 Dear viewers, an announcement regarding target 2020 series. As you are all aware that we launched the target 2020 prelim series, this series aimed at simplifying the current affairs preparation for the upcoming 2020 prelims examination. This series was launched to cover 10 months of current affairs from July 2019 till April 2020 and all the 10 videos were delivered in an effective and efficient manner and are already available for your utility on our YouTube channel. But because of the change in the schedule of the prelims exam, we have been receiving numerous requests from our viewers to cover the additional months that are from May 2020 to August 2020. In this regard, we wish to clarify that we couldn't do the additional months because of the prevailing lockdown restrictions, but for the benefit of the aspirants, Shankar Iyer's Academy has launched limited exclusive 5 current affairs tests covering the current affairs till the month of August 2020 at just Rs 1000. Further top 3 meritorious students in each of the 5 monthly current affairs tests will be given 100% free reimbursement, so in total 15 candidates will be awarded 100% free reimbursement. Furthermore, for the benefit of the students, if you subscribe for 5 monthly current affairs tests, as a complementary, Shankar Iyer's Academy is giving an additional 13 tests free of cost. These additional 13 tests consist of 8 GS full mock tests, 3 CSAT full tests and 2 more exclusive current affairs tests covering current affairs from June 2019 till March 2020. For more details, visit the registration link which is given in the description box and also in the comment section. For this, let us move on to the analysis for the date 1st of September 2020. The list of news articles along with the page numbers of 5 different editions is given here for your reference. Let us now begin our analysis. This editorial is a response article to the recent announcement made by the central government on GST compensation to the states. In this discussion, the author mentions about the two grand bargains, one done in the past and the one required in the future. So let us discuss all these aspects in this analysis. The relevant syllabus is given here for your reference. See recently the union finance minister said that this year we are facing an extraordinary situation. We are facing an act of God which might even result in contraction of the economy. And also if you have seen the 41st meeting of the GST council that was held on 27th August 2020, the GST council took note that the projected shortfall in GST revenue for the states for the current financial year would be around 3 lakh crores. And against this shortfall the compensation says that is available during the year would be only around 65,000 crores. So this leaves an unmet shortfall of rupees 2.35 lakh crores. So based on all these discussions that happened during the GST council meeting, the union ministry of finance gave two borrowing options for the states with reference to managing this GST revenue gap. And the states were asked to communicate their preference within seven working days. Before discussing the options, let us see the provision for compensation to the states under this GST. See this provision for compensation to the states an account of GST implementation was demanded by the states since they gave up their right to collect the sales tax and few other taxes to agree for GST regime. For this purpose the parliament enacted a law in order to provide for the compensation to the states for the loss of revenue that arise on the account of GST implementation. And this law is called as the GST compensation to states act of 2017. Now if you look at this act, it states that the compensation shall be payable to any state during the transition period which is a period of five years from the date on which the state GST acts of the concerned states come into force. And this act also gave a mechanism to compensate the states. It allowed the center to levy and collect the compensation says for providing compensation to the states for this period of five years of a such period as prescribed based on the recommendations of the GST council. So this compensation to states is the main part of the grand bargain between the central government and the state governments that led to the introduction of GST. Now let us come to the current scenario out of the 3 lakh crore revenue shortfall that we saw earlier. The finance ministry states that only 65000 crores could be met through compensation SES collection of the remaining 2.35 lakh crores only around 97000 crores shortfall can be attributed to implementation of GST and the remaining 1.38 lakh crores is the GST revenue shortfall due to COVID-19. As of now if you see the central government has taken direct responsibility of only the money that has been collected through SES which is up to 65000 crores. And to realize the remaining compensation whether the part which is due to implementation of GST or the part that is due to COVID-19 pandemic is up to the state governments now. And for this purpose the central government has given two options to the state governments. We shall see about these two options shortly now. Now if you see there is a criticism for this announcement by the central government. This act of central government is criticized as abdication of statutory responsibility and going back on promise something that shakes the trust that states have on the central government. But as saw earlier the union finance minister made a remark that this 2070 GST act did not foresee an act of God that is the present COVID-19 pandemic. Now if we go through the provisions of the act at least 97000 crores out of this 2.35 lakh crores are absolutely falling under the central government. But by citing this COVID-19 pandemic as an act of God or nature the central government appears to have stepped back on its promise of compensation at least for the time being. And if you see the central government has invoked force mezzo clause in commercial contracts and you can find this term force mezzo in this editorial. Now let us come to the two borrowing options given by the central government. See some of the aspects are quite technical in nature and we shall discuss more on