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Prelims Booster

7th October – Prelims Booster

Production Linked Incentive Scheme

Ministry of Electronics and Information and Technology (MeitY) has approved 16 eligible applicants under the PLI Scheme.

What is PLI Scheme?

Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing notified on 1st April, 2020, extends an incentive of 4% to 6% on incremental sales (over base year) of goods under target segments that are manufactured in India to eligible companies, for a period of five years subsequent to the base year (FY2019-20).

Significance –

  • Over the next 5 years, the approved companies under the PLI Scheme are expected to lead to total production of more than INR 10,50,000 crore (INR 10.5 lakh crore).
  • Out of the total production, the approved companies under Mobile Phone (Invoice Value INR 15,000 and above) segment have proposed a production of over INR 9,00,000 crore, The approved companies under Mobile Phone (Domestic Companies) segment have proposed a production of about INR 1,25,000 crore and those under Specified Electronic Components segment have proposed a production of over INR 15,000 crore.
  • The companies approved under the scheme are expected to promote exports significantly. Out of the total production of INR 10,50,000 crore in the next 5 years, around 60% will be contributed by exports of the order of INR 6,50,000 crore.
  • The companies approved under the scheme will bring additional investment in electronics manufacturing to the tune of INR 11,000 crore.
  • The companies approved under the scheme will generate more than 2 lakh direct employment opportunities in next 5 years along with creation of additional indirect employment of nearly 3 times the direct employment.
  • Domestic Value Addition is expected to grow from the current 15-20% to 35-40% in case of Mobile Phones and 45-50% for electronic components.
  • With the demand for electronics in India expected to grow manifold by 2025, the PLI scheme and other initiatives to promote electronics manufacturing will help in making India a competitive destination for electronics manufacturing and give boost to AtmaNirbhar Bharat.
  • Creation of domestic champion companies in electronics manufacturing under the Scheme will give fillip to vocal for local while aiming for global scale.

Facts and figures related to MSP

“Only 6% of Indian farmers benefit from minimum support prices (MSP)”. This figure is widely quoted — especially in the context of the recently-passed Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act.

Is it correct?

  • The apparent source of the 6% figure is the Shanta Kumar-headed High Level Committee on Restructuring of Food Corporation of India (FCI). Its report, submitted in January 2015, had noted that only 5.21 million of the country’s total estimated 90.20 million agricultural households in 2012-13 had sold paddy and wheat to any government procurement agency. In other words, less than 5.8%.
  • The committee, in turn, based its analysis on the National Sample Survey Office’s (NSSO) ‘Key Indicators of Situation of Agricultural Households in India’ report for the 2012-13 farm year (July-June).
  • The Shanta Kumar panel, however, looked only at paddy (un-milled rice) and wheat. While much of public procurement is, no doubt, limited to these two cereals — the 76.49 million tonnes (mt) of paddy and 38.99 mt of wheat bought by FCI and state agencies in 2019-20 was worth almost Rs 215,000 crore at their respective MSPs — one must also take into account other crops.
  • The procurement of other crops is not at all insignificant relative to their estimated production. The ratios are from 29.5 per cent to over 43 per cent for paddy/rice, wheat and cotton, 18-19% in chana and arhar/tur, 10% in milk, and 7-9% in mustard and groundnut.
  • In case of milk, the ratio of cooperative procurement, for which there is authentic data from the National Dairy Development Board (NDDB) — will be at least a fifth of the marketable surplus of milk.
  • Cane prices are fixed by the government, with sugar mills legally obliged to pay the Centre’s fair and remunerative price (FRP) within 14 days of purchase. They buy roughly 80% of the total crop produced. The FRP value of cane crushed by them in the 2019-20 season (October-September) alone was Rs 75,585 crore.

