Current Affairs 01 April 2023

CONTENTS

1. PM MITRA scheme & EPCG Scheme
2. Current Account Deficit
3. Vaikom satyagraha
4. North Atlantic Treaty Organisation
5. Interchange Charge ON PPI Merchant Transactions

PM MITRA Scheme & EPCG Scheme

Context:

The new Foreign Trade Policy (FTP) has added the Prime Minister Mega Integrated Textile Region and Apparel Parks (PM MITRA) scheme as an additional scheme eligible for benefits as Common Service Providers (CSP) under the Export Promotion Capital Goods Scheme (EPCG).

Relevance:

GS-III: Industry and Infrastructure (Textile Industry, Government Policies and Initiatives, Industrial Policy)

Dimensions of the Article:

1. About PM Mega Investment Textiles Parks (PM MITRA) scheme
2. Aims and Significance of MITRA
3. Significance of Textile Sector in India
4. About the EPCG Scheme:

About PM Mega Investment Textiles Parks (PM MITRA) scheme

• The PM Mega Investment Textiles Parks (PM MITRA) scheme was launched in 2020 with a plan to establish Seven textile parks which will have a world-class infrastructure over three years.
• These parks will also have plug-and-play facilities (business facilities will be available ready-made) to help create global champions in exports in the textile sector.

Aims and Significance of MITRA

• The Mega Investment Textiles Parks (MITRA) Scheme aims to enable the textile industry to become globally competitive and boost exports.
• The scheme also aims to boost employment generation within the textile sector and also attract large investment.
• The scheme was launched in addition to the Production Linked Incentive (PLI) Scheme.
• The scheme will create a level-playing field for domestic manufacturers in the international textiles market.
• It will also pave the way for India to become a global champion of textiles exports across all segments.
• MITRA will lead to increased investments and enhanced employment opportunities with the support from the Production Linked Incentive (PLI) scheme.

Significance of Textile Sector in India

• The Textile Sector accounts for 7% of India’s manufacturing output, 2% of GDP, 12% of exports and employs directly and indirectly about 10 crore people.
• Owing to the abundant supply of raw material and labour, India is the largest producer of cotton (accounting for 25% of the global output) and second-largest producer of textiles and garments and man-made fibres (polyester and viscose).
• The availability of a strong domestic market in India is a major reason that increases the importance of the sector.

About the EPCG Scheme:

• The Export Promotion Capital Goods (EPCG) Scheme was launched in the 1990s to enhance the production quality of goods and services in India, thereby increasing the country’s international manufacturing competitiveness.
• The scheme facilitates the import of capital goods without attracting any customs duty on them, and second-hand capital goods may also be imported without any age restriction.

Key Features of the EPCG Scheme:

• Manufacturers can import capital goods for pre-production, production, and post-production goods without paying any customs duty on them.
• An exporter must fulfil an export value equivalent to six times the duty saved on the importation of such capital goods within six years from the date of issuance of the authorization to be exempted from paying customs duty on the imported goods.
• The scheme is applicable to manufacturer exporters with or without supporting manufacturers, merchant exporters tied to supporting manufacturers, and service providers, including Common Service Providers (CSP).

Benefits of the EPCG Scheme:

• The primary objective of the EPCG Scheme is to promote exports, and the Indian government provides incentives and financial support to exporters to achieve this objective.
• Heavy exporters could benefit from this scheme; however, those who do not expect to manufacture in quantity or sell their products entirely within the country may find it challenging to fulfil the obligations set under this scheme.

-Source: The Hindu

Current Account Deficit

Context:   

India’s current account deficit (CAD) narrowed to $18.2 billion (2.2% of GDP) in Q3 of FY23 from $30.9 billion (3.7% of GDP) in Q2 of FY23 and $22.2 billion (2.7%) in the year-earlier period, according to RBI Balance of Payments data.

Relevance:

GS III- Indian Economy (Growth and Development)

Dimensions of the Article:

1. What is the Current Account Deficit?
2. What is Balance of Payments?
3. What are the reasons for the current account deficit?

What is the Current Account Deficit?

• A current account deficit occurs when the total value of goods and services a country imports exceeds the total value of goods and services it exports.
• The balance of exports and imports of goods is referred to as the trade balance. Trade Balance is a part of ‘Current Account Balance’.
• According to an earlier report of 2021, High Oil Imports, High Gold Imports are the major driving force, widening the CAD.

What is Balance of Payments?

• BoP of a country can be defined as a systematic statement of all economic transactions of a country with the rest of the world during a specific period, usually one year.
• Purposes of Calculation of BoP:
  • Provides information about a country’s financial and economic situation.
  • Can be used to evaluate whether the value of a country’s currency is appreciating or depreciating.
  • Assists the government in making budgetary and trade policy decisions.
  • Provides crucial data for analysing and comprehending the economic dealings of a country with other countries.

Components of the Balance of payments (BOP)

• Current account: It includes the financial transactions dealing with the export and import of goods, services, unilateral transfers, investment income etc.
• Capital account: It includes the financial transactions dealing with assets such as foreign direct investment, foreign portfolio investment, foreign loans etc.
• Official reserve transactions: It conducted by the central bank in case of the BOP deficit or BOP surplus.
• Errors and omissions: It is the element of BOP (other than the current account and the capital account) which refers to the balancing items reflecting the inability to record all the international financial transactions.

What are the reasons for the current account deficit?

