 A very good evening everyone. Welcome to the Hindu News Analysis by Shankaray's Academy for the date 14th May 2020. These are the articles chosen for today's analysis. Their page numbers in different editions of the Hindu newspaper is provided here. The link for the handwritten notes in the PDF format along with the time stamping for the displayed articles is provided in the description box and for the benefit of the smartphone users it is also provided in the comment section. Let us begin our today's discussion. This discussion is based on the editorial which has been written on the wake of the announcement of the mega relief package by the government. Government has announced rupees 20 lakh crore stimulus package which also includes the 1.7 lakh crore package that was announced in March along with the RBI's liquidity measures and the interest rate cuts. So the mega package includes the previously announced measures to save the economy during the lockdown and it focuses on tax breaks for the small businesses as well as the incentives for the domestic manufacturing. This combined package is approximately 10% of the country's GDP. So the author of this editorial provides some suggestions on what has to be done by the government immediately in fiscal terms for reviving the economy and for supporting the livelihoods of the citizens. The first and the foremost suggestion is the food and the cash transfers. As we know many have become incomeless in this lockdown period. So according to the author every household should be provided with 7000 rupees per month for a period of three months and every individual shall be provided with 10 kg free food grains per month for a period of six months. Further the required transfers for the state governments with respect to this must also be made along with the outstanding GST compensation to the states. This might seem like a lot but this is executable according to the author's point of view because of the following reason. First author calculates the expenditure for this to be around 3% of our GDP. So the funding for this could be financed immediately through the large borrowing by the centre from RBI. Secondly food corporation of India has plentiful of food grains. See already food corporation of India mowed 60 lakh metric tons of food grains in the month of April 2020 and government announced that due to the steady inflows of food grains through the procurement the overall central pools stock position remains stable. So the food grains transfer is possible. Thirdly due to the lockdown restrictions the demand is not as same as the normal times. Fourthly if only cash transfers in different spears is made then only two is going to enable the current demand. Finally putting money in the hands of the poor is the best stimulus to the economic revival as it is going to create an effective demand and that too mainly in the local markets. So from all these reasons it is clear that an immediate program of food and cash transfers must be the highest priority of the government. The next suggestions are related to what shall be done after the lockdown period. In this the first need will be to create the employment. Here an option is revamping the MNRIGA work. Already millions of migrant workers have returned to their hometowns with much difficulty so we cannot assume that they would be returning to where they previously worked. Because of this author suggests to provide the employment to them at where they are. So for this Mahatma Gandhi National Rural Employment Guarantee Scheme must be expanded greatly and revamped along with the wage arrears to be paid immediately. Author here also suggests that the 100 day limit per household under the scheme can be relaxed and the work has to be provided to all the adults on demand without any limit. In addition to the existing permissible work under the scheme such as the agriculture and the construction work work in rural enterprises and the care activities must also be included as a part of the MNRIGA work. Here author also talks about the rural enterprises started by the Panchayans. This idea is based on the Township and the Village Enterprises program of China. TVEs or Township and Village Enterprises are the economic units which are either collectively owned by the local residents or which are run by the individual peasants and these TVEs have played a significant role in the growth of Chinese economy. So the author asks to replicate a similar model in India. Further, the author suggests that for the time period the revamped MNRIGA could cover the wage bills of the rural enterprises started by the Panchayans and additionally public banks could provide credit to such Panchayat owned enterprises. This would create employment and income to those in need of it. The second thing to be done after lockdown is boosting the agricultural growth. This is more important as it is an important determinant of growth of the home market. The growth of the home market is important as it will only help to sustain the growth of the country since globalization after the pandemic might be unsustainable. For this also MNRIGA can be used which can help in paying the wages for the land development and the farm work for the small and medium farmers. Along with this subsidized institutional credit other input subsidies can be given and redistribution of unused land with plantations can be done. This will boost the agricultural growth which in turn can promote the rural enterprises. It is because it will create demand for their products and it will also provide inputs for them to process. All these activities will generate substantial rural employment also. So far we have discussed about the rural areas and developing the rural employment. Now what about the urban areas and the employment? Like the rural migrant workers who have returned to hometown many workers have also stayed in the towns itself. For them generating employment and income is important. So in urban areas it is essential to revive the MSMEs that is the micro small and the medium enterprises. Now to revive MSMEs and generate employment in the urban areas the author suggests that introduce an urban employment guarantee program. This program could serve diverse groups of urban unemployed