelp plant, and many fish, birds and mammals depend on the whole forest.
• Kelp forests also help protect coastlines by decreasing the power of waves during storms and reducing coastal erosion.

Neelakurinji Blossom

• Kurinji or Neelakurinji (Strobilanthes kunthianus) is a shrub that is found in the shola forests of the Western Ghats in South India
• Nilgiri Hills, which literally means the blue mountains, got their name from the purplish-blue flowers of Neelakurinji that blossoms only once in 12 years.
• It is the most rigorously demonstrated, with documented bloomings in 1838, 1850, 1862, 1874, 1886, 1898, 1910, 1922, 1934, 1946, 1958, 1970, 1982, 1994, 2006 and 2018
• Some Kurinji flowers bloom once every seven years, and then die. Their seeds subsequently sprout and continue the cycle of life and death.

Kashmir Stag (Hangul)

• Hangul, the state animal of Jammu & Kashmir, is restricted to the Dachigam National Park some 15 km north-west of Jammu & Kashmir summer capital Srinagar.
• The Hangul is placed under Schedule I of the Indian Wildlife (Protection) Act, 1972 and the J&K Wildlife Protection Act, 1978.
• The Hangul was once widely distributed in the mountains of Kashmir and parts of Chamba district in neighbouring Himachal Pradesh.
• The IUCN’s Red List has classified it as Critically Endan-gered and is similarly listed under the Species Recovery Programme of the Wildlife Institute of India (WII) and the Environmental Information System (ENVIS) of the MoEFCC.
• From a population of 5,000 in the early 1900s, the Hangul’s numbers have constantly declined over the decades.
• The Hangul is considered equally significant to the state of Jammu & Kashmir as the tiger is to the whole of India.
• The Paliyan tribal people living in Tamil Nadu used it as a reference to calculate their age.
• It is the only Asiatic survivor or subspecies of the European red deer.
• But the state animal’s decreasing population remains a big concern.
• According to the latest survey in 2017, the population of Hangul is 182 in Dachigam and adjoining areas. Earlier population estimates suggest that there were 197 deer in 2004 and 186 in 2015. T
• The IUCN Red Data Book — which contains lists of species at risk of extinction — has declared the Hangul as one of three species that were critically endangered in J&K.
• The other two are the Markhor — the world’s largest species of wild goat found in Kashmir and several regions of central Asia — and the Tibetan antelope or ‘Chiru’.

Great Indian Bustard

• The Great Indian Bustard (GIB) is one of the few species that the Government of India has included in its ‘recovery programme for critically endangered species’.
• With less than 200 GIBs remaining in the world, most of them were found in Rajasthan’s ‘Desert National Park’. We are on the brink of forever losing a majestic bird species, which was once a strong contender to be declared as India’s National Bird.
• Habitat: Arid and semi-arid grasslands, open country with thorn scrub, tall grass interspersed with cultivation.
• It avoids irrigated areas. It is endemic to Indian Sub-continent. found in central India, westem India and eastern Pakistan.
• Currently, it is found in only six states in the country Madhya Pradesh, Gujarat, Maharashtra, Andhra Pradesh, Rajasthan and Karnataka. Protection: Listed in Schedule I of the Wildlife (Protection) Act, 1972 and Critically Endangered on the IUCN Red List.
• It is also listed in Appendix I of CITES and covered under CMS or Bonn Convention.
• Bustard Species Found in India: Great Indian Bustard, the Lesser Florican and the Bengal Florican; Houbara also belong to Bustard family but it’s a migratory species.
• Importance to Ecosystem: GIB is an indicator species for grassland habitats and its gradual disappearance from such environments shows their deterioration. Once the species is lost. there will be no other species to replace it, and that will destabilise the ecosystem of the grassland and affect critical bio-diversities, as well as blackbucks and wolves, who share their habitat with the GIB.
• Conservation Steps: Great Indian Bustard, popularly known as ‘Godawan is Rajasthan’s state bird. The state government has started “Project Godawan” for its conservation at Desert National Park (DNP) in Jaisalmer. It’s one of the Spades for The Recovery Programme under the Integrated Development of  Wildlife Habitats of the Ministry of Environment and Forests.

Tasmanian Tiger

• The Tasmanian tiger or thylacine (a dog headed pouched dog) was an exclusively carnivorous marsupial that is considered to be extinct.
• It has resemblance to a dog, with its distinguishing features being the dark stripes beginning at the rear of its body and extending into its tail, its stiff tail and abdominal pouch.
• The last known thylacine died in captivity over 80 years ago, in Tasmania’s Hobart Zoo in 1936.
• It may also be the only mammal to have become extinct in Tasmania since the European settlement.

Adratiklit boulahfa

• Named Adratiklit boulahfa, it is also the first stegosaurus to be found in North Africa.
• Its remains were discovered in the Middle Atlas Mountains of Morocco.
• The scientists believe it is not only a new species but also belongs to a new genus.
• The name is derived from the words used by the Berber (an ethnic group indigenous to North Africa) for mountains (Adras), lizard (tiklit) and and the area where the specimen was found. (Boulahfa).

Dear Aspirants,

This Spotlight is a part of our Mission Nikaalo Prelims-2023.

