TOPIC: GS 3 Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Timely windfall

What is the news?

• The Reserve Bank of India’s decision to transfer 99,122 crore of surplus to the Centre comes as a windfall to the government
• At a moment when the ferocious second wave of the COVID­19 pandemic has likely Supended most projections for the economy including revenue assumptions.

Budgeting Figures

• The payout is almost double the 53,511 crore that had budgeted for by way of dividend receipts, including from nationalized banks and financial institutions.
• That the RBI has generated a surplus that is over 73% higher than what it posted for the previous 12­month period, is also noteworthy
• The bank just changed its accounting calendar from July­June to an April­March format by truncating its last financial year to a nine­month period.
• The RBI’s annual report, released shows that a sharp 63% contraction in expenditure was a major factor in boosting the surplus, especially as income fell by 11%.
• The biggest contributor in real terms was 50,629 crore of exchange gain realised by the central bank from its foreign exchange transactions.
• The central bank, which admits to intervening in the foreign exchange market to smoothe volatility,
• RBIM clearly had a very busy time mopping up the record foreign direct investment inflows that exceeded $81 billion in the last financial year
• It also had responsibility of the sizeable portfolio investments from overseas.
• Increase in exchange gain over the preceding 12­month period, prompts the question as to whether the RBI’s foreign exchange transactions were all entirely aimed only at stabilising the rupee’s value.
• Given the magnitude of economic disruption caused by the ongoing pandemic and
• The lack of visibility on the costs that the economy is going to have to bear in the months
• The RBI’s transfer surely provides a much­needed buffer to the government’s finances.
• Both the Centre and the central bank need to be cognisant of the risks in making a habit of banking on these surpluses to cushion the government’s coffers.

Back to History

• Two years ago the RBI had transferred a record 1.76­lakh crore to the exchequer.
• While the Reserve Bank has ensured that it maintains contingency reserves at exactly 5.5% of the overall size of its balance sheet
• The level of its reserves provides little room to safeguard against a sudden, unexpected financial crisis and is at the lower end of the 5.5%­6.5% band recommended by the Bimal Jalan committee.

Way Forward

• With the government facing the likelihood of its budgeted borrowing given the higher spending needed to bolster vaccinations, health care
• This could results in direct fiscal support the RBI’s balance sheet could swell in size this year too.
• It would behave policymakers to remember that the central bank is ultimately the lender of last resort to the nation as a whole
• The ill afford to be less than adequately funded to meet every conceivable contingency.

 

Mains Question

The RBI’s transfer is a much­needed buffer, but there are risks in banking on these surpluses. Explain

Sources : https://www.thehindu.com/opinion/editorial/timely-windfall/article34670921.ece

 

PRELIMS PUNCHERS

1. Balukhand Konark Wildlife Sanctuary

The Balukhand-Konark Wildlife Sanctuary is a wildlife sanctuary located in the Indian state of Odisha. The sanctuary is located along the Bay of Bengal coast, between the towns of Puri and Konark. The sanctuary includes sandy beaches, coastal dunes, groves of introduced Casuarina trees planted, and cashew plantations. Little of the native flora remains. The sanctuary was designated in 1984. This place is extremely suitable for the development of ecological tourism.

The sanctuary is home to a herd of Blackbuck and Spotted Deer. Other animals found in the sanctuary include monkey, squirrel, jungle cat, hyena, jackal, mongoose and variety of birds and reptiles. olive ridley sea turtles nest on the beaches

Sources : https://www.thehindu.com/news/national/other-states/odishas-wildlife-sanctuaries-ravaged-by-fani/article27062491.ece

 

2. Indian spiny-tailed lizard

It is a species of lizard in the family Agamidae. The species is found in patches across the Thar desert, Kutch, and surrounding arid zones in India and Pakistan. It is mainly herbivorous and lives in numbers in some areas. Since it is found in loose clusters it often attracts predators such as raptors. It is also hunted by local peoples in the belief that the fat extracted from it