including the educated unemployed. According to the author urban local bodies must take charge of this program. Further currently permissible work under this program should include the work in the MSMEs. Thus this would ensure a labor's apply for the MSMEs and it would also cover their wage bills at the government's expense. So it would revive the MSME. Now to generate employment the care economy can also be used. This pandemic has understood the importance of the public health care system. So post pandemic period must provide significant increase in public expenditure on education and health especially in primary and secondary health including for the urban poor and the rural poor. So thus the care economy provides immense scope for increasing employment as vacancies will be filled and new vacancies can also be created. According to the author all these suggestions could be realized within the total package announced by the prime minister but in the medium term public revenues must be increased too. So for this the author gives a combination of two suggestions. One is a wealth and inheritance taxation as we know in our country the rich and the wealthiest are from the one percent of the population. So two percent wealth tax on this top one percent can be levied. Along with this additionally a 33 percent inheritance tax can also be levied on the wealth they pass on every year to their progeny. According to the author this could finance an increase in the government expenditure to the tune of 10 percent of GDP. Secondly the author also suggests that the multinational companies should be made to pay the same effective rate as the local companies. This could be done through a system of unitary taxation. This will also provide substantial public revenue. So by all these suggestions the author aims to revive the economy and support the livelihood of the common man. This article is about the economic stimulus package to the msme sector which has appeared at three different places in today's newspaper. Recently the prime minister of India has announced a Atma Nirbar Bharat Abhyan or self-relent India mission. So what this mission is all about? It aims to provide a 20 lakh crore economic stimulus package to deal with the COVID-19 pandemic and this 20 lakh crore amounts to 10 percent of India's GDP and it is also considered as one of the largest economic stimulus packages of the world. Yesterday the finance minister had announced several measures as a part of this mission. So let us focus on the important changes made with respect to the msme sector. You can find the syllabus that is relevant for the article for your reference here. An important measure announced is the massive 3 lakh crore collateral free assistance to the msme sector. This measure would benefit more than 45 lakh msmes which are facing an existential crisis now. The finance minister also said that the complete amount would be 100 percent guaranteed by the government. This guarantee is essential as banks would have been reluctant to support the troubled borrowers. As we have already discussed in the earlier article this guarantee by the government is going to both benefit the banks and also the borrowers. The finance minister also said that these loans would be provided at a concessional interest rate. It would have been better if the government had specified the interest cap on these loans without leaving it to the individual lenders. According to the news article this facility is available only till October 31st. There is a demand that this should be extended at least up to the end of the financial year to realize the full benefits. Another measure is with respect to the 2 lakh msmes which are stressed or considered as the non-performing assets. The center is going to facilitate a 20,000 crore as a subordinate debt for these msmes. The government will support them by ensuring 4000 crores to the credit guarantee fund trust for the msmes. It was also announced to set up a fund of funds which is going to mobilize about 50,000 crores through the equity funding. So what is fund of funds? A fund of fund is a pooled investment fund which is going to invest in a different kind of funds. Okay so this fund of funds will have a corpus of 10,000 crores and the FM has also announced the promotion of e-market linkage for the msmes. This would replace the existing trade fairs and the exhibitions and is going to make sure that the msme products will have a proper market access. Another important change was also made in the definition of msmes. So let us have a look at the present definition under the msme development act of 2006 first. At present the criteria is based on the investment in the plant and machinery for the manufacturing enterprises and the investment in the equipment for the service sector msmes. So you can find the classification and the limits in the given table here. And in 2018 the union cabinet approved changes to the definition of msmes. Here the criteria was changed from the investment in plant and machinery or equipment to the annual turnover. You can find the revised definition in the table shown here and under the new definition a micro enterprise is a unit where the annual turnover does not exceed five crores. A small enterprise would have a turnover of more than five crores but not exceeding the 75 crores. A medium enterprise was defined as a unit where the annual turnover is more than the 75 crores but not exceeding the 250 crores. But this has not come into effect yet. So we may expect this new definition also to revise in the coming days with a new investment limit and turnover. Also the distinction between the manufacturing and the service sector may also be eliminated. All these measures are expected to the boost investment and liquidity in the msme sector. The finance minister here also announced that the government will distill of global tenders for procuring goods and services of value less than 200 crores. What does this mean? It is mandating that the local sourcing of goods and services birth 200 crores. This would insulate the local ms from the external competition. So via all these measures required now the msme's are the backbone of the Indian economy and they contribute nearly 30% of our GDP and nearly 50% of our