You can check the broad timetable of Nikaalo Prelims here

Session Details

YouTube LIVE with Parth sir – 1 PM  – Prelims Spotlight Session

Evening 04 PM  – Daily Mini Tests

Telegram LIVE with Sukanya ma’am – 06 PM  – Current Affairs Session

Join our Official telegram channel for Study material and Daily Sessions Here

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21st Mar 2023

National Parks, Biosphere Reserves, Wildlife Sanctuaries in India

National Parks, Biosphere Reserves, Wildlife Sanctuaries in India

NATIONAL PARKS	STATES
Papikonda National Park	Andhra Pradesh
Rajiv Gandhi National Park	Andhra Pradesh
Lanjamadugu Wildlife Sanctuary	Andhra Pradesh
Namdapha National Park	Arunachal Pradesh
Dibang Wildlife Sanctuary	Arunachal Pradesh
Manas National Park (UNESCO)	Assam
Nameri National Park	Assam
Rajiv Gandhi Orang National Park	Assam
Kaziranga National Park (UNESCO)	Assam
Dibru Sai Khowa National Park	Assam
Gautam Budha Wildlife Sanctuary	Bihar
Valmild National Park	Bihar
Rajgir Wildlife Sanctuary	Bihar
Indravati National Park	Chhattisgarh
Achanakmar Wildlife Sanctuary	Chhattisgarh
Kanger Valley National Park	Chhattisgarh
Tamor Pingla Wildlife Sanctuary	Chhattisgarh
Guru Ghasi Das (Sanjay) National Park	Chhattisgarh
Gomarda Wildlife Sanctuary	Chhattisgarh
Bhagwan Mahavir National Park	Goa
Vansda National Park	Gujarat
Kutch Desert Wildlife Sanctuary	Gujarat
Indian Wild Ass Sanctuary	Gujarat
Marine National Park (First Marine National Park)	Gujarat
Black Buck National Park	Gujarat
Gir Forest National Park	Gujarat
Kalesar National Park	Haryana
Sultanpur National Park	Haryana
Lippa Asrang Wildlife Sanctuary	Himachal Pradesh
Tundah Wildlife Sanctuary	Himachal Pradesh
Inderkilla National Park	Himachal Pradesh
Great Himalayan National Park	Himachal Pradesh
Pin Valley National Park	Himachal Pradesh
Khirganga National Park	Himachal Pradesh
Simbalbara National Park	Himachal Pradesh
Sechu Tuan Nala Wildlife Sanctuary	Himachal Pradesh
Salim All National Park	Jammu & Kashmir
Kishtwar National Park	Jammu & Kashmir
Hemis National Park (Largest in Area)	Jammu & Kashmir
Changtang Wildlife Sanctuary	Jammu & Kashmir
Dachigam National Park	Jammu & Kashmir
Kara Koram Wildlife Sanctuary	Jammu & Kashmir
Hirpora Wildlife Sanctuary	Jammu & Kashmir
Lachipora Wildlife Sanctuary	Jammu & Kashmir
Betla National Park	Jharkhand
Hazaribagh National Park	Jharkhand
Lawalong Wildlife Sanctuary	Jharkhand
Nagarhole National Park	Karnataka
Cauvery Wildlife Sanctuary	Karnataka
Kudremukh National Park	Karnataka
Bannerghatta National Park	Karnataka
Bandipur National Park	Karnataka
Arabithittu Wildlife Sanctuary	Karnataka
Nugu Wildlife Sanctuary	Karnataka
Pushpagiri Wildlife Sanctuary	Karnataka
Chinnar Wild Life Sanctuary	Kerala
Idukki Wildlife Sanctuary	Kerala
Periyar National Park	Kerala
Silent Valley National Park	Kerala
Eravikulam National Park	Kerala
Parambikulam Wildlife Sanctuary	Kerala
Malabar Wildlife Sanctuary	Kerala
Anamudi Shola National Park	Kerala
Pampadum Shola National Park	Kerala
Pench National Park	Madhya Pradesh
Bandhavgarh National Park (Highest Numbers of Tigers)	Madhya Pradesh
Kanha National Park	Madhya Pradesh
Madhav National Park	Madhya Pradesh
Panna National Park	Madhya Pradesh
Satpura National Park	Madhya Pradesh
Van Vihar National Park	Madhya Pradesh
Gandhi Sagar Sanctuary	Madhya Pradesh
National Chambal Sanctuary	Madhya Pradesh
Mandla Plant Fossils National Park	Madhya Pradesh
Pachmari Wildlife Sanctuary	Madhya Pradesh
Phen Wildlife Sanctuary	Madhya Pradesh
Ratapani Tiger Reserve	Madhya Pradesh
Sanjay National Park	Madhya Pradesh
Chandoli National Park	Maharashtra
Gugamal National Park	Maharashtra
Sanjay Gandhi (Borivilli) National Park	Maharashtra
Koyna Wildlife Sanctuary	Maharashtra
Navegaon National Park	Maharashtra
Tadoba National Park	Maharashtra
Dhakna Kolkaz Wildlife Sanctuary	Maharashtra
Phansad Wildlife Sanctuary	Maharashtra
Wain Ganga Wildlife Sanctuary	Maharashtra
Keibul Lamjao National Park	Manipur
Yagoupokpi Lokchao Wildlife Sanctuary	Manipur
Nokrek National Park	Meghalaya
Nongkhyllem Wildlife Sanctuary	Meghalaya
Balphakram National Park	Meghalaya
Khawnglung Wildlife Sanctuary	Mizoram
Murlen National Park	Mizoram
Ngengpui Wildlife Sanctuary	Mizoram
Phawngpui Blue Mountain National Park	Mizoram
Pulebarze Wildlife Sanctuary	Nagaland
Intanki National Park	Nagaland
Simplipal National Park	Orissa
Chilka Wild Life Sanctuary	Orissa
Baisipalli Wildlife Sanctuary	Orissa
Bhitarkanika National Park	Orissa
Debrigarh Wildlife Sanctuary	Orissa
Kuldiha Wildlife Sanctuary	Orissa
Ranthambore National Park	Rajasthan
Sariska National Park	Rajasthan
First National Park in the world, which was successfully adapted by Royal Bengal Tiger]
Darrah National Park	Rajasthan
Desert National Park	Rajasthan
Keoladeo National Park (UNESCO)	Rajasthan
Mount Abu Wildlife Sanctuary	Rajasthan
Jawaharsagar Wildlife Sanctuary	Rajasthan
Phulwari Wildlife Sanctuary	Rajasthan
Keladevi Wildlife Sanctuary	Rajasthan
Fambonglho Wildlife Sanctuary	Sikkim
Khangchendzonga National Park	Sikkim
Kyongnosla Alpine Sanctuary	Sikkim
Pangolakha Wildlife Sanctuary	Sikkim
Shingba Rhododendron Sanctuary	Sikkim
Mukurthi National Park	Tamilnadu
Shenbagathoppu Grizzled Squirrel Wildlife Sanctuary	Tamilnadu
Satyamanglam wild Life Sanctuary	Tamilnadu
Indira Gandhi (Annamalai) National Park	Tamilnadu
Guindy National Park	Tamilnadu
Mudumalai National Park	Tamilnadu
Vettangundi Wildlife Sanctuary	Tamilnadu
Gulf of Mannar Marine National Park	Tamilnadu
Mrugavani National Park	Telangana
Sipahijola Wildlife Sanctuary	Tripura
Bisan (Rajbari) National Park	Tripura
Gumti Wildlife Sanctuary	Tripura
Clouded Leopard National Park	Tripura
Chandra Prabha Wildlife Sanctuary	Uttar Pradesh
Dudhwa National Park	Uttar Pradesh
Ranipur Sanctuary	Uttar Pradesh
Rajaji National Park	Uttarakhand
Gangotri National Park	Uttarakhand
Nanda Devi National Park (UNESCO)	Uttarakhand
Jim Corbett National Park (Oldest Park)	Uttarakhand
Valley of Flowers National Park (UNESCO)	Uttarakhand
Askot Musk Deer Sanctuary	Uttarakhand
Govind Pashu Vihar	Uttarakhand
Kedarnath Wildlife Sanctuary	Uttarakhand
Sundarbans National Park	West Bengal
Gorumara National Park	West Bengal
Buxa National Park	West Bengal
Jaldapara National Park	West Bengal
Neora Valley National Park	West Bengal
Singalila National Park	West Bengal
Mahatma Gandhi Marine National Park	Andaman & Nicobar Islands
Rani Jhansi Marine National Park	Andaman & Nicobar Islands
Saddle Peak National Park	Andaman & Nicobar Islands
Middle Button Island National Park	Andaman & Nicobar Islands
South Button Island National Park	Andaman &Nicobar Islands
Mount Harriet National Park	Andaman &Nicobar Islands
North Button Island National Park	Andaman & Nicobar Islands
Campbell Bay National Park	Andaman & Nicobar Islands
Galathea National Park	Andaman & Nicobar Islands