Case of paddy and wheat –

  • According to the earlier-mentioned NSSO report, 44.84 million or nearly half of India’s estimated 90.2 million agricultural households cultivated paddy during July-December 2012 and another 8.46 million in January-June 2013.
  • Besides, 35.23 million (39%) grew wheat that year. If 43.4% of India’s rice/paddy output and 36.2% of wheat was actually procured by government agencies, it is obvious that the MSP benefits would have accrued to far more than the 5.8% figure in the Shanta Kumar committee report.
  • The Food Ministry’s own data shows that 11.06 million paddy and 4.06 million wheat farmers benefited from MSP procurement in 2019-20. Even after eliminating double-counting (Punjab and Haryana farmers cultivate both crops), they would add up to 13-13.5 million, which is way above the Shanta Kumar panel’s estimate of 5.21 million.

Conclusion –

All in all, it can be reasonably inferred that the existing MSP/assured price system covers 25 million-plus farmers across all crops, including pulses and oilseeds. Depending on the denominator – the 2015-16 Agriculture Census puts the total number of operational holdings at 146.45 million – that translates into anywhere between 15% and 25%. Certainly, not 6%.

Nobel Prize of Physics

Recently, the Royal Swedish Academy of Sciences decided to award one half of the 2020 Nobel Prize in physics to Roger Penrose and the other half jointly to Reinhard Genzel and Andrea Ghez for furthering the understanding of black holes, the most “enigmatic” objects in the universe.

Recently, three biologists shared the Nobel Prize in medicine for the discovery of the vaccine for the hepatitis C virus.

What is a ‘black hole’?

  • A black hole is formed when stars collapse and can be defined as a space in the universe with an escape velocity so strong that even light cannot escape it.
  • Escape velocity is the speed at which an object must travel to override a planet or an object’s gravitational force. For instance, for a spacecraft to leave the surface of the Earth, it needs to be travelling at a speed of about 40,000 km per hour.
  • Since light cannot get out, black holes are invisible and can only be tracked with the help of a space telescope or other special tools. And the reason light cannot escape is mainly that the gravity inside a black hole is very strong as a result of a lot of matter being squeezed into a small space.

Contribution of Penrose –

  • Penrose’s work has shown that black holes are a direct consequence of Albert Einstein’s general theory of relativity. Einstein himself did not believe that black holes exist and presented his theory in November 1915, providing a new way to look at and understand gravity that shapes the universe “at the largest scale”. Gravity also shapes space and influences the passage of time. It is this gravity, which is so great inside a black hole that is able to bend space and slow down time.
  • Penrose used Einstein’s general theory of relativity in order to prove that the process of formation of black holes is a stable one. He proved that black holes exist and described them in detail back in 1965, ten years after Einstein died.

Contributions of Genzel and Ghez –

  • Genzel and Ghez, on the other hand, have discovered that an invisible and an extremely heavy object governs the stars’ orbit at the centre of the Milky Way. This extremely heavy object has the mass equivalent to 4 million solar masses and is packed into an area about the size of our solar system.
  • Essentially, their work tells us that at the centre of our galaxy the Milky Way lies an invisible supermassive object, of which a black hole provides a reasonable explanation. Physicists have been suspecting the existence of a black hole at the centre of our galaxy for over 50 years now.

Keto Diet

Recently, an actor from Bengal died after suffering kidney failure as she was following a keto diet to lose weight.

What is a ‘ketogenic diet’ or ‘keto diet’?

The ketogenic diet is one of the most popular weight loss diets the world over. It is a high-fat, moderate-protein and low-carb diet that helps in weight loss by achieving ketosis — a metabolic state where the liver burns body fat and provides fuel for the body, as there is limited access to glucose.

What constitutes a keto diet?

A classic keto requires that 90 per cent of a person’s calories come from fat, six per cent from protein and four per cent from carbs. But there are many versions doing the round, since this one was designed for children suffering from epilepsy to gain control over their seizures. Typically, popular ketogenic diets suggest an average of 70-80 per cent fat, 5-10 per cent carbohydrate, and 10-20 per cent protein.

What are the food items that make the diet?

  • One can have eggs, chicken and turkey in poultry, fatty fish like salmon and mackerel, full-fat dairy, nuts and seeds like Macadamia nuts, almonds, walnuts, pumpkin seeds, peanuts and flaxseeds.
  • There is also nut butter like natural peanut, almond and cashew butters. It also consists of healthy fats like coconut oil, olive oil, avocado oil, coconut butter and sesame oil. There are Avocados, and non-starchy vegetables like the greens, broccoli, tomatoes, mushrooms and peppers.