Indian export. Not just that they are also the largest provider of the employment and it is after agriculture that the msme stand with respect to the employment. So all these measures are expected to revive our lost economic growth and make India a 5 trillion economy by 2024-2025. This discussion is based on the article which highlights that Taiwan is eager to collaborate with India with respect to the COVID pandemic. Pandemics affect the public health and they severely damage our country's resources. So a joint effort which focuses on information sharing and multilateral coordination becomes important in preventing such pandemics. The international health regulations is one such effort. It is an international law which helps the countries to work together to save the lives and the livelihoods caused by the international spread of the diseases and other health risks. It entered into force in the year 2007 and it is legally binding on the 196 countries across the globe. The international health regulations establish a set of rules to improve the international surveillance in order to prevent, protect, control and respond to the international spread of the disease. At the same time, avoiding the unnecessary interference with the international traffic and trade. So let us see how international health regulations was formed. The cholera epidemic that overran Europe between 1830 and 1847 became the catalyst for the multilateral cooperation in public health. This led to the first international sanitary conference in Paris in 1851. After the World Health Organization was formed in 1948, it adopted the international sanitary regulations in the year 1951. Later, these were replaced and renamed by the international health regulations of 1969. The international health regulations were primarily intended to monitor and control six serious infectious diseases. The cholera, plague, yellow fever, smallpox, relapsing fever and typhus. In the recent decades, its scope has also been expanded to include the new and the reemerging diseases including the emergencies caused by the non-infectious disease agents. The international health regulations requires states to report timely and accurate information to the World Health Organization about the potential public health emergencies of international concern. This would then enable World Health Organization to ensure a proper technical collaboration for effective prevention of such emergencies and it would also enable who to inform other states of the public health risks. This was the main bone of contention by the countries around the world with respect to the COVID-19 pandemic against China. So, what is meant by a public health emergency of international concern? According to the international health regulations, it refers to an extraordinary public health event which satisfies two conditions. A, it must constitute a public health risk to other states through the international spread of the disease b, it must require a coordinated international response. Coming to the news article, it says, Taiwan is seen as one of the few places in the world which has successfully stemmed the spread of the coronavirus without resorting to the draconian measures. Taiwan which had only 440 infections as of May 13 wanted to share the experience with the World Health Organization but we must note that Taiwan is not a member of World Health Organization. So, why is Taiwan not a member of World Health Organization? The People's Republic of China claims that Taiwan is the province of China and not an independent state. It says that only the PRC has got the right to represent all of China in the United Nations and also in the other international organizations like the World Health Organization. So, is Taiwan a part of the international health regulation system? Yes, it was included in the IHR system in 2009. Accordingly, Taiwan can now interact directly with the World Health Organization on major disease outbreaks without having to go through beaging. The principle of universal application in the international health regulation has provided the legal ground for the Taiwan to participate in the international health regulation mechanism. Coming to the India-Taiwan relationship, there are no official diplomatic ties between Taiwan and India but both the countries have set up their representative offices in each other's capital cities in 1995. Even now during the coronavirus pandemic, both are collaborating on research and have been conducting webinars on COVID-19. Taiwan's success is mainly based on vigorous measures for screening, testing, contact tracing and enforcing quarantines. So, these hold several lessons to India in controlling the coronavirus pandemic. Let us look at the prelims question at the end of the video. This discussion is based on the editorial which highlights that it's the time to give the IHR's officers their due. Recently, a group of IHR's officers had prepared a document called Fiscal Options and Response to the COVID-19 Epidemic. It suggested measures like reintroducing wealth tax to tax the rich, providing an additional one-times says for the COVID-19 relief, then providing tax relief for the sectors that were hit hard and finally reintroducing their inheritance tax, etc. But the Central Board of Direct Taxes has punished the three senior IHR's officers. They were punished for breaching the service rules in preparing the policy document and making it public, which allegedly created panic and tax policy uncertainty among the public. The author feels that the officers should not have been admonished. This issue reignites the generalist versus the specialist issue and the discrimination faced by the IHR's officer. The author, a former Chief Commissioner of Income Tax, gives a few examples to show that the IHR's officers are relegated to the margins despite being specialists. According to the author, the Ministry of Finance is always headed by an IHR's officer. The Revenue Secretary, the Expenditure Secretary and the Finance Secretary are usually drawn from the IHR's. This is despite the fact that they have little experience in handling the economy when compared to an IHR's officer. We know that the union budget is the handy work of IHR's officers, but at the time of the