Daily GS Mains Notes or Mains Content Enrichment

GS 2

Category : Govt.  policies

Electronics Manufacturing in India

Why in News

Recently, the Government of India unveiled three schemes of about Rs. 48,000 crore to promote electronics manufacturing in India.

These schemes are:

• Production Linked Incentive (PLI) Scheme.
• Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS).
• Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme.

Key Points

• Domestic production of electronics has grown from USD 29 billion in 2014-15 to nearly USD 70 billion in 2019-20 (Compounded Annual Growth Rate of 25%).
• Most of this production takes place in the final assembly units (last-mile industries) located in India and focussing on them would help develop deep backward linkages, thus inducing industrialisation.
• This idea was propounded by economist Albert O Hirschman in his theory of ‘Unbalanced Growth’.
• The Economic Survey 2019-20 also promoted this idea and suggested “assembly in India for the world”, especially in “networked products”.
• This is the strategy that helped China become the economic superpower it is today.
• The recently launched PLI Scheme plans to achieve this goal by granting an incentive of 4-6% for domestic production.

Challenges

Missing Profits:

• the net value added by production units is very low.

Limited Indigenous Capability in Upstream Industries:

• In the era of global supply chains, the value addition at the final stages of production is very low, especially in electronics because the more complicated processes, involving greater value addition, occur prior to assembly, in ‘upstream’ industries.
• These include the production of processors, display panels, memory chips, cameras, etc. Currently, these imports nearly constitute 80% of these components, with approximately 67% of the imports coming from China

Absence of Foundries:

• In the absence of foundries (semiconductor fabrication plants where microchips are produced), India has to rely on foreign contractors to produce microchips.

Challenges in Set-up of Foundries:

• It requires massive capital expenditure to the tune of USD 2 billion and more. Foundries are also required to adopt newer technologies and processes almost every 18 months to ensure competitiveness which means high capital depreciation and often accounts for 50-60% of the production cost.
•  Domestic players have also shown low interest due to their inability to compete with tech giants in research and development (R&D) and investment.
• Many industry experts also cite the lack of a foundry as contributing to low R&D in this sector in India, which results in poor talent retention and eventually ‘brain drain’.
•  National Security Considerations: Most of the chips, as well as components used in Indian communication and critical systems, are imported. This could hamper national security and sovereignty as backdoors could be programmed in chips during manufacturing, which could compromise networks and cyber-security.

Increasing Imports:

• It is expected that electronics imports will soon overtake crude oil as India’s largest import commodity which will result in assembly units ending up as little more than mere packaging units.

Suggestions

• Increasing Investments
• Profiting from Anti-Chinese Sentiments
• Pushing Make in India

Way Forward

• India is one of the upcoming hubs for microchip designing with start-ups making substantial progress in this field. some IITs have developed indigenous microchip designs like Shakti and Ajit.
• The schemes to promote electronics manufacturing combined with the Prime Minister’s call for an ‘Atmanirbhar Bharat’, have rejuvenated hopes of a rise of the indigenous electronics industry, allowing India to be truly self-sufficient.

 

GS 2

Category: polity/governance/E-governance

AuditOnline Application for Local Bodies

Why in News

The Ministry of Panchayati Raj has decided to conduct an online audit of accounts of  50,000 Gram Panchayats (GPs) through its application Audit Online during the current financial year (2020-21). This will be the first such exercise.

Key Points

Online Audit of Accounts:

• 50,000 GPs’ books of accounts for 2019-20 will be audited with a focus on how they used Finance Commission (FC) grants. 50,000 is equivalent to the 20% of the estimated 2.5 lakh GPs across the country.
• In the next financial year (2021-22), the exercise will be scaled up to cover all the GPs.

AuditOnline:

• It is an application developed as a part of Panchayat Enterprise Suite (PES) under e-panchayat Mission Mode Project (MMP) initiated by the Ministry of Panchayati Raj (MoPR).
• It facilitates the financial audit of accounts at all the three levels of Panchayats viz District, Block and Village Panchayats, Urban Local Bodies (ULB) and Line department by Auditors.
• It also serves the purpose of maintaining the past audit records of the auditee with associated list of the auditors and audit team involved in the audit. The information remains available in public domain and for usage by other PES applications.

Benefits of Online Audit:

• Online audit with the option of physical verification assumes greater relevance given the pandemic and the lockdown.
• Further, it ensures accountability in the utilisation of funds at the ground level. In the offline system, timely availability of records is a major issue.
• an online audit can be monitored at all levels: district-statecentre.

Challenge:

• More than 15% of Panchayats in several states have not completed their books of accounts for the year 2019-20.
• Completing and closing the accounts is a prerequisite for the online audit. While 100% of Panchayats in Maharashtra and Haryana have closed their 2019-20 accounts, no Panchayat has done this in Arunachal Pradesh and Bihar. States like Punjab and Himachal Pradesh are also low performers.