 

Dear Aspirants,

This Spotlight is a part of our Mission Nikaalo Prelims-2023.

You can check the broad timetable of Nikaalo Prelims here

Session Details

YouTube LIVE with Parth sir – 1 PM  – Prelims Spotlight Session

Evening 04 PM  – Daily Mini Tests

Telegram LIVE with Sukanya ma’am – 06 PM  – Current Affairs Session

Join our Official telegram channel for Study material and Daily Sessions Here

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20th Mar 2023

Laws and Bodies Related To Environment Conservation In India

Dear Aspirants,

This Spotlight is a part of our Mission Nikaalo Prelims-2023.

You can check the broad timetable of Nikaalo Prelims here

Session Details

YouTube LIVE with Parth sir – 1 PM  – Prelims Spotlight Session

Evening 04 PM  – Daily Mini Tests

Telegram LIVE with Sukanya ma’am – 06 PM  – Current Affairs Session

Join our Official telegram channel for Study material and Daily Sessions Here

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17th Mar 2023

Important Declarations, Conventions, Protocols Regarding UNFCCC COPs

Major UN climate negotiations under UNFCCC- Timeline

1992—

The UN Framework Convention on Climate Change (UNFCCC) was adopted and opened for signatures in Rio de Janeiro, Brazil, at the UN Conference on Environment and Development, also known as the Earth Summit.

154 signatories to the UNFCCC agreed to stabilize “greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous interference with the climate system.”

The treaty is not legally binding because it sets no mandatory limits on GHG emissions. Instead, the treaty provides for future negotiations to set emissions limits. The first principal revision is the Kyoto Protocol.

1994—

The UNFCCC Treaty entered into force after receiving 50 ratifications.

1997—

KYOTO PROTOCOL

COP 3 was held in Kyoto, Japan. On December 11, the Kyoto Protocol was adopted by consensus with more than 150 signatories.

The Protocol included legally binding emissions targets for developed country Parties for the six major GHGs, which are-

• Carbon dioxide.
• Methane.
• Nitrous oxide.
• Hydrofluorocarbons.
• Perfluorocarbons, and
• Sulfur hexafluoride.

Annex of the Kyoto Protocol

• Annex 1 – Industrialised Countries (mainly OECD) plus economies in transition (mainly former soviet block countries) – They would mandatorily reduce GHGs, base year – 1990
• Annex 2 – Subset of Annex 1,  Industrialised Countries (mainly OECD), would also provide finances and technology to non annex countries
• Non annex – not included in annex, all other countries, no binding targets
• Annex A – gases covered under Kyoto <name those 7 gases>
• Annex B – Binding targets for each Annex 1 country i.e Japan will reduce emission by X%, Australia by Y% 

The Protocol offered additional means of meeting targets by way of three market-based mechanisms:

• Emissions trading.
• Clean Development Mechanism (CDM).
• Joint Implementation (JI).

Under the Protocol, industrialized countries’ actual emissions have to be monitored and precise records have to be kept of the trades carried out.

India ratified the Kyoto Protocol in 2002.

 

2000—

COP 6 part I was held in The Hague, Netherlands. Negotiations faltered, and parties agreed to meet again.

COP 6part II was held in Bonn, Germany. The consensus was reached on what was called the Bonn Agreements.

All nations except the United States agreed on the mechanisms for implementation of the Kyoto Protocol.

The U.S. participated in observatory status only.

2001—

COP 7 was held in Marrakesh, Morocco. The detailed rules for the implementation of the Kyoto Protocol were adopted and called the Marrakesh Accords.

The Special Climate Change Fund (SCCF) was established to “finance projects relating to: adaptation; technology transfer and capacity building; energy transport, industry, agriculture, forestry and waste management; and economic diversification.”

The Least Developed Countries Fund was also “established to support a work programme to assist Least Developed Country Parties (LDCs) carry out, inter alia [among other things], the preparation and implementation of national adaptation programmes of action (NAPAs).”

2005—

COP 11/CMP 1 were held in Montreal, Canada. This conference was the first to take place after the Kyoto Protocol took force. The annual meeting between the parties (COP) was supplemented by the first annual Meeting of the Parties to the Kyoto Protocol (CMP).

The countries that had ratified the UNFCCC, but not accepted the Kyoto Protocol, had observer status at the latter conference.

The parties addressed issues such as “capacity building, development and transfer of technologies, the adverse effects of climate change on developing and least developed countries, and several financial and budget-related issues, including guidelines to the Global Environment Facility (GEF).” (UNFCCC)

2007—

COP 13/CMP 3 were held in Bali. COP parties agreed to a Bali Action Plan to negotiate GHG mitigation actions after the Kyoto Protocol expires in 2012. The Bali Action Plan did not require binding GHG targets for developing countries.

2009—

June – As part of the UN Framework Convention on Climate Change (UNFCCC) process, governments met in Bonn, Germany, to begin discussions on draft negotiations that would form the basis of an agreement at Copenhagen.

December – COP 15 was held in Copenhagen, Denmark.

It failed to reach agreement on binding commitments after the Kyoto Protocol commitment period ends in 2012.

During the summit, leaders from the United States, Brazil, China, Indonesia, India and South Africa agreed to what would be called the Copenhagen Accord which recognized the need to limit the global temperature rise to 2°C based on the science of climate change.