How does keto impact the body?

  • If you starve the body of carbohydrate, after burning out the glucose, the liver starts breaking down fats for energy. Ketosis is common in all kinds of fasting, but in a keto diet, when one is feeding it by giving a lot of fats from outside without carbs, it can become mildly toxic.
  • It may lead to many nutrient deficiencies such as carbohydrates, proteins, vitamins (especially vitamin A, D, E, & K) and minerals like calcium, phosphorus, sodium.
  • Extreme carbohydrate restriction can lead to hunger, fatigue, low mood, irritability, constipation, headaches, and brain fog, which may last days to weeks.

Impact on kidneys –

Even the moderate increase in protein needs to be carefully monitored, especially in those who are already suffering from a chronic kidney disease, as it could lead to kidney failure. This diet could lead to increased stress on the kidneys and result in kidney stones, as they are made to work overtime.

Kamath Panel Report

The Supreme Court has asked the Union government and the Reserve Bank of India (RBI) about the steps taken to implement the K.V. Kamath Committee report on recommendations to bail out sectors affected by the COVID-19 pandemic.

About KV Kamath Panel Report –

  • The Reserve Bank of India-appointed (RBI-appointed) expert committee on a resolution framework for bank loans stressed on account of the pandemic to outline parameters to deal with 26 sectors buffeted by Covid-19.
  • According to the much-awaited report, the pandemic affected retail and wholesale trade, roads, textiles, and engineering the hardest, while sectors that were already under stress, such as non-banking financial companies (NBFC), power, steel, and real estate, piled up more misery due to the crisis.
  • The committee identified almost all major sectors including auto, real estate, and aviation. It also found areas such as agriculture, food, pharma, and IT, among a few others, that remained mostly unaffected.

Recommendations –

  • The KV Kamath Committee has listed FMCG, consumer durables and corporate retail outlets among 26 sectors that require financial restructuring in the aftermath of the COVID crisis.
  • The five-member committee appointed by the Reserve Bank of India (RBI) has recommended five financial parameters or ratios with sector-specific thresholds that lending institutions can factor in as part of a graded approach to restructuring or finalising a resolution plan for a borrower.
  • The five parameters for each sector are the total outstanding liability to adjusted networth, total debt to EBITDA, debt service coverage ratio (DSCR), average DSCR and current ratio.
  • Debt/EBITDA (earnings before interest, depreciation, tax, and amortisation) ratio signals how well a company will be able to service its loans and other liabilities and a lower ratio indicate a higher capability to service loans and liabilities. While this ratio has been kept at less than or equal to five for corporate retail outlets, it has been pegged at less than or equal to four for consumer durables/FMCG.
  • For the listed sectors, banks will use these ratios as guidelines while preparing a plan for loan restructuring.
  • Lenders can make their own internal assessments for the sectors threshold parameters are not specified.
  • The resolution framework must be based on the borrower’s pre-COVID operating and financial performance, and the impact of COVID-19 on its operating and financial performance in Q1 and Q2FY21, to assess the cash-flows for FY21/FY22 and subsequent years.
  • The real estate sector was given a priority, with the committee proposing a high debt to EBITDA ratio.

Nobel Prize for Medicine

Two Americans and a Briton won the 2020 Nobel Prize for Medicine for identifying the Hepatitis C virus, in work spanning decades that has helped to limit the spread of the fatal disease and develop antiviral drugs to cure it. The discoveries by scientists Harvey J. Alter, Charles M. Rice and Briton Michael Houghton meant there was now a chance of eradicating the Hepatitis C virus.

Details –

  • The three share the 10 million Swedish crowns ($1.1 million) award for discovering and proving that a bloodborne virus could cause Hepatitis C, which afflicts more than 70 million people and causes about 4,00,000 deaths each year.
  • It’s the second Nobel Prize for Medicine for hepatitis research, after Baruch Blumberg won in 1976 for determining that one form of blood-borne hepatitis was caused by a virus that came to be known as Hepatitis B.

