 Dear aspirants, this is an important announcement. The much awaited results of Maine's Scholarship Test 2020 will be declared by tomorrow, that is on 8th August at 6pm. And before that, we wish to hear your experience and suggestions for further improvement. So to give your feedback, access the link for the feedback form, which is given in the description box as well as in the comment section. We request all the participants of the scholarship test to submit their feedback form. Let's begin with the first news article analysis. These news articles are with reference to bi-monthly monetary policy statement 2020-21. The policy statement was published yesterday, that is on 6th August 2020, by the Reserve Bank of India after the three-day meeting of the Monetary Policy Committee. So in this contest, let us discuss about monetary policy, then how RBA qualitatively controls credit flow to handle inflation and also major announcements mentioned in these news articles. Relevant to the analysis of these news articles is highlighted here for your reference. Now we will see about monetary policy, which refers to the use of monetary instruments under the control of RBI to regulate interest rates, money supply and also availability of credit to achieve the ultimate objective of economic policy. The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth rates. So as per the RBI Act of 1934, the Reserve Bank of India is vested with the responsibility of conducting monetary policy. Here RBI states that price stability is a necessary precondition to sustain the growth rates. See the monetary policy framework aims at setting the policy rates. These rates will be set up based on an assessment of the current situation and also considering the evolving macroeconomic situation. It aims at the modulation of liquidity conditions to coordinate money market rates at the repo rate or around the repo rate. Here when you say money market rates, it refers to interest rate for various money market instruments and the announced repo rate changes transmit through the money market to the entire financial system and this in turn influences aggregated demand which is a key determinant of inflation and growth rates. Now we will see two methods of credit control by the Reserve Bank of India. These are quantitative or general credit control policy and qualitative or selective credit control policy. The instruments that are available under quantitative or general credit control policy or bank rate, cash reserve ratio, statutory liquidity ratio, repo and reverse repo rates, then marginal standing facility and connect of open market operations. Then under the qualitative or selective credit control policy, RBA may impose a ceiling on credit, that is it will restrict the lending capacity of banks to grant loans against specific securities. Then it may impose margin requirements. Here know that a margin means the proportion of the value of security against which loan is not given. Margin against a particular security is reduced in order to increase credit flow to a particular sector and also know that it is increased to decrease credit flow. Then one more qualitative method is through discriminatory interest rates. Here RBA makes credit flow to certain priority or weaker sections by charging concessional rates of interest. Then RBA may give direct use regarding the purposes for which loans may or may not be given. Then one severe and rare action is direct action of RBA for banks that are failing to comply with the direct use given by the Reserve Bank of India. Here RBA issues periodical letters to banks to exercise control over credit in general or to exercise control over advances against particular commodities. So these are certain ways in which RBI qualitatively control the flow of credit. Now let us come to the recent announcements made by the Reserve Bank of India. The news article reports that Reserve Bank of India has not altered the policy repo rate. That repo rate is the rate at which banks borrow money from the RBI by selling securities to the Reserve Bank of India. There will be an agreement to repurchase the sole securities on a mutually agreed future date at an agreed price. So when this repo rate is reduced, the obligation from the banks is to reduce the interest rates for the loans. That is the banks will extend the same gesture shown by the Reserve Bank of India to its customers. This is what is referred to monetary transmission in one of the news articles. Then one reason why Reserve Bank of India has not changed the repo rate is because of the expectation that the good monsoon and bumper curry crop will help in bringing down the inflation in the food prices. The news article also states that the central bank did not extend the moratorium on loan repayments that were offered to borrowers until 31st August. However, it has allowed banks to restructure loans from large corporates, MSMEs, and also from individuals. And this is to help these entities to help overcome and manage the growing stress on their incomes and balance sheets. So when we say restructuring of loans, the banks may give the option of concessional interest rates for the already obtained loans. So these restructuring efforts may or may not include a moratorium on installed repayments. So such restructuring is helpful for those entities that are facing financial challenges. And it also helps these entities to avoid bankruptcy and at the same time for the bank, the borrowed money will be paid back in some time. So in the context of these news articles we have discussed about monetary policy, then how RBA qualitatively controls credit flow to handle inflation and certain announcements made by the Reserve Bank of India. Let's move on to the next news article analysis. This op-ed article enumerates the concerns regarding the new education policy 2020. The syllabus relevant to the analysis of this news article is highlighted here for your reference. Now, know that the policy seeks to align itself with the Sustainable Development Goal No. 4 of ensuring inclusive and equitable quality education for all and aims to transform the present education system based on new education policy by 2040 with equitable access to the highest quality