Panchayat Enterprise Suite

• The Ministry of Panchayati Raj (MoPR) has undertaken e-Panchayat Mission Mode Project (e-Panchayat MMP) with a view to introduce and strengthen e- Governance in Panchayati Raj Institutions (PRIs) across the country and build associated capacities of the PRIs for effective adoption of the e-Governance initiative.
• Under e-Panchayat, a suite of 11 Core Common Applications has been deployed that address nearly the entire spectrum of Panchayats’ functioning viz. from core functions such as Planning, Monitoring, Budgeting, Accounting, Social Audit etc. to citizen service delivery operations like issue of certificates, licenses etc.
• Together these 11 software Applications constitute the Panchayat Enterprise Suite (PES).

Way Forward

• If the Panchayats are to perform efficiently and effectively all the mandated tasks, which are increasing day by day, extensive use of Information and Communication Technology (ICT) is needed. The launch of e-GramSwaraj and Swamitva Programme underlines the same.

 

GS 3

Category: ENVIRONMENT AND ECOLOGY

1. Nearly 28 lakh people affected by Assam floods, toll rises to 93

Why in news

Floods have devastated Assam, inundating the Kaziranga National Park and Tiger Reserve (KNPTR), putting the lives of several endangered species under threat, besides affecting about 28 lakh people.

Issues:

• Large strips of East Siang and other districts along the flow of river Siang in Arunachal Pradesh have also been affected. o Siang is one of the three rivers that form the Brahmaputra in Assam downstream.
• Goalpara continued to be the worst-affected district.
• River Brahmaputra takes a sharp turn at Goalpara village, causing maximum red alerts and flooding in that area.

Role of floods in Kaziranga’s ecosystem:

• Assam is traditionally flood-prone. KNPTR, sandwiched between the Brahmaputra river and the Karbi Anglong Hills, is no exception.
• Floods are considered necessary for Kaziranga as it is a riverine ecosystem.
• The entire area of Kaziranga, formed by alluvial deposits from the Brahmaputra and its tributaries is centred around the river.
• The regenerative nature of floods helps replenish Kaziranga’s water bodies and maintain its landscape, a mix of wetlands, grasslands and semi-evergreen deciduous forests.
• It helps get rid of unwanted plants, such as water hyacinth, which collect in huge masses in the landscape.
• Animals adapt naturally to floods but when the waters hit a certain level, they gravitate towards safer, higher ground in the Karbi Anglong hills.

Way forward:

• Over the years, artificial highlands (111 in the nineties, 33 in 2016-17) have been built inside the park for wild animals to take refuge in during floods.
• Emphasis is needed to secure animal corridors and ensuring a safe passage to the Karbi hills.
• In April 2019, the Supreme Court banned all types of mining and related activities along the park’s southern boundary and in the entire catchment area of the rivers that originate in the Karbi Anglong hill ranges and flow into Kaziranga, as well as new construction activities in private lands on nine animal corridors.

 

 

Category: ECONOMY

1. Banks’ gross NPAs may climb to as much as 14.7% by March: RBI

Why in news

Reserve Bank of India’s observation on gross non-performing assets (GNPA) ratio of scheduled commercial banks (SCBs).

Details:

• RBI has observed that the GNPA ratio of SCBs may escalate to 14.7% under a very severely stressed scenario, which assumes hypothetically that GDP would suffer a contraction of 8.9% in 2020-21.
• Earlier in its Financial Stability Report, RBI had predicted that the GNPA ratio of all SCBs may increase to 12.5% by March 2021.
• On the assessment of systemic risk, the RBI said in its report that the Indian financial system remained stable, notwithstanding the significant downside risks to economic prospects.

Gross Non-Performing Assets:

• Gross NPA is the summation of all loan assets that are classified as NPA as per RBI guidelines.
• Gross NPA consists of Substandard Assets, Doubtful Assets and Loss Assets.

Net Non-Performing Asset:

• For precautions and to meet unforeseen losses, banks are required to make provisions as per RBI guidelines. RBI issues guidelines on Income Recognition, Asset Classification and Provisioning.
• From the gross NPA, provisions provided are netted to arrive at Net NPA.
• Net non-performing assets = Gross NPAs – Provisions.

Impact of High NPAs on Banks:

• NPA is an important financial component that is considered while analyzing a bank. It indicates the asset quality of banks.
• Banks with high NPAs have lesser funds to advance because of the higher provisioning that they have to provide.
• Lesser lending would mean lesser interest income, impacting the profitability of the banks. Banks would have to face difficulty maintaining capital adequacy ratio.