this once there is enough clarity among the experts. Now let us see both these options in brief. See under option 1 the shortfall that has risen out of GST implementation which is the 97000 crore money will be borrowed by the states through an issue of debt under a special window coordinated by the ministry of finance. Here the central government has agreed to keep the cost of debt at par with the GSEC yield or close to the GSEC yield that is the interest rate for these debts will be lower. If at all the interest increases then some margin will have to be borne by the center through subsidy. So whatever interest on this borrowing under the special window will be paid from the CES until the end of the transition period and after the transition period the principal amount and the interest amount will also be paid from the proceeds of the CES. For this the CES arrangement will be extended beyond the transition period and the states will not be required to service the debt or to repay it from any other source. And if you see the borrowing under the special window in this option will not be treated as debt of the state. Now let us come to option 2 here the entire shortfall of 235000 crores may be borrowed by the states through issue of market debt instrument. The principal on the amount will be paid from CES after the transition period but if you see the interest shall be paid by the states from their own resources and under this option the 97000 crore will not be treated as debt of the state. So these are the some of the special borrowing permissions given to states under both the options by the center and we shall discuss more on this some other day in a related discussion as we get more clarity. So just try to remember there are two borrowing options from both these options you can see that the central government has put the onus on the state governments to bridge this CES gap. This is the reason why many states such as Kerala, Telangana, Tamil Nadu, West Bengal, Chattisgarh, Delhi and Punjab are all not ready to accept this proposal by the center. Why because they all feel that the central government has a moral and a legal obligation to pay the compensation for the shortfall in GST collections but under both the options that we saw the states are required to borrow from the market to bridge the shortfall in the compensation dues and it becomes administratively difficult for the states to implement and further the exercise by itself is more expensive. So these are some of the aspects related to compensation CES that you need to know from exam perspective and in connection with this we also saw the recent announcements by the central government. With this background information in mind let us look at this editorial the authors of this editorial or of the opinion that the central government should have taken the responsibility of providing the compensation as it is well positioned in terms of borrowing options and also well positioned in terms of getting debt at low interest rates when compared to the state governments. Here the authors say that fighting this recession through increased fiscal stimulus is basically the job of macroeconomic stabilization and if you see this job of macroeconomic stabilization basically comes under the domain of the central government but based on the two options that were announced by the government which we saw now the authors feel that the central government is moving away from its promise and this may cause a serious dent in the trust factor between the central government and the state governments. So in this regard the authors have given few important reforms or changes in the existing GST implementation and these reforms are called as grand bargain version 2 on this editorial which is yet to be carried out that is why the title of this article is GST reform needs a new grand bargain. The first thing which the authors mention is that the GST must include all goods and services with very few exceptions such as food and medicine. Now why because if you see certain items like alcohol for human consumption then petroleum products then electricity are all kept outside the purview of GST. Next the authors tell that India should adopt a low and a standard rate of 12 percentage GST for at least five years almost for all goods and services. Here the authors highlight the example of Australia where the GST rate has been constant at 10 percentage for the past two decades. If you remember there was a discussion about the tax labs under GST and many of our viewers asked that if India is having four tax labs or five tax labs well we do not have any official data to substantiate if there are four tax labs or five tax labs but remember predominantly there are some items for which there is no GST and apart from that we have GST rates of 5 percent 12 percent 18 percent and 28 percent and for few jewelry articles there is also GST for 3 percentage so we will try to have a more detailed discussion about various GST tax labs in one of our future analysis. So here in this editorial the authors have suggested that India should adopt a low and a standard rate of 12 percentage for at least five years and out of this 12 percentage the authors tell that 10 percentage should be equally shared between the states and the center and the remaining two percentage out of this 12 percentage must be earmarked exclusively for the urban and rural local bodies. So you can see that the authors are focusing about financial devolution to the third tier of government which is the urban and the rural local bodies. Why because even after 28 years of the 73rd and 74th constitutional amendment acts the local governments do not have proper funds to carry out the development activities but on the other side they have a huge responsibility for providing a wide variety of government services. So the authors tell that if this two percentage is earmarked exclusively for the local bodies then it will ensure some sort of revenue autonomy to them. So this was one suggestion the next suggestion which the authors have given is that they are calling for simplification of implementation of interstate GST and they are also calling for simplification of the administration of the e-vables. So these are some of the changes