education for all learners regardless of their social or economic background. So in this context we are going to discuss some of the important concerns raised by the authors of this article. The first concern raised is regarding expanding the Scope of Right to Education Act in order to cover children from 3 years to 18 years and it is to achieve universalization of education. I know that this was proposed in the draft National Education Policy 2019 which aimed to include early childhood care education as an integral part of the Right to Education Act. But the present policy is silent on this proposal. So authors feel that only if Right to Education Act scope is expanded then universal education can be attained. Then the next concern is that since there is a clubbing of 3 years of early childhood care education with grade 1 and grade 2 of primary school, the authors feel that the Anganwadi workers who take care of preschool are professionally trained to be a teacher for primary classes. See the policy envisages training the current Anganwadi workers through a systematic effort according to the curricular or pedagogical framework developed by the NCERT. So because of this one of the authors criticizes that the government is trying to abandon its responsibility of even providing a good professional teacher for the earliest years. Here you should note that Anganwadi workers play a crucial role in the early years of children's life. This is because they are actually replacing the parents of the children in the institution. So keeping this point in mind, another author supports that it is alright to begin teaching the children through the Anganwadi workers. And the next concern is that the policy advocates philanthropic private participation. See primarily policies focus is ensuring very high quality government education because it is the only way to make sure that every child is given access to education in respect of where they are and how many children are there. And this cannot be ensured in a private sector because it is very unlikely that the private sector is going to open schools in remote areas with less than 10 children and this can be provided only by the government. So strengthening the government education system is important. But it does not mean that private education should not be allowed because in the last 25 years there is nearly 50% private school education and nearly 70% of enrollment in higher education is in private schools. But the problem is that there are too many players who are not of good quality. So government should ensure to allow only those who are providing good quality education. Now we will discuss the next concern is on the proposal to create school complexes. Know that the concept of a school complex was recommended by the Kotari commission report on education and national development. This commission recommended a school complex to have a collaborative synergy between high or higher secondary schools and the smaller neighborhood and primary schools. Another new education policy 2020 provides for the establishment of a grouping structure called the school complex which will consist of one secondary school together with all other schools that offer lower grades in its neighborhood in a radius of 5 to 10 kilometers and it will also include Anganwadi institutions. Know that the aim of a school complex will be greater resource efficiency, resource sharing and more effective functioning and management of schools. But here authors worry that new education policy uses the word school complex in a completely different sense that of Kotari commission. Because new education policy says we should have larger institutions indirectly meaning more number of students. So under the name of grouping they fear that the schools might be closed saying that small schools are suboptimal and they fear based on the Maharashtra example where large number of schools were closed in the name of consolidation. And the schools that existed in the proximity of the child within the community and providing access to education were either closed or matched. Here important point is even if the schools are small but they provide access to children in need and it should not be disturbed other than for enhancing quality of education. So here the concern is that the larger institutions concept will remove access to education in rural and disadvantaged areas as it may lead to closing or matching of schools. Then the next concern is that new education policy advocates equitable and inclusive education but there is no mention of a common school curriculum. So there are worries that it would broaden inequalities in the society. You know that the policy aims to impart education in the mother tongue or home language but authors feel that this objective is open-ended. For example to understand this let us take Karnataka where Canada will be taught in schools of Karnataka under this policy. But this ignores the fact that the areas of Karnataka which share borders with Maharashtra and Telangana prominently speak Marathi and Telugu respectively. So if all of Karnataka is taught in Canada ignoring this fact then young children who only understand their mother tongue will not be able to grasp the trivial facts. Then the next scenario is that it is possible for a school in a certain community to teach students in the dominant language of that area but here problem is that state governments transfer teachers. So if a teacher who speaks Kannada only is high to a school in the Maharashtra border of Karnataka then they will be taught in Kannada which is obviously an unfamiliar language for the young minds. So because of this students will not be able to attain foundational literacy and numeracy. So here the possible solution is to make the state governments to allow local schools to teach in their own language by hiring local teachers. Then the next concern is about vocational education. The concern is that the push on vocational education will weaken students academically and it may lead to sustaining hereditary occupations and may lead to early exits or dropouts. Here the authors feel that the notion of vocational education is only to prepare for vocations and should not be pushed