• Intensifying geopolitical tensions and supply chain disruptions leading to crude oil and commodity prices soaring globally have been exerting upward pressure on the import bill.
• A rise in prices of coal, natural gas, fertilizers, and edible oils have added to the pressure on trade deficit.
• However, with global demand picking up, merchandise exports have also been rising.

-Source: The Hindu

Vaikom Satyagraha

Context:

Kerala Chief Minister and Tamil Nadu Chief Minister, will inaugurate the centenary celebrations of the Vaikom Satyagraha.

Relevance:

GS I: History

Dimensions of the Article:

1. The Vaikom Satyagraha
2. Legacy

The Vaikom Satyagraha

Introduction:

• On March 30, 1924, in Vaikom, a non-violent agitation started, marking the beginning of “temple entry movements” across India.
• The Vaikom Satyagraha was launched in opposition to caste discrimination and untouchability, which were widespread across the country at the time.

Background:

• Caste discrimination and untouchability were rife in India in the 1920s, particularly in Travancore.
• Lower castes like the Ezhavas and Pulayas were considered polluting, and they were prohibited from entering temples or even walking on the roads surrounding them.
• The Vaikom Satyagraha was launched in response to these discriminatory practices.

The Vaikom Satyagraha:

• The Vaikom Satyagraha was a non-violent protest against the caste discrimination and untouchability prevalent in Travancore.
• It was the first time that Gandhian methods of nonviolent protest were employed in Travancore.
• The movement was led by prominent leaders like K. Kelappan and T. K. Madhavan.
• The protesters demanded the right of lower-caste Hindus to enter the temple in Vaikom, which was denied to them.
• The Satyagrahis faced violent opposition from upper-caste Hindus, but they continued their protest in a peaceful manner.
• The movement gained national attention and support, and it helped to raise awareness about the issue of caste discrimination.

Legacy:

• The Vaikom Satyagraha was a significant event in the history of India’s struggle against caste discrimination.
• The movement paved the way for other temple entry movements across the country.
• It also helped to create awareness about the need for social reform and led to the enactment of laws that abolished caste-based discrimination and untouchability.
• The legacy of the Vaikom Satyagraha continues to inspire people fighting against caste discrimination and other forms of social inequality.

-Source: Indian Express

North Atlantic Treaty Organisation

Context:

NATO chief said that Finland would formally become a member within days, as he congratulated its President on clearing the final hurdle to joining.

Relevance:

GS II: International Relations

Dimensions of the Article:

1. What is NATO?
2. What is important about NATO’s collective defence?

What is NATO?

• The North Atlantic Treaty Organisation, or NATO, is a political and military alliance of 28 European countries and two countries in North America (United States and Canada).
• It was set up in 1949 by the US, Canada, and several western European nations to ensure their collective security against the Soviet Union.
• It was the US’s first peacetime military alliance outside the western hemisphere.
• Thirty countries are currently members of NATO, which is headquartered in Brussels, Belgium.
• The headquarters of the Allied Command Operations is near Mons, also in Belgium.

What is important about NATO’s collective defence?

• Members of NATO are committed to mutual defence in response to an attack by any external party.
• Collective defence lies at the very heart of NATO, “a unique and enduring principle that binds its members together, committing them to protect each other and setting a spirit of solidarity within the Alliance”.
• This is laid out in Article 5 of the North Atlantic Treaty, the founding treaty of NATO.

Article 5 reads: “The Parties agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all and consequently they agree that, if such an armed attack occurs, each of them, in exercise of the right of individual or collective self-defence recognized by Article 51 of the Charter of the United Nations, will assist the Party or Parties so attacked by taking forthwith, individually and in concert with the other Parties, such action as it deems necessary, including the use of armed force, to restore and maintain the security of the North Atlantic area.”

-Source: The Hindu

Interchange Charge ON PPI Merchant Transactions

Context:

Recently, National Payments Corporation of India (NPCI) clarified that there are no charges for bank account – to – bank account based UPI payments.

Relevance:

GS III: Indian Economy

Relevance:

1. Details
2. What are Prepaid Payment Instruments?
3. How are PPIs issued?
4. National Payments Corporation of India

Details:

• NPCI stated that an interchange charge of 1.1% has been introduced on UPI transactions made through PPI instruments above Rs 2,000, and there is no charge to customers.
• Also, NPCI has permitted the PPI wallets to be part of interoperable UPI ecosystem.

What are Prepaid Payment Instruments?

• PPIs are instruments that enable the purchase of goods and services, including financial services and remittance facilities, against the value stored on them.
• PPIs can be in the form of smart cards, magnetic stripe cards, internet accounts, internet wallets, mobile accounts, mobile wallets, paper vouchers, and other instruments used to access the prepaid amount.

How are PPIs issued?

• The PPIs can be issued after physical verification of Passport and Visa of the customers at the point of issuance.
• The PPI issuers should ensure that such information and record thereof are maintained with them.
• The conversion to Indian rupee can be carried out only by entities authorised to deal in foreign exchange under FEMA.
• The amount outstanding at any point of time in such PPIs should not exceed the limit applicable on full-KYC PPIs.
• The unutilised balances in such PPIs can be encashed in foreign currency or transferred ‘back to source’ (payment source from where the PPI was loaded), in compliance with foreign exchange regulations, the RBI said.

National Payments Corporation of India

• National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007.
• It is a “Not for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013), with an intention to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems.

-Source: Indian Express