proposed by the authors in the existing GST system. This is all about the discussion of this editorial. In this editorial we saw about the recent announcement made by the central government on GST compensation to the states. As a part of this we saw about GST compensation and the two options announced by the government from exam perspective and finally we saw some of the suggestions given by the authors to bring certain changes in the existing GST system. Let us move on to the next news article. Now let us look at this editorial which has been written by a former inspector general of police of the Central Reserve Police Force. Recently we have heard the news that CISF personnel allegedly asked member of parliament from the state of Tamil Nadu whether she was an Indian as she could not speak Hindi. In this context the author stresses on the need for reforms in CISF that is Central Industrial Security Force. So let us discuss about the various paramilitary forces in India and then in particular about CISF and then we shall discuss about the editorial. The relevant syllabus is given here for your reference. Know that the paramilitary forces are officially called as Central Armed Police Forces. It consists of seven forces all of which functions under the Ministry of Home Affairs. Remember this fact the seven forces are Assam Rifles, Border Security Force, Central Industrial Security Force, Central Reserve Police Force, Indo-Tibetan Border Police, National Security Guard and Sahastra Seema Bal. Today let us focus on CISF. See the need for a specialized firefighting unit in India was first felt when major fire accident took place at Heavy Engineering Corporation Limited which is located at Ranchi Jharkhand and this led to the formation of the Central Industrial Security Force. Know that it is an armed force of the union established under the Central Industrial Security Force Act of 1968. See this act envisages CISF as an armed force of the union for the better protection and security of industrial undertakings that are owned by the central government and certain other industrial undertakings and employees of all such industrial undertakings. Also if you see CISF provides technical consultancy services to industrial establishments in the private sector. See at present CISF has 12 reserve battalions, 8 training institutes and 63 other formations with a total of approximately 1.4 lakh personnel. Know that according to its mandate, CISF provides security to the premises staff along the security of property and establishments and apart from this if you see it also provides security to the strategic establishments such as the Department of Space, Department of Atomic Energy, the various airports of India, then the Delhi Metro and even the ports of India. Also it provides security to the historical monuments and the basic areas of Indian economy such as petroleum and natural gas, electricity, coal, steel, mining etc. And apart from this if you see CISF is also providing protection to some private sector units and some important government buildings in Delhi. Then along with this if you see at present CISF is also providing security to the protected persons classified as Z plus Z, X and Y. It is important to know that CISF is the only force with a customized and a dedicated firing. And if you look at the official website of CISF it tells that CISF is a compensatory cost force. What is this compensatory cost force? It means that CISF has to be paid by the protective for its security cover. So these are some of the aspects that you need to know about CISF from exam perspective. Now with this information let us look at this editorial. This editorial tells that giving basic training, speaking, reading and writing in English should be made mandatory based on the recent incident that happened to a member of parliament which we saw earlier. The author tells that imparting such English knowledge will help the personnel build confidence and it will also help them interact easily with people at airports, metro stations and government buildings. And the author feels that for basic language training the Air Force training institutes should serve as a model for CISF. Why because they are successful in training and converting a recruit with hardly any knowledge of the language into a smart English speaking personnel. And similarly the author has also discussed about the proposal to impart language training in Spanish, German, French and various other foreign languages to be implemented for the convenience of foreign passengers. Such a move will enhance India's image as foreigners landing on our soil would be assisted by CISF personnel in their own native languages. And apart from this the author also suggests that immediate disciplinary action should be taken against those personnel who are found misbehaving with the passenger and they should be removed from airport security duties. So these are some of the suggestions put forward by the author in this editorial. In this editorial focus mainly on the seven forces that are classified as central armed police forces and about the central industrial security force. We shall discuss about the remaining forces in our future discussion. Now have a look at this practice question. Let us move on to the next news article. This news article mentions that Indian economy is witnessing its worst contraction in decades since the gross domestic product has shrunk to a record low. So in this discussion let us see what is meant by GDP, the status of Indian economy in GDP terms and also about GFCF which is Gross Fixed Capital Formation that is mentioned in this news article. The relevant syllabus is given here for your reference. First let us understand what is meant by GDP. See GDP is the aggregate value of goods and services produced within the domestic territory of a country or we can tell that GDP is the market value or the monetary value of all the final goods and services that is produced within the boundary of nation during one particular year. To understand it better let us understand each term in this GDP which is gross domestic product. Here gross signifies that no deduction has been made for the depreciation of machinery, buildings and other capital products that are used