early in the schools. And if this is done then there will be a lot of dropping out of school and it will divert the focus only on vocational courses or open school because the ultimate objective will be job but not the education. Now we will discuss final and important concern that is whether new education policies brought categorization of socio economically disadvantaged group hampers equity. See according to the policy the SCDGs can be broadly categorized based on gender identities, socio cultural identities, geographical identities, disabilities then based on socio economic conditions. The authors agree that it hampers equity because the disadvantaged groups or disadvantaged due to the historical backwardness caused to them by caste and religious inequalities. Now this broad categorization seems to remove the special importance given to these groups. So as a conclusion authors hope that the new education policy will understand diverse social realities and diverse disadvantages and exclusions in the society and it will try to retain their special treatment. With this information let us move on to the next news article analysis. This news article reports the ongoing tussle between Punjab and Madhya Pradesh chief ministers on the issue of giving GI tag for the Basmati rise. So in this context we are going to discuss about geographical indication which is an indication used on products that have a specific geographical origin and such products happen to possess qualities or a repetition that are due to the source of origin. Know that geographical indication tag also conveys an assurance of quality and distinctiveness which is essentially attributable to its source of origin in that defined geographical locality. The tag is used to identify agricultural or natural or manufactured goods. So if a product gets GI tag only such products that are produced in the geographical area can bear the GI tag. So in this context know that the Paris convention for the protection of industrial property which was signed in the year 1883 says that the geographical indications are covered as an element of intellectual property rights and they are also covered under the trade related aspects of intellectual property rights that is a TRIPS agreement of WTO. So India after becoming a member of this TRIPS agreement it has enacted the geographical indications of goods registration and protection act of 1999. This act came into enforcement in the year 2003 which seeks to provide for the registration and better protection of geographical indications. In India, GI tags are issued or recognized by office of the controller general of patents, designs and trade marks and this office comes under the department for promotion of industry and internal trade in the ministry of commerce and industry. And know that the registration of a GI tag is valid for a period of 10 years but it can be renewed from time to time for a further period of 10 years each. So with this information let us come to the present issue that is the Basmati rice variety received GI tag under the agricultural category in the year 2015-16. In India this tag extends to the states of Punjab, Haryana, National Capital Territory, Uttarakhand, Uttar Pradesh and the erstwhile state of Jammu and Kashmir. See in the year 2017-18 the registrar of geographical indications rejected the demand of the Madhya Pradesh government to get GI tag for its Basmati rice. So in the later days the Madhya Pradesh government filed a petition in the Madrasai court seeking GI tag for its Basmati rice and this petition was rejected by the Madrasai court. So the present Madhya Pradesh government is claiming that 13 of its districts are producing and exporting Basmati rice therefore it should also be included in the GI tag for its Basmati rice. And we know that GI tag for Basmati rice has been given on the basis of the traditionally grown areas of Basmati due to its special aroma, its quality and taste of the grain. So these qualities are indigenous to the region below the foothills of Himalayas in the Indo-Gangetic plains. So the Chief Minister of Punjab said that Madhya Pradesh does not fall under this specialized zone for Basmati cultivation therefore it cannot be given GI tag for its Basmati rice. With this information the disciplinary practice question will be discussed at the end of the session. Let's move on to the next news article analysis. Now let's take up this news article which is about the review of priority sector lending guidelines as announced by the RBA governor. So in this context we are going to discuss about priority sector lending program. Know that the objective of PSL program is to ensure that adequate credit flows into the vulnerable sectors of the economy. And we know that these sectors are not attractive for the banks from the view of profitability. So it is held as a significant reform in the banking sector as it ensures inclusive credit facility to the disadvantaged sectors of the economy. So Reserve Bank of India in exercise of its post as per the Banking Regulation Act of 1949 issued PSL targets and classification directions 2016. And as per this guidelines banks have to channelize part of their credit to the sectors that come under the priority sector lending categories. So as on December 2019 these directions apply to every scheduled commercial bank that is licensed to operate in India by the Reserve Bank of India. Know that it is not applicable to regional rural banks and small finance banks. So at present there are eight categories which are called as priority sectors. These are agriculture, MSMEs, export credit, education, then housing and social infrastructure and also renewable energy and the last category is others. Under others category loans are provided to individuals and their self-help groups or joint liability groups. Here the individual borrower's household annual income should not exceed a specified amount by the Reserve Bank of India. This is to channelize money to low income households and distressed persons other than farmers. Then loans are sanctioned to state sponsored organizations for scheduled cast or scheduled types for the specific purpose of purchase and supply of inputs and for the marketing of the