WHY IN NEWS?

A high strength titanium alloy has been developed by India’s Defence Research and Development Organisation (DRDO). This alloy has been developed for applications in aerospace structural forgings.

About the Titanium alloy

The titanium alloys are unique due to their ductility, higher strength, fracture toughness and fatigue which make them beneficial for various aircraft structural applications.

Also this alloy has relatively lower lifetime cost due to its superior corrosion resistance in comparison to steels, which makes it very beneficial for aircraft structural applications.

DRDO has said that this alloy can be used in various ways that include slat and flap tracks, landing gears and drop link in landing gear etc.

Over 15 steel components that can be replaced in the near future with this alloy have been identified by The Aeronautical Development Agency (ADA).

SYLLABUS: GENERAL STUDIES PAPER 3 (ECONOMICS)

CONTEXT:

Thirty years ago, the liberalization regime launched in 1991 completed its 30 years in 2021.

• A severe balance of payments problem triggered an acute economic crisis that year.
• Three decades later, the pandemic-induced lockdown brought the wheels of economic activity to a grinding halt, triggering a sharp economic contraction in the first half of the fiscal year.

BACKGROUND:

LPG reforms: India’s New Economic Policy was announced on July 24, 1991 known as the LPG or Liberalisation, Privatisation and Globalisation model.

• Liberalization-It refers to the process of making policies less constraining of economic activity and also reduction of tariff or removal of non-tariff barriers.
• Except for 18 controlled industries, licenses were abolished across the board.
• Industrialists were free to enter any sectorand expand capacities without govt.’s approvals.
• Foreign ownership,hitherto restricted to 40%, was taken above the critical threshold of 51%.
• The monopolies law was abolished.
• The state was allowed to sell public sector.

SIGNIFICANCE OF REFORMS IN 1991:

India’s post-1990 economic strategy entailed three important breaks with the past.

• One was to dismantle the vast network of controls and permitsthat dominated the economic system.
• The second was toredefine the role of the state as a facilitator of economic transactions and as a neutral regulator rather than the primary provider of goods and services.
• The third was to move away from a regime of import substitutionand to integrate fully with the global trading system.
• Liberalization was adopted as the guiding principle of governanceand all governments since 1991, including the current one, have broadly stuck to that path.

KEY OUTCOMES:

• The GDP growth averaged 7% in the 25 years from 1992 to 2017, compared with an average of 5% in the preceding ten years and 4% in the preceding 20!
• And as growth accelerated, poverty declined. Between 2004-05 and 2011-12, the last year for which official data on poverty are available, about 140 million people were pulled above the poverty line.
• Increase in employment:There was a fall in employment in agriculture, which is a desirable structural shift of labour out of agriculture.
  • But it was accompanied by sufficient growth in total employment in non-agriculture sectors, so that the labour displaced from agriculture was absorbed in non-agriculture.

CRITICISM:

• India is still at the lower end of the middle-income group of countries and many more reforms are needed to get to the top of the group.
• The 1991 reforms package faced heavy criticism as being dictated by the International Monetary Fund (IMF) and World Bank.
• Some of the reforms were criticized as a sell out to capitalists.
• Employment in manufacturing did not increase: This was because we were not able to replicate the East Asian experience of rapid growth in the export of labour-intensive manufactures.
• Most of the increase in employment was not regular contractual employmentbut informal non-contractual employment. It is possible that rigid labour laws were at least partly responsible.

1991 CRISIS VS 2021 CRISIS:

• 1991 crisis: Reducing the fiscal deficit was essential in 1991 because the crisis was caused by excess domestic demand sucking in imports and widening the current account deficit (CAD).
  • A loss of confidence triggered an outflow of funds and financing CAD forced a sharp drawdown in reserves.
  • Reducing the fiscal deficit was an obvious way of containing demand.
  • The 1991 strategy had two components — reducing the fiscal deficit and implementing structural reforms. Both are relevant today, but with differences.
• 2021 crisis: The crisis today is not caused by excess demand.
  • It has been triggered by a collapse in productionfollowing the disruption caused by the pandemic, which, in turn, has caused a fall in demand.
  • Investment, a key source of aggregate demand, has also slowed because of unutilised capacity and uncertainty about growth.
  • Job crisis: The substantial slowdown in GDP growth after 2016-17 led to employment actually falling from 474 million in 2011-12 to 469 million in 2018-19.
  • Employment in agriculture continued to decline, butnon-agricultural employment grew much more slowly.
  • The COVID-19 pandemic has of course triggered a collapse in employment.
  • Decline in investment:There is a decline in the gross fixed capital formation (GFCF) rate, which has fallen from 29% of GDP in 2018-19 to 24.2% in 2020-21.

WAY FORWARD:

Past experience shows that we need to get back to 7% to 8% growth if we want to make progress on poverty reduction and provide enough jobs for our growing labour force.