in production that is it includes the total value and the word domestic it means that the production is by the resident institutional units of the country or in other words we can tell that all the economic activities is done inside the boundary of a country and by its own capital that is own money and the word product refers to the final goods and services that is those that are purchased imputed or estimated or otherwise as the final consumption of households, nonprofit institutions serving households and government, fixed assets and the exports. So in all these final means the stage of the product after which there is no known chance of value addition in it. So this is what we mean by the gross domestic product or GDP. Remember that in GDP the income generated by foreigners in a country is included but the income generated by nationals of our country outside the country is not included. Next know that GDP of any country is derived from different sectors of the economy. In India if you see there are three sectors agricultural sector, industrial sector and services sector. So you can see that GDP is the single most important indicator in Indian economy to capture the economic activities since the changes in the size of economies are usually measured by the changes in the volume of GDP. And one more thing which you need to know from exam perspective the GDP data is released by the national statistical office that comes under the ministry of statistics and program implementation and the base here for calculating the GDP series is 2011-2012. So remember both these important facts as well. Now if you look at today's news article it tells that Indian economy is witnessing its worst contraction in decades with GDP shrinking by a record 23.9 percentage in the April to June quarter of the current financial year when we compare this to the same period of the previous financial year. So this is the situation of Indian economy as a whole but what about sector ways? If you take the three sectors agriculture sector was the only sector that recorded a modest growth of 3.4 percentage while if you see all the other sectors saw contraction and steepest fall was witnessed by the construction sector. As you know one of the reasons for this contraction is the severe impact of the COVID-19 lockdown that halted most economic activities and because of it the demand is contracting heavily. So you can see that there is a contraction and reduction in the tax revenue collection as well because of which the capacity to utilize this contraction has also been reduced. So you can see that the entire activities have pushed the economy into a deeply vicious cycle. Also if you see the demand contraction can be seen by the reduction in the expenditure set that is people are not spending things and hence there is no demand in the market. Now how do we know that people are not spending? These are known by some indicators like for example the private consumption the data tells that the private consumption fell 26.7 percentage and even the exports they contracted almost 20 percentage and also if you see even the investments have reduced 47 percentage. If you see the investment reduction it is reflected by term called as gross fixed capital formation. So what is this gross fixed capital formation or GFCF? Know that it is the important indicator to assess the strength of any country's economy and to provide the strong base for the future growth of any economy. It is measured by the total value of producers acquisitions minus disposals of fixed assets during the accounting period plus certain specified expenditure on services that adds to the value of non-produced assets. See the fixed assets are tangible or they can even be intangible assets that are produced as output from the process of production and that are themselves used repeatedly or continuously in other processes or production for more than one year. Here you also need to know about the term non-produced assets. They are defined as non-financial assets that have come into existence in ways other than the process of production. This includes tangible non-produced assets like land, subsoil assets etc and intangible non-produced assets like patented entities, leases and other transferable contracts, purchase goodwill etc. So this GFCF is important as it provides the investment rate. In India investment rate is measured as the GFCF as a percentage of India's GDP and according to the recent estimates it has reduced by 47 percentage. This indicates that the investments have reduced in India. So according to the experts the investment outlook is very bleak that is it is not promising and the investment may fall further. Well we cannot totally blame the current situation of Indian economy on the COVID-19 pandemic because even before that India's economy was in slowdown. So what would be the consequences of such a low GDP performance that was observed in this quarter? According to the economists this might contribute to a contraction in annual GDP this year and this may turn into the worst GDP in the history of independent India. The economists predict that the annual GDP might contract 5 to 7 percentage in the current financial year which is 2020-2021. So this is all about the discussion of this news article. In this news article we saw what do we mean by GDP and the status of Indian economy in GDP terms. Now if you look at this news article it is critical about the recently released GDP data. In this news article the former finance minister P Chidambaram has said that the present government has done nothing to stop this contraction in GDP. This is all about the discussion of both these news articles. Now have a look at this practice question. Let us move on to the next news article. This question about Kutub Shahi dynasty has been framed based on this news article which speaks about the conservation work done on the mask of Hayat Bakshi Begum who was the daughter of Muhammad Koli. In this context let us discuss in detail about the Bahamini kingdom and the Kutub Shahi dynasty. See the Muslim kingdom of Bahamini was established by some nobles of the Deccan region who revolted against the repressive policies of Sultan Muhammad Tukla. At the peak of its rule if you see the Bahamini