It inhabits the dry desert tracts of the northern half of the plains of India into Pakistan. It ranges from Uttar Pradesh in the east to Rajasthan in the West and the Kachchh area of Gujarat. The hot Thar desert is the stronghold of this species and are found extensively in the Jaisalmer, Bikaner, Barmer and Churu districts in Rajasthan. It is also found in some parts of Madhya Pradesh

Sources : https://www.thehindu.com/sci-tech/energy-and-environment/plastic-the-spiny-tailed-lizard/article26089120.ece

 

3. Mekedatu Project

Mekedatu is a location along Kaveri in the border of Chamarajanagar and Ramanagara Districts. The confluence of the Cauvery and Arkavati river by Karnataka government . The point where the goat leapt has widened since then from erosion caused by the river Cauvery.

At Mekedaatu, the Kaveri runs through a deep, narrow ravine of hard granite rock. Upstream on the Kaveri is the well-known Shivanasamudra Falls with its hydro-electric power station. The water flows very fast through the gorge, gouging pits in the rocky riverbed. The rocks are slippery making it difficult to climb down the gorge. The NGT has formed a committee to investigate the alleged violation of norms in the construction of Mekedatu Project

Sources : https://www.thehindu.com/news/cities/Tiruchirapalli/oppose-mekedatu-project-urge-farmers/article34658916.ece

 

4. Sea buckthorns

It is deciduous shrubs. It is also referred to as sandthorn, sallowthorn, or seaberry. It produces orange-yellow berries, which have been used over centuries as food, traditional medicine, and skin treatment in Mongolia, Russia, Ukraine, and northern Europe, which are its origin regions.

It is an exceptionally hardy plant able to withstand winter temperatures as low as −43 °C . Because Hippophae develops an aggressive and extensive root system, it is planted to inhibit soil erosion and is used in land reclamation for its nitrogen fixing properties, wildlife habitat, and soil enrichment. Hippophae berries and leaves are manufactured into various human and animal food and skincare products. It can be used to make pies, jams, lotions, teas, fruit wines, and liquors.  For its troops confronting low winter temperatures, India’s Defence Research Development Organization established a factory in Leh to manufacture a multivitamin herbal beverage based on sea buckthorn juice.

Sources : https://indianexpress.com/article/explained/himachal-pradesh-seabuckthorn-project-explained-7226260/

 

PRELIMS QUESTIONS

1. Consider the following statement with reference to Mekedatu Project
2. It is built on the confluence of the Cauvery and kabini river
3. Upstream on the Kaveri is the well-known Hogenakkal Falls

Select the correct statement using code given below.

(a). 1only                                 (b) 2 only

(c). Both of them                 (d). None of the above

Answer : D

 

 

 

Mekedatu is a location along Kaveri in the border of Chamarajanagar and Ramanagara Districts. The confluence of the Cauvery and Arkavati river by Karnataka government . The point where the goat leapt has widened since then from erosion caused by the river Cauvery.

At Mekedaatu, the Kaveri runs through a deep, narrow ravine of hard granite rock. Upstream on the Kaveri is the well-known Shivanasamudra Falls with its hydro-electric power station. The water flows very fast through the gorge, gouging pits in the rocky riverbed. The rocks are slippery making it difficult to climb down the gorge. The NGT has formed a committee to investigate the alleged violation of norms in the construction of Mekedatu Project

 

 

2. Balukhand Wildlife Sanctuary is located in which of the following states
3. Chhattisgarh
4. Madhya Pradesh
5. West Bengal
6. Odissa

Answer : D

The Balukhand-Konark Wildlife Sanctuary is a wildlife sanctuary located in the Indian state of Odisha. The sanctuary is located along the Bay of Bengal coast, between the towns of Puri and Konark. The sanctuary includes sandy beaches, coastal dunes, groves of introduced Casuarina trees planted, and cashew plantations. Little of the native flora remains. The sanctuary was designated in 1984. This place is extremely suitable for the development of ecological tourism.

The sanctuary is home to a herd of Blackbuck and Spotted Deer. Other animals found in the sanctuary include monkey, squirrel, jungle cat, hyena, jackal, mongoose and variety of birds and reptiles. olive ridley sea turtles nest on the beaches