• The priority now must be to get the vaccination coverage expandedas soon as possible. This will create conditions conducive to a return to normalcy.
• Growth should become the top priority now, for the finance ministry and for the entire government.
  • While it is desirable that the fiscal deficit be brought down, the scope for it is limited in 2021-22. It could still be around 7% of GDP.
  • Going forward, a new map for fiscal consolidation must be drawn up.
• ‘Maruti Model of Disinvestment’: The government should be giving up 26% in each public sector undertaking, including banks, to strategic partners, followed by a hugely profitable ‘exit from control’.
  • The Government of India was the majority shareholder in Maruti Udyog Ltd., but Suzuki exercised control even though Suzuki owned only 26% in the unlisted company.
• The government will need to step up public investmentsto boost growth. In a developing economy, growth is sustained only by investment.
  • A proper climate for investment must be created: Changes in corporate tax rates announced some months ago will help once growth starts picking up.
  • The policy framework must be supportive of fresh investments so that entrepreneurs are encouraged to take risks.
  • Non-economic factorssuch as a peaceful environment and social cohesion are also relevant. The government must begin to act on all these fronts.
• Duty rates: The NITI Aayog had recommended that we should move to an average duty rate of about 7%, gradually narrowing the range of variation across products and eliminating duty reversals. This is the right approach.
• Another important lesson from 1991 is that we need to move away from a “long list of reforms” approachtowards a more strategic approach, focussing on the most critical reforms needed immediately.
  • The 1991 reforms succeeded because they were structured around a core package of mutually supportive reforms.
• Bank reforms:Vesting the government’s equity in PSBs into a holding corporation run by a board of independent professionals, which then appoints the top management, would be a serious reform. It was recommended by the PJ Nayak committee in 2015.
• GST reforms: GST is a major reform and it was expected to generate greater tax buoyancy. It has not done so.
  • Its rate structure and exclusions need to be reviewed.
  • An important lesson from 1991 is that tax reforms are best evolved by an expert group outside government.
  • Such a group should be set up and asked to review the experience so far, and make proposals for reform which could be discussed in the GST Council. This cannot be left to the revenue department

The Hindu Link:

https://www.thehindu.com/opinion/op-ed/indias-1991-liberalisation-leap-and-lessons-for-today-montek-singh-ahluwalia/article35066035.ece

United States of America, Afghanistan, Pakistan, and Uzbekistan, have made a principle agreement to establish a new quadrilateral diplomatic platform with the primary aim to enhance regional connectivity. This QUAD group was announced by the administration of Biden.

ABOUT:

• A new quadrilateral group is being formed by the USA, Afghanistan, Uzbekistan and Pakistan amid the escalating violence in Afghanistan due to the pull out of US troops from the country.
• According to the administration of President Biden, this new QUAD group’s primary focuses will be on enhancing the regional connectivity and the country of Afghanistan.
• The US state department has said that the parties have recognised this opportunity to open flourishing inter regional trade routes; the parties also intend to cooperate among themselves to build transit links, expand trade and strengthen business ties.

QUAD group meetings

• The four nations have agreed to meet in the coming few months to chalk out the various modalities of this QUAD cooperation with mutual consensus.

WHY IN NEWS?

Recently, National Aeronautics and Space Administration (NASA) has announced that its new spacecraft, named Near-Earth Asteroid Scout or NEA Scout, has completed all required tests and has been safely tucked inside the Space Launch System (SLS) rocket.

About NEA Scout:

• Near-Earth Asteroid Scout, or NEA Scout, is a miniaturized spacecraft, known as a CubeSat, developed under NASA’s Advanced Exploration Systems (AES) Program.
  • AES pioneers new approaches for rapidly developing prototype systems, demonstrating key capabilities, and validating operational concepts for future human missions beyond low-Earth orbit.
• Its main mission is to fly by and collect data from a near-Earth asteroid.
  • It will take about two years to cruise to the asteroid and will be about 93 million miles away from Earth during the asteroid encounter.
• It will also be America’s first interplanetary mission using special solar sail propulsion.
  • So far, spacecraft have been using solar energy to power them and execute critical functions.
  • This will be the first time that a spacecraft uses it as wind to generate thrust and move forward.

WHY IN NEWS?

The Oxfam report which is named ‘Inequality Report 2021: India’s Unequal Healthcare Story’ was released on Tuesday. This report talks about how India’s focus on supporting private healthcare while low spending on public healthcare systems has led to inequalities in accessing healthcare, especially during the ongoing pandemic.

About:

• The States which are attempting to reduce the existing healthcare inequalities with higher expenditure on health had lower confirmed cases of Covid-19 compared to the other states.
• The report states that the states such as Telangana, Himachal Pradesh and Rajasthan, that for the past few years have been reducing inequalities, especially healthcare inequalities between the general category and SC and ST populations, have less COVID-19 confirmed cases. On the other hand states, such as Assam, Bihar and Goa that have had higher GDP expenditure on health have higher Covid recovery rates.
• The Oxfam report has marked the state of Kerala as a success story in the handling of the COVID-19 pandemic.
• The report stated that the people in the higher income brackets and those with access to health infrastructure had less visits to hospitals and Covid centres than those who belongs to the lower income groups (LIG). People in the LIG faced more discrimination regarding the access of COVID-19 related medicines and healthcare.
• This report also points out the country’s digital divide which has been ignored while administering the vaccine which is causing a vaccine inequality between the income groups as well as general and SC, ST categories.
• There have also been inequalities on the basis of gender. Men are better off than women.