While no legally binding commitments were required by the deal, countries were asked to pledge voluntary GHG reduction targets. $100 billion was pledged in climate aid to developing countries.

2012—

COP 18 was held in Doha, Qatar.

Parties agreed to extend the expiring Kyoto Protocol, creating a second commitment phase that would begin on January 1, 2013 and end December 31, 2020. India ratified the second commitment period in 2017.

Parties failed to set a pathway to provide $100 billion per year by 2020 for developing countries to finance climate change adaptation, as agreed upon at COP 15 in Copenhagen.

The concept of “loss and damage” was introduced as developed countries pledged to help developing countries and small island nations pay for the losses and damages from climate change that they are already experiencing.

2013—

COP 19 was held in Warsaw, Poland.

Parties were expected to create a roadmap for the 2015 COP in Paris where a legally binding treaty to reduce greenhouse gas (GHG) emissions is expected to be finalized (in order to come into effect in 2020).

Differences of opinion on responsibility of GHG emissions between developing and developed countries led to a flexible ruling on the wording and a plan to discuss further at the COP 20 in Peru.

A non-binding agreement was reached among countries to set up a system tackling the “loss and damage” issue, although details of how to set up the mechanism were not discussed.

Concerning climate finance, the United Nations’ Reducing Emissions from Deforestation and Forest Degradation (REDD+) Program, aimed at preserving the world’s forests, was formally adopted.

Little progress was made on developed countries committing to the agreed upon plan of providing $100 billion per year by 2020 to developing countries.

 

2015—

PARIS AGREEMENT

COP 21 or CMP 11 was held in Paris.

Aims of the Paris Agreement-

1.Keep the global temperature rise this century well below 2 degrees Celsius above the pre-industrial level.

2.Pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.

3.Strengthen the ability of countries to deal with the impacts of climate change.

 

COP 23 – BONN(GERMANY)

First COP to be hosted by a small Island developing nation.
Countries continued to negotiate the finer details of how the agreement will work from 2020 onwards.

 

COP 24 – KATOWICE(POLLAND)

• Countries settled on most of the tricky elements of the “rulebook” for putting the 2015 Paris agreement into practice.
• This includes how governments will measure, report on and verify their emissions-cutting efforts, a key element because it ensures all countries are held to proper standards and will find it harder to wriggle out of their commitments.

COP 26: Glasgow Agreement

What was achieved?
1. Mitigation:

• The Glasgow agreement has emphasised that stronger action in the current decade was most critical to achieving the 1.5-degree target.

2. Adaptation:

• The Glasgow Climate Pact has:

1. Asked the developed countries to at least double the money being provided for adaptation by 2025 from the 2019 levels.
2. Created a two-year work programme to define a global goal on adaptation.

3. Finance: 

• In 2009, developed countries had promised to mobilise at least $100 billion every year from 2020.
• The developed nations have now said that they will arrange this amount of 100 billion annual fund by 2023.

4. Accounting earlier failures:

• The pact has expressed “deep regrets” over the failure of the developed countries to deliver on their $100 billion promise.
• It has asked them to arrange this money urgently and in every year till 2025.

5. Loss and Damage:

• There is no institutional mechanism to compensate nations for the losses, or provide them help in the form of relief and rehabilitation after suffering from climate disasters.
• The loss and damage provision in the Paris Agreement seeks to address that.
• Thanks to a push from many nations, substantive discussions on loss and damage could take place in Glasgow.

6. Carbon Markets:

• The Glasgow Pact has offered some reprieve to the developing nations.
• It has allowed these carbon credits to be used in meeting countries’ first NDC targets.

NATIONALLY DETERMINED CONTRIBURTIONS (NDCs)

• The national pledges by countries to cut emissions are voluntary.
• The Paris Agreement requires all Parties to put forward their best efforts through “nationally determined contributions” (NDCs) and to strengthen these efforts in the years ahead.
• This includes requirements that all Parties report regularly on their emissions and on their implementation efforts.
• In 2018, Parties will take stock of the collective efforts in relation to progress towards the goal set in the Paris Agreement.
• There will also be a global stock take every 5 years to assess the collective progress towards achieving the purpose of the Agreement and to inform further individual actions by Parties.

Some facts-

• It entered into force in November 2016 after (ratification by 55 countries that account for at least 55% of global emissions) had been met.
• The agreement calls for zero net anthropogenic greenhouse gas emissions to be reached during the second half of the 21st century.
• In the adopted version of the Paris Agreement, the parties will also “pursue efforts to limit the temperature increase to 1.5 °C.”
• The 1.5 °C goal will require zero-emissions sometime between 2030 and 2050, according to some scientists.
• The developed countries reaffirmed the commitment to mobilize $100 billion a year in climate finance by 2020 and agreed to continue mobilizing finance at the level of $100 billion a year until 2025.
• In 2017, United States announced that the U.S. would cease all participation in the 2015 Paris Agreement on climate change mitigation.
• In accordance with Article 28 of the Paris Agreement, the earliest possible effective withdrawal date by the United States cannot be before November 2020. Thus, The U.S. will remain a signatory till November 2020.

RATIFICATION TO KIGALI AGREEMENT

The Union Cabinet has given its approval for ratification of the Kigali Amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer for phase down of Hydrofluorocarbons (HFCs) by India.

What is Montreal Protocol?

• The Montreal Protocol on Substances that Deplete the Ozone Layer is an international agreement made in 1987.
• It was designed to stop the production and import of ozone-depleting substances and reduce their concentration in the atmosphere to help protect the earth’s ozone layer.
• It sits under the Vienna Convention for the Protection of the Ozone Layer.

What is the Kigali Amendment?

• It is an international agreement to gradually reduce the consumption and production of hydrofluorocarbons (HFCs).
• It is a legally binding agreement designed to create rights and obligations in international law.
• While HFCs do not deplete the stratospheric ozone layer, they have high global warming potential ranging from 12 to 14,000, which has an adverse impact on climate.

Dear Aspirants,

This Spotlight is a part of our Mission Nikaalo Prelims-2023.

You can check the broad timetable of Nikaalo Prelims here

Session Details

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Evening 04 PM  – Daily Mini Tests

Telegram LIVE with Sukanya ma’am – 06 PM  – Current Affairs Session

Join our Official telegram channel for Study material and Daily Sessions Here

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15th Mar 2023

External Sectors of India 

All economic activities of an economy which take place in foreign currency fall in the external sector such as balanced of payment, export, import, foreign investment, external debt, current account, capital account, exchange rates etc.