About Hepatitis C –

  • An infection caused by a virus that attacks the liver and leads to inflammation.
  • The virus is spread by contact with contaminated blood; for example, from sharing needles or from unsterile tattoo equipment.
  • Most people have no symptoms. Those who do develop symptoms may have fatigue, nausea, loss of appetite and yellowing of the eyes and skin.
  • Hepatitis C is treated with antiviral medication. In some people, newer medicines can eradicate the virus.

MCQs

1. Which of the following statement(s) is/are correct about the ‘Production Linked Incentive Scheme’?

  1. It aims to incentivise the producers of horticulture crops in terms of 4 to 6% of the value-addition in their crop produce.
  2. The scheme is open for farmers, farmer producer organisations, cooperatives and private traders engaged in value addition of horticulture products.

Select the correct codes from below –

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer – D

ExplanationProduction Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing notified on 1st April, 2020, extends an incentive of 4% to 6% on incremental sales (over base year) of goods under target segments that are manufactured in India to eligible companies, for a period of five years subsequent to the base year (FY2019-20).

2. Which of the following statement(s) is/are correct about a ‘black hole’?

  1. It is the space in the universe where the light is unable to reach because of the gravitational pull of the adjoining stars.
  2. Black Holes are invisible and can only be tracked with the help of a space telescope or other special tools.

Select the correct codes from below –

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer – B

Explanation – A black hole is formed when stars collapse and can be defined as a space in the universe with an escape velocity so strong that even light cannot escape it. Escape velocity is the speed at which an object must travel to override a planet or an object’s gravitational force. For instance, for a spacecraft to leave the surface of the Earth, it needs to be travelling at a speed of about 40,000 km per hour. Since light cannot get out, black holes are invisible and can only be tracked with the help of a space telescope or other special tools. And the reason light cannot escape is mainly that the gravity inside a black hole is very strong as a result of a lot of matter being squeezed into a small space.

3. The Nobel Prize for Medicine 2020 have been awarded to the scientists involved in the work of –

  1. SARS-CoV2 vaccine research
  2. Pneumococcal Conjugate Vaccine
  3. Hepatitis B vaccine
  4. Hepatitis C vaccine

Answer – D

Explanation – Two Americans and a Briton won the 2020 Nobel Prize for Medicine for identifying the Hepatitis C virus, in work spanning decades that has helped to limit the spread of the fatal disease and develop antiviral drugs to cure it. The discoveries by scientists Harvey J. Alter, Charles M. Rice and Briton Michael Houghton meant there was now a chance of eradicating the Hepatitis C virus.

4. Which of the following statement(s) is/are correct about the ‘Hepatitis C’?

  1. It is caused by a virus that attacks the liver and leads to inflammation.
  2. It is spread by the consumption of contaminated food.
  3. Currently, there is no treatment of Hepatitis C.

Select the correct codes from below –

  1. 1 only
  2. 1 and 2 only
  3. All of the above
  4. None of the above

Answer – A

Explanation – Hepatitis C is an infection caused by a virus that attacks the liver and leads to inflammation. The virus is spread by contact with contaminated blood; for example, from sharing needles or from unsterile tattoo equipment. Most people have no symptoms. Those who do develop symptoms may have fatigue, nausea, loss of appetite and yellowing of the eyes and skin. Hepatitis C is treated with antiviral medication. In some people, newer medicines can eradicate the virus.

5. ‘KV Kamath Panel’ relates to –

  1. Restructuring of bad loans on account of rising NPAs
  2. Restructuring of monetary policy framework on account of fall in money supply during the pandemic
  3. Restructuring of bank loans on account of the pandemic
  4. None of the above

Answer – C

Explanation – The Reserve Bank of India-appointed (RBI-appointed) expert committee on a resolution framework for bank loans stressed on account of the pandemic to outline parameters to deal with 26 sectors buffeted by Covid-19. According to the much-awaited report, the pandemic affected retail and wholesale trade, roads, textiles, and engineering the hardest, while sectors that were already under stress, such as non-banking financial companies (NBFC), power, steel, and real estate, piled up more misery due to the crisis. The committee identified almost all major sectors including auto, real estate, and aviation. It also found areas such as agriculture, food, pharma, and IT, among a few others, that remained mostly unaffected.

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