budget, it is an IHR's officer who accompanies the Finance Minister for the press briefing. The IHR's officer is totally invisible. It is obvious that the senior IHR's officers know the intricacies of the taxation, whether national or international. The author feels that mostly IHR's officers with little subject knowledge heads the Revenue Administration. The author believes that this can be the reason for complex income tax loss and frequent change in the policies. For example, the author quotes that the Centre had introduced radical changes in the corporate taxation after passing the union budget in 2019. This made some provisions in the budget irrelevant and things were further complicated. The author believes that this issue would have been resolved had the IHR's officer were given more role. The issue does not end here. It is mostly the IHR's officers who are made the Governor of the Reserve Bank of India, the Chief Election Commissioner and the Comptroller and the Auditor General of India. IHR's and other officers are rarely allowed to occupy the top post in the administration. So we can conclude here by saying that all the civil services must be given their due and be allowed to play a normal role and cooperation among the civil servants are essential for the political, social and the economic development of the nation. This article seems more relevant from the main's point of view. Let us look at the main's question towards the end of the video. Let us take a question here. This question is framed based on the news article that appeared in the business page of today's paper. The first statement here says the capital to the risk weighted assets ratio is the ratio of the bank's capital to the risk weighted assets of the bank. It is simple and it is a correct statement. So capital to the risk weighted assets ratio that is the CRAR is also called as the capital adequacy ratio. It is the ratio as mentioned above of the bank's capital to the risk weighted assets of the bank. So what is the risk weighted asset here? RBI in its monetary policy assigns some risk to the loans. This is based on the likely chance of a loan being repaid or not getting repaid. For example, a loan given to a normal vendor will have less risk compared to a loan given to a stockbroker. Let us assume that both the normal vendor and the stockbroker are taking a loan of 1000 rupees. Then we are assigning a risk of 100 percent to the normal vendor and 150 percent to the stockbroker. And how are we going to calculate the risk weighted asset? Risk weighted asset in case of the normal vendor is equal to 100 percent that is 100 by 100 into the loan taken that is the 1000 rupees and which will be in total to the 1000 rupees. So the risk weighted asset for the normal vendor is 1000 rupees. Let us now calculate the risk weighted asset for the stockbroker which is equal to the 150 percent that is 150 by 100 into the loan taken that is 1000 rupees again which is equal to the 1500 rupees. So this is the risk weighted asset for the stockbroker which is higher than the normal vendor as you can see. So all of the loans of the bank with the risk attached are added to arrive at the risk weighted assets. In the bank's terminology loans given are considered as the assets of the bank. So capital adequacy ratio is equal to the capital by the risk weighted assets into 100. As per the basal three norms banks have to maintain a capital adequacy ratio of 8 percent. If you see the numerator is the capital available with the bank and the denominator is the risk weighted assets. If the available capital with the bank is high it can easily cushion the losses suffered by the bank and if the denominator is lower that is the risk weighted assets then there is more possibility that these loans will get paid back. So a higher capital adequacy ratio reflects the good health of the bank. So the second statement in our question is incorrect and the correct answer to our question is option A 1 only. I am going to add here that the capital adequacy ratio and the PCA framework have been discussed in detail in our February target 2020 series. You can refer that for better understanding. Coming back to the news article the government in its 20 lakh crore fiscal stimulus package said that it will provide a full guarantee for the loans extended by the banks to the borrowers to kick start the economy that was paralyzed by the COVID-19 lockdown. If the government directly provides the guarantee then there will be no risk weight attached to the loans. As we have just seen in the question if the risk attached is less the denominator in the formula decreases. Overall it increases the capital adequacy of the banks. Also the news article mentioned that government announced a 30,000 crore special liquidity scheme for the NBFCs that is the non-banking financial companies. See NBFCs are the most affected due to the lockdown as their businesses came to a standstill and are facing a huge financial crunch. In this special liquidity scheme banks will borrow money from the RBA and they're going to lend it to the NBFCs. These investments will be 100 guaranteed by the government. Therefore a big liquidity boost is expected by the NBFCs. This is all about this news article. Let us move on to the next one. Let us look at this question on Foreign Contribution Regulation Act of 2010. This question was framed based on today's news article. The first statement says it aims to prohibit the acceptance and the utilization of foreign contribution for any activities that are detrimental to the national interest. Yes it is a correct statement. Second a candidate for election and their political party cannot receive the foreign contributions. This is correct because according to the section 3 of the FCRA Act the money cannot be received for the election and the political purposes. So the second statement is also correct and the answer here is C both 1 and 2. The article mentions that funding from the US Center for Disease Control and Prevention will be delayed. This is because this agency has been placed on a watchlist since December 2019. C, CDC that is the Center for Disease Control and Prevention this week announced that it has committed 3.6 million dollars to assess the government of India's