FOREX RESERVES

Foreign exchange reserves are assets denominated in a foreign currency that are held on reserve by a central bank. These may include foreign currencies, bonds, treasury bills and other government securities.

 

Forex Reserves Consist of:	• Bank deposits • Gold • Special drawing rights (SDRS) • Reserve tranche position (RTP) • Foreign currency assets (FCA) • Government securities
SDR	• SDR is an international reserve asset, created by the IMF in 1969. • Value of the SDR is based on a basket of five currencies- Dollar, Euro, Renminbi, Yen, and Pound Sterling. • It is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members.

EXCHANGE RATE

Exchange rate is Price at which one currency is converted into or exchanged for another currency.

Various Exchange rates mechanism:

 

FIXED EXCHANGE RATE	FLOATING EXCHANGE RATE	MANAGED FLOATING RATE
Complete intervention of Authority (government or central bank) in determination of the currency exchange rate.	Market forces(demand and supply) determine the value of currency No role of authority	Exchange rate is largely determined by market forces. In crisis, central banks may intervene to stabilize the exchange rate

NEER vs REER

 

Nominal Effective Exchange Rate (NEER)	Real Effective Exchange Rate (REER)
Weighted average of bilateral nominal exchange rates of the home currency in terms of foreign currencies	Weighted average of nominal exchange rates, adjusted for inflation.
It is the exchange rate of one currency against a basket of currencies, weighted according to trade with each country (not adjusted for inflation).	Is calculated on the basis of NEER. Captures inflation differentials between country and its major trading partners and reflects the degree of external competitiveness

CURRENCY CONVERTIBILITY

Currency convertibility is the ease with which the currency of a country can be freely converted into any other foreign currency or gold at market determined exchange rate.

 

Partial Convertibility:	• Portion allowed by the government which can be converted into foreign currency with least restrictions. • Union Budget for 1992-93, introduced it on current account under Liberalized Exchange Rate Management System (LERMS) • Also known as Dual exchange system. • Presently partial convertibility still operational on capital account.
Full Convertibility:	• Freedom to convert domestic currency into any foreign currency and vice versa without any regulatory intervention. • Dual exchange rate system got automatically abolished and LERMS was now based upon the open market exchange. • In 1994, the Government of India declared full convertibility of Rupee on Current account.
Tarapore Committee I (1997) and II (2006):	• Constituted by the RBI for suggesting a roadmap on full convertibility of Rupee on Capital Account.

Advantages of capital account convertibility:

• Availability of large funds
• Reduction in cost of capital.
• Greater financial competitiveness.
• Increase in FII/FPI flow.

BALANCE OF PAYMENT

A systematic record of all economic transactions between the residents of one country with the residents of the other country in a financial year.

It consists of balance of trade, balance of current account and capital account.

Balance of trade: Difference between the monetary value of a nation’s exports and imports over a certain time period.

Balance of payments divides transactions in two accounts:

Current account

Capital account

 

Current Account Invisible Visible Goods(+) Services [+) Income 1. Dividend 2. Interest 3. Profit Transfer [+] 1. Gift 2. Donation 3. Remittance

Capital account [+] Investment [+] 1.Sovereign 2.Commercial NRI account [+] 1. Gift 2.Donation 3.Remittance Loan (+) 1 FDI 2. FII/FPI

	CURRENT ACCOUNT	CAPITAL ACCOUNT
Meaning	• Records imports and exports of visible and invisibles • Short term implication transactions • Covers only earnings and spending. • Excludes any borrowings and lending.	• Shows capital expenditure and income for country • Long term implication transactions • Only includes borrowings and lending by a country
Components	• Visible trade(Export and Import of goods-Merchandise transactions ) • Invisible trade(Export and Import of services) • Unilateral transactions	• Direct Investment (FDI) • Portfolio Investment (FPI) • Loans / External commercial borrowing (ECB) • Non-resident’s investment in Bank, Insurance, Pension schemes. • RBI’s foreign exchange reserve
Deficit (CAD)	• If the value of the goods and services imported exceeds the value of those exported. • Current Account deficit = Trade gap(export – import) + Net current transfers (foreign aid) + Net factor income (Interest, Dividend)	• When more money is flowing out of a country to acquire assets and rights abroad
Surplus	• If the value of the goods and services exported exceeds the value of those imported.	• Money is flowing into the country, but these inflows reflect changes in the ownership of national assets by way of sale or borrowing.
Convertibility	• Current account convertibility relates to the removal of restrictions on payments relating to the international exchange of goals, services and factor incomes.	• Capital account convertibility refers to a liberalization of a country’s capital transactions such as loans and investment.
Current status	• Allowed Full convertibility	• Only Partial convertibility

EXTERNAL DEBT

Part of a country s debt which has been borrowed from foreign creditors which includes private commercial banks, international financial institutions such as the World Bank, International Monetary Fund (IMF), and sovereign governments.

Types of external debts:

Short term debt: Maturity period 1 year or less

Long term debt: Maturity period more than 1 year

Sovereign debt : Bonds issued by the national government in any foreign currency to generate funds to meet its financial expenses.

 

Dear Aspirants,

This Spotlight is a part of our Mission Nikaalo Prelims-2023.

You can check the broad timetable of Nikaalo Prelims here

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14th Mar 2023

Financial Markets

FINANCIAL MARKETS

• Financial Markets refers to the system consisting of financial institutions, financial instruments, regulatory bodies and organisations
•  It facilitates flow of debt and equity capital.
• Financial Institutions (Banks), Development financial Institutions (NABARD, SIDBI, IDBI etc.) and Non-Banking Financial Institutions form Financial Institutions. Ø Financial Instruments are shares, bonds, debentures etc.

Financial markets consist of two major segments:

(l) Money Market: the market for short term funds;

(2) Capital Market: the market for long and medium term funds.

MONEY MARKET

According to the RBI, “The money market is the centre for dealing mainly of short character, in monetary assets; it meets the short term requirements of borrowers and provides liquidity or cash to the lenders.

It is a place where short term surplus investible funds at the disposal of financial and other institutions and individuals are bid by borrowers, again comprising institutions and individuals and also by the government.