WHY IN NEWS?

Labour minister Bhupender Yadav has said that Urban India witnessed an unemployment rate of 20.8% in the quarter of April-June 2020. This period witnessed stringent nationwide lockdown to arrest the spread of the first wave of the Covid-19 pandemic.

About:

• Urban joblessness in the country had hit a high of 20.8% in the April-June 2020 quarter, especially since the country was under two months of hardcore lockdown.
• According to the Periodic Labour Force Survey (PLFS) Quarterly bulletin April-June 2020, quarterly unemployment rate for the quarters ending July-Sep 2019, Oct-Dec 2019, Jan-March 2020 and April-June 2020 were 8.3%, 7.8%, 9.1% and 20.8% respectively.
• The ministry has also mentioned that the complete employment or unemployment situation of the country can only be assessed only from the survey data for the full year covering both the urban and rural areas.

WHY IN NEWS?

Lewis Hamilton of United Kingdom has won the Formula One British Grand Prix at Silverstone for a record eighth time. This was the 99th win of Hamilton’s career who has also won the world championship seven times.

Key Points

• On the opening lap of the British Grand Prix held on Sunday Lewis Hamilton and Max Verstappen, were involved in a high speed collision as Hamilton tried to overtake the Verstappen. Hamilton’s front-left wheel touched Verstappen’s back-right tire. Due to this Verstappen spun off the track and crashed into the barriers. Later, Verstappen was seen walking away from his crashed car.
• Due to the collision, Hamilton was given a time penalty but in a dramatic conclusion to the race he overtook Ferrari’s Charles Leclerc to secure his eighth British GP victory.

ABOUT:

The British Grand Prix is a motor race which is organised in the United Kingdom. This race is organised by the Royal Automobile Club. It was first held in the year 1926; since the year 1948 the British Grand Prix has been held annually and every year since 1950 it has been a round of the FIA Formula One World Championship.

WHY IN NEWS?

United States of America, Afghanistan, Pakistan, and Uzbekistan, have made a principle agreement to establish a new quadrilateral diplomatic platform with the primary aim to enhance regional connectivity. This QUAD group was announced by the administration of Biden.

ABOUT:

• A new quadrilateral group is being formed by the USA, Afghanistan, Uzbekistan and Pakistan amid the escalating violence in Afghanistan due to the pull out of US troops from the country.
• According to the administration of President Biden, this new QUAD group’s primary focuses will be on enhancing the regional connectivity and the country of Afghanistan.
• The US state department has said that the parties have recognised this opportunity to open flourishing inter regional trade routes; the parties also intend to cooperate among themselves to build transit links, expand trade and strengthen business ties.

QUAD group meetings

• The four nations have agreed to meet in the coming few months to chalk out the various modalities of this QUAD cooperation with mutual consensus.

WHY IN NEWS?

According to a report, Pegasus spyware may have been used to conduct surveillance on about 300 Indians including two Cabinet ministers’ three opposition leaders, a Constitutional authority, government officials, scientists and about 40 journalists.

ABOUT:

• It is a spyware created by NSO Group, an Israeli cybersecurity firm founded in 2010.
• Pegasus spyware can hack any iOS or Android device and steal a variety of data from the infected device.
• It works by sending an exploit link and if the target user clicks on the link, the malware or the code that allows the surveillance is installed on the user’s phone.
• Once Pegasus is installed, the attacker has complete access to the target user’s phone.

WHY IN NEWS?

The government of Tripura has taken initiatives to promote commercial cultivation of Agar trees and has set a target of achieving Rs 2,000 crore business from this sector in the coming three years.

ABOUT:

• Tripura government has plans to export 1,500 kg of Agar oil and 75,000 kg of Agar chips in the year 2021-22.
• Chief Minister Biplab Kumar Deb had met Prime Minister Narendra Modi on Friday and apprised him about the potential of Agar trees.
• Tripura government has launched a draft named Tripura Agar Wood Policy 2021 and a target has been set up of doubling the plantation by the year 2025. Currently, there are over 50 lakh agar trees in the state.
• Chief Minister of Tripura had also requested PM Modi for fixing a quota on Agarwood exportation and its products.

About Agar Trees

Agar (Aquilaria malaccensis) is an evergreen tree that grows in abundance in the state of Tripura. The state’s forest department has said that this species has a huge potential of creating an economic revolution in the state after bamboo, rubber and other major forestry crops. Due to low input cost for its growth and management and its intercropping adaptation could make agar a cash crop.