outputs of the beneficiaries of these organizations. In addition to these categories the directions issued by the Reserve Bank of India also prescribe targets to be assured by the banks under priority sector lending program. These are certain targets and sub targets listed here for your reference. Here you can notice that some lenience is given to foreign banks with less than 20 branches as compared to the other banks in terms of achieving and adhering the targets. So with this information let's take up the news article. The news article reports that Reserve Bank of India has reviewed the existing guidelines related to the priority sector lending program and it has sought to address the regional disparities in flow of credit and also to bring startups as another category or beneficiary under the PSL program in order to increase their access to credit facility. So Reserve Bank of India has stated that PSL status is being given to the startups. So in the context of this news article we have discussed about PSL program and the display practice question will be discussed at the end of the session. Let's move on to the next news article analysis. Now let's take up this news article which reports the state of Tamil Nadu registers higher growth rate for the third consecutive year. So in this context we're going to compare the national growth rates with the state of Tamil Nadu growth rates. The syllabus relevant to the analysis of this news article is highlighted here for your reference. Now before going to discuss this news article we should know the difference between gross domestic product and gross state domestic product. Know that gross domestic product that is GDP is the final value of goods and services produced within the geographical boundaries of a country during a specified period of time. And this time period is generally taken as one financial year. Similarly gross state domestic product that is GSDPE indicates the final value of all goods and services produced within the geographical boundaries of a given state. Now let's know in brief about the economy of Tamil Nadu. See Tamil Nadu is the state with the largest number of factories in India. And its capital city Chennai is the largest industrial and commercial center of South India. And we know that Chennai is known as the Detroit of India due to the presence of large number of automobile industries. And know that almost one third of India's automobile manufacturing industry is concentrated here. Coming to the news article it says that for the third consecutive year, Tamil Nadu registered a higher economic growth rate than the national average rate. Tamil Nadu growth rate was about 8.59% in the financial year 2017-18 when the national average growth was about 7%. Similarly in the year 2019-20, national growth rate is about 4.2% while Tamil Nadu has a growth rate of 8.03%. And it is almost double the growth rate of national average. The article says that the given calculations on the GSDPE have been done at a constant prices with the 2011 toll as the base year. And we know that growth calculated in constant price indicates the growth with respect to a base year. And the calculation of GDPE in constant prices is known as real GDP. And GDP in terms of current prices is known as nominal GDP. And know that real GDP removes the impact of price fluctuations. So from the news article, we can say that all the three sectors that is primary, second and tertiary sectors have performed well in the state of Tamil Nadu during the year 2019-20 as compared to the national statistics. Here note that as per the economic survey 2019-20, the growth rate of agriculture sector at national level has been fluctuating and it is actually decreased from 6.3% in the year 2016-17 to about 2.8% in 2019-20. And the estimated overall industrial sector growth for the year 2019-20 was about 2.5% as compared to 6.9% growth in the year 2018-19. Further, the service sector is estimated to grow at 6.9% in the year 2019-20 as compared to 7.5% in the year 2018-19. So in the context of this news article, try to remember the actual trends of GDP at a constant prices and also at market prices over the past five years or in the last decade. And these trends are important for your exam because we have a relevant previous question based on the trends of GDP in the 2015 UPSC prelims exam. With this information, let's move on to the practice question session. Now let's stick up this question which was asked in 2015 UPSC prelims with reference to Indian economy consider the following statements. The rate of growth of real gross domestic product has steadily increased in the last decade. The gross domestic product at market prices has steadily increased in the last decade. So here the first statement is incorrect because real GDP is the GDP calculated at constant prices with respect to a base year, which is 2011-20. And know that real GDP is fluctuating in the past decade. For example, moving to the 2008 global financial crisis, India's GDP was negatively affected. Now the second statement says the gross domestic product at market prices has steadily increased in the last decade. And this statement is correct because GDP at market prices is the nominal GDP that is a GDP based on current prices, which includes impact of inflation. So considering the impact of inflation, the nominal GDP has been increasing steadily in the last decade. So the correct answer for this question is option B2 only. Let's take up these two questions based on monetary policy. So this question was asked in 2015, U.P.A. Cipollin's exam with reference to Indian economy consider the following. Bank rate, open market operations, public debt, public revenue. For this question, you need to choose components of monetary policy. On the similar lines, let's take up this question with reference to Indian economy consider the following. Cash reserve ratio, Morals, ASN, margin requirements, reverse repo rate. To this question also, you need to choose components of quantitative credit control policy. So in the context of these two questions, know that the monetary policy refers to the use of monetary instruments under the control of RBI to regulate interest rates, money supply and availability of