Functions of Money Market

• To maintain monetary equilibrium: It means to keep a balance between the demand for and supply of money for short term monetary transactions.
• To promote economic growth: Money market can do this by making funds available to various units in the economy such as agriculture, small scale industries, etc.
• To provide help to Trade and Industry: Money market provides adequate finance to trade and industry. Similarly it also provides facility of discounting bills of exchange for trade and industry.
• To help in implementing Monetary Policy: It provides a mechanism for an effective implementation of the monetary policy.
• To help in Capital Formation: Money market makes available investment avenues for short term period. It helps in generating savings and investments in the economy.
• Money market provides non-inflationary sources of finance to government.

Instruments of money market

Treasury Bills: They are promissory notes issued by the RBI on behalf of the government as a short term liability and sold to banks and to the public. The maturity period ranges from 14 to 364 days. They are the negotiable instruments, i.e. they are freely transferable. No interest is paid on such bills but they are issued at a discount on their face value.

Commercial Bills: They are also called Trade Bills or Bills of Exchange. Commercial bills are drawn by one business firm to another in lieu of credit transaction. It is a written acknowledgement of debt by the maker directing to pay a specified sum of money to a particular person. They are short-term instruments generally issued for a period of 90 days. These are freely marketable. Banks provide working capital finance to firms by purchasing the commercial bills at a discount; this is called ‘discounting of bills’.

Commercial Paper (CP): The CP was introduced in 1990 on the recommendation of the Vaghul Committee. A commercial paper is an unsecured promissory note issued by corporate with net worth of atleast Rs 5 crore to the banks for short term loans. These are issued at discount on face value for a period of 14 days to 12 months. These are issued in multiples of Rs 1 lakh subject to a minimum of Rs 25 lakh.

Certificate of Deposit (CD): The CD was introduced in 1989 on the recommendation of the Vaghul Committee. These are issued by banks against deposits kept by individuals and institutions for a period of 15 days to 3 years. These are similar to Fixed Deposits but are negotiable and tradable. These are issued in multiples of Rs. 1 lakh subject to a minimum of Rs25 lakh.

CAPITAL MARKET

The capital market is the market, for medium and long term funds. It consists of all the financial institutions, organizations and instruments which deal in lending and borrowing transaction of over one year maturity.

It is of following two types:

Primary Market	Secondary Market
It issues security for the first time. Example- Initial public offer and follow on public offer.	Existing securities are bought and sold.
Firms issue shares to public.	One investor sells it to another investor.
Price is fixed by the firms.	Price is fixed on the basis of demand and supply.
Firms raise money for long-term investment.	Companies benefit from the secondary markets.
There is no specific geographical location.	There is no specific geographical location.
SEBI is the regulator for this market.	SEBI is the regulator for this market as well.

GILT-EDGED MARKET

 The Gilt-edged market refers to the market for government and semi government securities, backed by the RBI.

It is known so because the government securities do not suffer from the risk of default and are highly liquid.

The RBI is the sole supplier of such securities. These are demanded by commercial banks, insurance companies, provident funds and mutual funds.

The gilt-edged market may be divided into two parts- the Treasury bill market and the government bond market. Treasury bills are issued to meet short-term needs for funds of the government, while government bonds are issued to finance long-term developmental expenditure. 

 

Dear Aspirants,

This Spotlight is a part of our Mission Nikaalo Prelims-2023.

You can check the broad timetable of Nikaalo Prelims here

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13th Mar 2023

Important keywords in Budget, Fiscal Policy and Taxation 

Annual financial statement:

The Union Budget is the annual financial statement that contains the government’s revenue and expenditure for a fiscal year.

It may also include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows.

The statement details the revenues from all sources, and expenditure on all activities that the government will undertake for the fiscal year. The fiscal year is calculated from 1 April-31 March.

Under Article 112 of the Constitution, the government has to present a statement of estimated revenue and expenditure for every fiscal. This statement is called the annual financial statement. This document is divided into three sections: For each of these funds, the central government is required to present a statement of revenue and expenditure.

1. Consolidated Fund:

The Consolidated Fund of India, created under Article 266 of the Indian Constitution, includes the revenues received by the government and expenses made by it.

All the revenue that the government receives through direct (income tax, corporation tax etc.) or indirect tax (Goods and Services Tax or GST) go into the Consolidated Fund of India.

Revenue from non-tax sources like dividends, profits from the PSUs, and income from general services also contribute to the fund. Recoveries of loans, earnings from disinvestment and repayment of debts issued by the Centre also contribute to the fund.

However, no money can be withdrawn for meeting expenses until the government gets the approval of the Parliament. Examples of expenditure include wages, salaries and pension of government employees, and other fixed costs. The repayment of debts incurred by the government is also done through the Consolidated Fund of India.

The Consolidated Fund of India is divided into five parts:

• Revenue account – receipts,
• Revenue account – disbursements,
• Capital account – receipts,
• Capital account – disbursements, and
• Disbursements ‘charged’ on the Consolidated Fund of India.

Disbursements ‘charged’ on the Consolidated Fund of India is a special category within the Consolidated Fund of India which is not put to vote in the Parliament.

This means whatever comes under this category need to be paid, whether the Budget is passed or not.

The salary and allowances of the President, speaker and deputy speaker of the Lok Sabha, chairman and deputy chairman of the Rajya Sabha, salaries and allowances of Supreme Court judges, pensions of Supreme Court and High Court judges come under this category.

2.Contingency fund:

Like the Consolidated Fund of India, the Contingency Fund of India constitutes a part of the annual financial statement.

Established under Article 267(1) of the Indian Constitution, the fund is maintained by the ministry of finance on behalf of the President of India.

As the name suggests, the Contingency Fund of India is an account maintained for meeting expenses during any unforeseen emergencies.

Parliamentary approval for such unforeseen expenditure is obtained, ex- post-facto, and an equivalent amount is drawn from the Consolidated Fund of India to recoup the Contingency Fund after such ex-post-facto approval.

3. Public account.

Article 266 of the Constitution defines the Public Account as being those funds that are received on behalf of the Government of India.

Money held by the government in a trust — such as in the case of Provident Funds, Small Savings collections, income of government set apart for expenditure on specific objects like road development, primary education, reserve/special Funds, etc — are kept in the Public Account.

Public Account funds do not belong to the government and have to be finally paid back to the persons and authorities that deposited them.

Parliamentary authorisation for such payments is not required.

However, when money is withdrawn from the Consolidated Fund with the approval of Parliament and kept in the Public Account for expenditure for a specific purpose, it is submitted for a vote in Parliament.

Appropriation bill

Appropriation Bill is a money bill that allows the government to withdraw funds from the Consolidated Fund of India to meet its expenses during the course of a financial year.