response towards the COVID-19 pandemic. These resources will support the prevention, preparedness and the response activities in India. And also this is the initial tranche of funding which will seek to further strengthen and support the government of India's efforts to increase the laboratory capacity for the SARS-CoV-2 testing. But now the funding may be delayed since the agency has been placed on a watchlist since December 2019. It was placed on this list because of an inquiry into the CDC's funding of an unapproved Indian laboratory which was in Manipal and which was also working on the Nipah virus and the virus is considered as a potential bio weapon. So the Union Health Ministry asked both the CDC and also the Manipal Center to shut down the study. So what is this watchlist? The watchlist category mentioned here is the prior reference category and it is related to the Foreign Contribution Regulation Act or the FCRA. As you know, this act was enacted by the parliament to consolidate the law to regulate the acceptance and the utilization of the foreign contribution by certain individuals or associations or companies. This act is also to prohibit the acceptance and the utilization of the foreign contribution for any activities that are detrimental to the national interest as we have already seen in the question. So who can receive a foreign contribution according to this act? Any person that is any individual association or company can receive foreign contribution but subject to some conditions. So among the given list of conditions here, if you see, condition 2 is important as it mandates that those individuals, associations or companies which wants to receive the foreign contribution must obtain the FCRA registration or FCRA prior permission from the Central Government. Otherwise, they will be ineligible to receive the foreign contribution. So as we saw already, Manipal Center was unapproved and CDC was not given prior permission to fund the Manipal Center. So this amounts to the violation of the act. This is the reason why CDC has been under the watch list or the prior reference category and this means that when any foreign source or foreign donor wants to transfer the money to some recipient association in India, then for doing so prior clearance from the Ministry of the Home Affairs is needed. So we must remember the Ministry here. Foreign Contribution Regulation Act is under the Ministry of Home Affairs. We might get confused that it might be under the Ministry of External Affairs. So whenever a foreign source or a donor is placed under this category, they have to get a prior clearance from the Ministry of Home Affairs for transferring the money. So CDC also has to get the MHS clearance for transferring and that is why the funding may be delayed. This is done by the government when the information is received that a particular donor who is located outside the country is transferring the money to ineligible recipients located within the country. After the information is received, the matter will be examined in detail and the prima facie is established, then the action is initiated against the recipients of such donations as per the provisions of the FCRA Act and simultaneously the foreign donor is placed under the prior reference category by the central government. But know that this is not a permanent penalty and with a due consideration and based on specific reports any organization or an agency can be removed from the prior reference category. Let us look at today's practice question for prelims and mains. Consider the following statements with reference to the international health regulations. First statement, it is an international treaty that is legally binding on its member states. It is correct. It is administered by the World Health Organization. This is also a correct statement. Third statement, India, China and Taiwan are included in the IHR system. This is also correct. If we are going to make a guess, we might think that Taiwan is not a member of World Health Organization, so it might not be part of the IHR system. But today's analysis would have cleared that though Taiwan is not a part of World Health Organization, it is included in the IHR system. So all the three statements are correct and the correct answer is D12 and 3. The next question, consider the following statements regarding the micro, small and medium enterprises. The first statement says, as per the MSME Development Act 2006, if a manufacturing enterprise has an investment of three crores on its plant and machinery, it will be classified as a small enterprise. This is a right statement. Second statement, MSME sector contributes 30% of the India's GDP and nearly 50% of the India's export. Both the statements are correct here. You can get this answer correct even without knowing about the MSME Development Act because more or less UPSC does not play with the numbers. So if you're just aware that a small enterprise would have a range of somewhere less than 5 crores, you can go and make the guess and it would come right. Next, moving on to the main's question, Sardar Vallabhai Patel has famously called the Indian Administrative Services as the steel frame of India. But there are allegations that the Indian Administrative Services officers are preferred over the other civil services officers for heading the top institutions in the country. So here we can have an introduction mentioning the generalist versus specialist debate which has been existing from very long time and the today's news article discussion would give you a lot of points for the content. Like the Ministry of Finance is always headed by the IAS officer, the secretaries like revenue secretary, expenditure secretary and the finance secretary are usually drawn from the IAS and the IAS officer is generally not allowed to make the policy changes. So these all can form the content and in the end you can say that second ARC highlights the need of specialists which would be a good way to end the question. With this we have come to the end of today's Hindu News Analysis. If you like the video, don't forget to like, share and comment and for more updates on civil services exam preparation do subscribe to the Shankara IAS Academy YouTube channel. Thank you.