credit to achieve the ultimate objective of sustainable economic growth. As per monetary policy of RBI, there are two methods of credit control. One is known as quantitative or general credit control policy and the other is qualitative or selective credit control policy. So these two are methods of monetary policy by the Reserve Bank of India. Know that under general credit control policy, RBI uses bank rate, cash reserve ratio, statutory liquidity ratio, repo and reverse repo rates, then marginal standing facility and also open market operations. Then under qualitative credit control policy or selective credit control policy, RBI may impose a ceiling on credit, that is it will restrict the lending capacity of banks to grant loans against specific securities. Then it may impose margin requirements. Here know that margin means the proportion of the value of security against which loan is not given. So margin against a particular security is reduced in order to increase the credit flow to a particular sector and it is increased to decrease the credit flow. So to understand this margin requirements, let's take up one example. Say one person went to the bank with a collateral security of 100 crores and the bank may not give 100% value of collateral security and it may extend 60% of value of security based on the policies of the respective bank and the remaining 40% is known as margin, which indicates the proportion of the value of security against which loan is not given. So if margin is reduced, that is from 40 to 30%, then the borrower may get 70% of value of security. And if the margin is increased from 40% to 50%, the borrower may get 50% of value of security. So we can say that if margin against a particular security is reduced, it may increase credit flow to a particular sector and if it is increased, it decreases credit flow to the particular sector. Then the one more qualitative method is through discriminatory interest rates. Here RBI makes the credit flow to certain priority or weaker sectors by charging a consistent rate of interest. Then moral sueyation is also part of qualitative credit control policy. As part of moral sueyation, RBI issues periodical letters to banks to exercise the control over credit against particular commodities. So we can say moral sueyation, ceiling of credit and margin requirements come under qualitative credit control policy. So with this information, let's take up the given questions. The correct answer for this question is option C, one and two. And for this question, you need to choose components of quantitative credit control policy. So cash reserve ratio and reverse report rate constitute part of quantitative credit control policy. So the answer is option D, one and four. Consider the following pace. Your pace are given with reference to state of geographical indications like Pokali rice with Tamil Nadu, Kalanamak rice, Uttar Pradesh, Kaipad rice, Kerala, Ambemohar rice, Bihar, Basmati, Punjab. Which of the given above is or correctly matched? In the context of this question, try to know that geographical indication is an indication used on products that have a specified geographical origin and having unique qualities and reputations because of the source of origin. So JTAG conveys an assurance of quality and distinctiveness and mainly used to identify agricultural or natural or manufactured goods. And you should know that geographical indication is given as per the pros and sub geographical indications of goods, registration and protection act of 1999. And this tag is valid for a period of 10 years and can be renewed from time to time for a further period of 10 years. And this question is with reference to rice varieties. So for your reference, we have given important rice varieties which were awarded JTAG. So Pokali rice is from the state of Kerala, Kalanamak rice variety from the state of Uttar Pradesh. Kaipad rice variety from the state of Kerala, Ambemohar from the state of Maharashtra and Basmati rice JTAG extends to the states of Punjab, Haryana, Himachal Pradesh, National Capital Territory, Uttarakhand, Uttar Pradesh and the Estwell state of Jammu and Kashmir. So in the given pace, one and four are incorrectly matched and the remaining pace are correctly matched. So the correct answer for this question is option C, two, three and five only. Now let's take up this question which was asked in 2013 UPSC Prelims exam. Priority sector lending by banks in India constitutes the lending to agriculture, micro and small enterprises, weaker sections. In the context of this question, try to know that there are eight categories as per the priority sector lending program. These are agriculture, micro, small, medium enterprises, export credit, education, housing, social infrastructure, renewable energy and others category. So the correct answer for this question is option D, all of the above. Now let's take up one more question on priority sector lending by banks in India which are the following categories of borrowers will be considered as weaker sections under the priority sector lending by banks in India. So here options are minority communities, self-help groups, distressed farmers indebted to non-institutional lenders, scheduled cast and scheduled tribes. So as per the priority sector lending program of our Reserve Bank of India, weaker sections category include small and marginal farmers, artisans, village and cottage industries, then beneficiaries and the government sponsored schemes like NRLM program, national urban livelihood missions, self-employment scheme for rehabilitation of manual scavengers, scheduled cast and scheduled tribes, beneficiaries of differential rate of interest scheme, self-help groups, then distressed farmers indebted to non-institutional lenders, then distressed persons other than farmers, then individual women beneficiaries up to 1 lakh per borrower, persons with disabilities, overdraft limit to PMJDY, that is Pradhanamantri Jandan Yojana, then minority communities as may be notified by government of India from time to time. So the correct answer for this question is option D1234. With this we have come to the end of today's Hindu News Analysis. 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