As per Article 114 of the Constitution, the government can withdraw money from the Consolidated Fund only after receiving approval from Parliament.

To put it simply, the Finance Bill contains provisions on financing the expenditure of the government, and Appropriation Bill specifies the quantum and purpose for withdrawing money.

Vote-on-account

The Constitution says that no money can be withdrawn by the government from the Consolidated Fund of India except under appropriation made by law.

For that, an appropriation bill is passed during the Budget process.

However, the appropriation bill may take time to pass through the Parliament and become a law. Meanwhile, the government would need permission to spend even a single penny from April 1 when the new financial year starts.

Vote on the account is the permission to withdraw money from the Consolidated Fund of India in that period, usually two months.

Vote on the account is a formality and requires no debate. When elections are scheduled a few months into the new financial year, the government seeks vote on account for four months. Essentially, vote on account is the interim permission of the parliament to the government to spend money.

Corporation tax:

Corporation tax is a direct tax imposed on the net income or profit that enterprises make from their businesses. Companies, both public and privately registered in India under the Companies Act 1956, are liable to pay corporation tax. This tax is levied at a specific rate according to the provisions of the Income Tax Act, 1961.

Fringe benefits tax (FBT):
The taxation of perquisites – or fringe benefits – provided by an employer to his employees, in addition to the cash salary or wages paid, is fringe benefits tax. It was introduced in Budget 2005-06. The government felt many companies were disguising perquisites such as club facilities as ordinary business expenses, which escaped taxation altogether. Employers have to now pay FBT on a percentage of the expense incurred on such perquisites.

Direct Tax:

A direct tax is paid directly by an individual or organization to the imposing entity. A taxpayer, for example, pays direct taxes to the government for different purposes, including real property tax, personal property tax, income tax, or taxes on assets. Direct taxes are based on the ability-to-pay principle. This economic principle states that those who have more resources or earn a higher income should pay more taxes.

Indirect Tax
In the case of indirect taxes, the incidence of tax is usually not on the person who pays the tax. These are largely taxes on expenditure and include Customs, excise and service tax.

Indirect taxes are considered regressive, the burden on the rich and the poor is alike. That is why governments strive to raise a higher proportion of taxes through direct taxes. Moving on, we come to the next important receipt item in the revenue account, non-tax revenue.

Non-tax revenue:

Other than taxation being a primary source of income, the government also earns a recurring income, which is called non-tax revenue. While sources of tax revenue are few, the sources of non-tax revenue are many, with the number of collections per source. Although there are many sources of non-tax revenue, the amount per source is much less than that for tax revenue.

For example, when citizens use services offered by the government, they pay bills, which are categorised as non-tax revenue, as the government provides infrastructure support to implement the services. Non-tax revenue also includes the interest collected by the government on the loans or funds offered to states.

Grants-in-aid and contributions
The third receipt item in the revenue account is relatively small grants-in-aid and contributions. These are in the nature of pure transfers to the government without any repayment obligation.
These include expense incurred on organs of state such as Parliament, judiciary and elections. A substantial amount goes into administering fiscal services such as tax collection. The biggest item is the interest payment on loans taken by the government. Defence and other services like police also get a sizeable share. Having looked at receipts and expenditure on revenue account we come to an important item, the difference between the two, the revenue deficit.

Revenue deficit:

Revenue deficit arises when the government’s revenue expenditure exceeds the total revenue receipts.

Revenue deficit includes those transactions that have a direct impact on a government’s current income and expenditure. This represents that the government’s own earnings are not sufficient to meet the day-to-day operations of its departments. Revenue deficit turns into borrowings when the government spends more than what it earns and has to resort to the external borrowings.

               Revenue Deficit= Total revenue receipts – Total revenue expenditure.

Revenue Deficit deals only with the government’s revenue receipts and revenue expenditures.

Note that revenue receipts are receipts which neither create liability nor lead to a reduction in assets.

It is further divided into two heads:

• Receipt from Tax (Direct Tax,  Indirect Tax)
• Receipts from Non-Tax Revenue

Revenue Expenditure is referred to as the expenditure that does not result in the creation of assets reduction of liabilities. It is further divided into two types

• Plan revenue expenditure
• Non-plan revenue expenditure

Fiscal Deficit:
The fiscal deficit is defined as an excess of total budget expenditure over total budget receipts excluding borrowings during a fiscal year. In simple words, it is the amount of borrowing the government has to resort to meet its expenses. A large deficit means a large amount of borrowing. The fiscal deficit is a measure of how much the government needs to borrow from the market to meet its expenditure when its resources are inadequate.

Primary deficit:

Primary deficit is defined as a fiscal deficit of current year minus interest payments on previous borrowings.

         Primary deficit= Fiscal deficit – Interest payment on the previous borrowing

In other words, whereas fiscal deficit indicates borrowing requirement inclusive of interest payment, the primary deficit indicates borrowing requirement exclusive of interest payment (i.e., amount of loan).

We have seen that borrowing requirement of the government includes not only accumulated debt, but also interest payment on the debt. If we deduct ‘interest payment on debt’ from borrowing, the balance is called the primary deficit.

Public debt:

Public debt receipts and public debt disbursals are borrowings and repayments during the year, respectively. The difference is the net accretion to the public debt. Public debt can be split into internal (money borrowed within the country) and external (funds borrowed from non-Indian sources). Internal debt comprises treasury bills, market stabilisation schemes, ways and means advance, and securities against small savings.

Ways and means advance (WMA):

One of RBI’s roles is to serve as banker to both central and state governments. In this capacity, RBI provides temporary support to tide over mismatches in their receipts and payments in the form of ways and means advances.

CESS:
This is an additional levy on the basic tax liability. Governments resort to cess for meeting specific expenditure.

Dividend distribution tax:

A dividend is a return given by a company to its shareholders out of the profits earned by the company in a particular year. Dividend constitutes income in the hands of the shareholders which ideally should be subject to income tax.

However, the income tax laws in India provided for an exemption of the dividend income received from Indian companies by the investors by levying a tax called the Dividend Distribution Tax (DDT) on the company paying the dividend. This tax has been abolished in the 2020-21 budget.

FRBM Act 2003:

The Fiscal Responsibility and Budget Management Act (FRBM Act), 2003, establishes financial discipline to reduce the fiscal deficit.

What are the objectives of the FRBM Act?

The FRBM Act aims to introduce transparency in India’s fiscal management systems. The Act’s long-term objective is for India to achieve fiscal stability and to give the Reserve Bank of India (RBI) flexibility to deal with inflation in India. The FRBM Act was enacted to introduce a more equitable distribution of India’s debt over the years.

Key features of the FRBM Act

The FRBM Act made it mandatory for the government to place the following along with the Union Budget documents in Parliament annually:

1. Medium Term Fiscal Policy Statement

2. Macroeconomic Framework Statement

3. Fiscal Policy Strategy Statement

The FRBM Act proposed that revenue deficit, fiscal deficit, tax revenue and the total outstanding liabilities be projected as a percentage of gross domestic product (GDP) in the medium-term fiscal policy statement.

Fiscal Performance Index (FPI)

• The composite FPI developed by CII is an innovative tool using multiple indicators to examine the quality of Budgets at the Central and State levels.
• The index has been constructed using UNDP’s Human Development Index methodology which comprises six components for holistic assessment of the quality of government budgets, subsidies, pensions and defence in GDP
• Quality of capital expenditure: measured by the share of capital expenditure (other than defence) in GDP
• Quality of revenue: the ratio of net tax revenue to GDP (own tax revenue in case of States)
• Degree of fiscal prudence I: fiscal deficit to GDP
• Degree of fiscal prudence II: revenue deficit to GDP and
• Debt index: Change in debt and guarantees to GDP

Other measures of FPI

• As per the new index, expenditure on infrastructure, education, healthcare and other social sectors can be considered beneficial for economic growth.

Sabka Vishwas-Legacy Dispute Resolution Scheme

• This Scheme is introduced to resolve and settle legacy cases of the Central Excise and Service Tax.
• The proposed scheme would cover all the past disputes of taxes which may have got subsumed in GST; namely Central Excise, Service Tax and Cesses.
• The Government expects the Scheme to be availed by a large number of taxpayers for closing their pending disputes relating to legacy Service Tax and Central Excise cases that are now subsumed under GST so they can focus on GST.
• The Scheme is, especially, tailored to free a large number of small taxpayers of their pending disputes with the tax administration.

Components of the Scheme

• The two main components of the Scheme are dispute resolution and amnesty.
• The dispute resolution component is aimed at liquidating the legacy cases of Central Excise and Service Tax that are subsumed in GST and are pending in litigation at various forums.
• The amnesty component of the Scheme offers an oppor­tunity to the taxpayers to pay the outstanding tax and be free of any other consequence under the law.
• The most attractive aspect of the Scheme is that it provides substantial relief in the tax dues for all categories of cases as well as full waiver of interest, fine, penalty,
• In all these cases, there would be no other liability of interest, fine or penalty. There is also a complete amnesty from prosecution.

Direct Tax Code:

• The Direct Tax Code (DTC) is an attempt by the Govern­ment of India to simplify the direct tax laws in India.
• It will revise, consolidate and simplify the structure of direct tax laws in India into a single legislation.
• When implemented, it will replace the Income-tax Act, 1961 (ITA), and other direct tax legislation like the Wealth Tax Act, 1957.
• The task force was constituted by the government to frame draft legislation for this proposed DTC in November 2017 and review the existing Income Tax Act.

Direct Tax:

• These are the taxes, paid directly to the government by the taxpayer. Under the direct tax system, the incidence and impact of taxation fall on the same entity, which cannot be transferred to another person.
• It is termed as a progressive tax because the proportion of tax liability rises as an individual or entity’s income increases.
• Examples- Income tax, corporate tax, Dividend Distri­bution Tax, Capital Gain Tax, Security Transaction Tax.
• The system of Direct taxation is governed by the Cen­tral Board of Direct Taxes (CBDT). It is a part of the Department of Revenue in the Ministry of Finance.

Corporate Tax

• A corporate tax also popularly known as the company tax or the corporation tax is the tax levied on the capital or income of corporations or analogous legal entities.
• In most countries, such taxes are levied at the national level, and a tax that is similar to that imposed at the na­tional level could be imposed at the local or state levels.
• The taxes could also be termed as capital tax or income tax.
• Generally, Partnership firms are not taxed at the entity level.
• In most of nations, the corporations functioning in a country are taxed for the income from that country.
• Many countries tax all income of corporations incorpo­rated in the country or those deemed to be resident for tax purposes in the country.
• The income of the company that is to be taxed is computed similarly to the taxable income for individuals.
• Tax is generally imposed on net profits.
• In India, companies, both private and public which are registered in India under the Companies Act 1956, are liable to pay corporate tax.

Securities transaction tax (STT)

• Sale of any asset (shares, property) results in loss or profit. Depending on the time the asset is held, such profits and losses are categorised as long-term or short-term capital gain/loss.
• In Budget 2004-05, the government abolished long-term capital gains tax on shares (tax on profits made on the sale of shares held for more than a year) and replaced it with STT.
• It is a kind of turnover tax where the investor has to pay a small tax on the total consideration paid/received in a share transaction.

Banking cash transaction tax (BCTT)

• Introduced in Budget 2005-06, BCTT is a small tax on cash withdrawal from bank exceeding a particular amount in a single day.
• The basic idea is to curb the black economy and generate a record of big cash transactions

Cess

• This is an additional levy on the basic tax liability Governments resort to cess for meeting specific expenditure. For instance, both corporate and individual income is at present subject to an education cess of 2%.
• In the last Budget, the government had imposed another 1% cess – secondary and higher education cess on income tax – to finance secondary and higher education.

Countervailing Duties (CVD)

• Countervailing duty is a tax imposed on imports, over and above the basic import duty CVD is at par with the excise duty paid by the domestic manufacturers of similar goods
• This ensures a level playing field between imported goods and locally-produced ones.
• An exemption from CVD places the domestic industry at the disadvantage and over long run discourages investments in affected sectors.

Export Duty

• This is a tax levied on exports. In most instances, the object is not revenue, but to discourage exports of certain items.
• In the last Budget, for instance, the government imposed an export duty of Rs 300 per metric tonne on the export of iron ores and concentrates and Rs 2,000 per metric tonne on the export of chrome ores and concentrates.

Pass-through Status

• A pass-through status helps avoid double taxation. Mutual funds, for instance, enjoy pass-through status.
• The income earned by the funds is tax-free. Since mutual funds’ income is distributed to the unit-holders, who are in turn taxed on their income from such investments any taxation of mutual funds would amount to double taxation.
• Essentially, it means the income is merely passing through the mutual funds and, therefore, should not be taxed.
• The government allows venture funds in some sectors pass-through status to encourage investments in start-ups.