kingdom extended from north of Krishna river up to Narmada and it stretched east west from the coasts of Biafbengal to the Arabian sea. And after the death of its last king in 1527 if you see the Bahamini empire was disintegrated into five regional independent principalities which are Ahmed Nagar, Bijapur, Behrar, Bidar and Gholkonda. So you can see that one of the five regional independent principalities was Gholkonda. This region was ruled by Sultan Koli Kutub Shah and he founded the Kutub Shahi dynasty in 1518 AD. This dynasty existed till 1687 AD. Know that it was a Muslim military aristocracy with strong Persian influence and if you see the sultans belong to the Shiite sect of Islam. Know that seven rulers of the dynasty ruled for 170 years and they successfully resisted the Mughal attack till 1687 AD. And also know that this Kutub Shahi dynasty was the last kingdom to be absorbed in the expanding Mughal empire under Aurangzeb. Note that King Muhammad Koli Kutub Shah was the fourth king of this dynasty founded the Hyderabad city. Then the capital of Kutub Shahi kingdom was shifted from Gholkonda to Hyderabad. Now coming to the art and architecture of Kutub Shahi dynasty. Know that the rulers were great builders and patrons of learning. They had constructed massive tanks, religious structures and even certain secular structures and they also constructed various bridges. If you see they patronized the Persian culture and the regional culture of the Deccan. And this is symbolized by the expressive Telugu language and the newly developed Dakni idiom that is Deccani idiom. Next if you see the royal tombs of the seven Kutub Shahi rulers which is located near Gholkonda is considered as the final resting place of the royal kings. See these are the symbols of the architectural expertise of the Kutub Shahi dynasty. Why because one can see the colossal domes, mosques, basins and pools of water including heritage fountains which were all built in Indo-Islamic style. They are rich with freezes, tile work, plaster designs, stucco work, floral designs and geometrical patterns. Here just I have an idea that the Kutub Shahi monuments of Hyderabad, Gholkonda fort and the Kutub Shahi tombs in Charminar are all in the tentative list of UNESCO world heritage site. Now if you look at Hyderabad city it also has some fine examples of Kutub Shahi architecture which are the Jami Masjid then the Mecca Masjid then Toli Masjid and also one of the landmark symbol of Hyderabad which is the Charminar. Know that the Charminar which is a massive arch was built by Muhammad Kuli Kutub Shah in 1591 to commemorate the end of plague in Hyderabad and yet another important architecture is the Gholkonda fort. Know that it was originally a mud fort built in 1143 AD under the reign of the Raja of Varangal. Later it was fortified between 14th and 17th centuries by the Bhaamani sultans and then by the ruling Kutub Shahi dynasty. So these are some aspects that you need to know about Kutub Shahi dynasty from exam perspective. With this information let us look at this question about Kutub Shahi kingdom in the Deccan. Three statements are given and you need to choose those statement or statements that are incorrect. Look at the first statement it tells that the Kutub Shahi dynasty was founded by Sultan Kuli Kutub Shah with Berar as its capital. This statement is incorrect because Kutub Shahi dynasty was founded by Sultan Kuli Kutub Shah but the capital was Gholkonda not Berar. Now look at the second statement it tells that Kutub Shahi was the last kingdom to be absorbed in the expanding Mughal empire under Aurangazeb. Yes this statement is a correct statement as we saw during our discussion. Now look at the third statement it tells that the Gholkonda fort was originally constructed by Muhammad Kuli Kutub Shah in 1591 to commemorate the end of the plague in Hyderabad city. This statement is incorrect it is Charminar not Gholkonda fort. Why because we saw that Gholkonda fort was a mud fort that was built far back in 1143 AD under the reign of Raja of Varangal and the later rulers subsequently built this fort. So you have the first and the third statements are incorrect hence the correct answer is option D 1 and 3 1 b since you need to choose those statements that are incorrect. So always be careful when you read the question. Now let us move on to the next news article. This map-based question has been framed based on this news article which talks about the recent attempt made by the Chinese army to alter the status quo along the line of control and the Indian army has successfully blocked the Chinese army troops from entering into our territory. See this news article mentions five important locations and all these locations are important for us from prelims point of view. It mentions places such as Pangongso lake, Rekin mountain pass near Rezangla, then Chushul, then Debsang plains and then Kauru. See this news article states that Rekin mountain pass is located near Rezangla both are closer as they are separated by just a distance of 7 kilometers and know that the Rekin pass is located south to the Rezangla area and as you can observe here Pangongso lake lies north to Chushul and you can also see the place Kauru. If you see we have lost one of our captains in this place due to an accident and you can observe that this place Kauru is located south to lake and Debsang plains is located in the north. This news article reports that the Chinese army attempted to alter the status quo along the south bank of Pangongso lake and also the Chinese army troops were noticed near Chushul area. So, remember all these five places from prelims perspective. With this information now let us look at this question arrange the following locations from north to south Chushul, Leh, Debsang plains. Here the correct answer is 3 2 1 which is option D from north to south you have Debsang plains then Leh and then Chushul. Now let us move on to the practice questions discussion session. Consider the following forces Assam rifles, Inter-Tibetan border police, Central industrial security force, National disaster response force, National security guard which of the above constitutes the Central armed police forces under the Ministry of Home Affairs. You know that NDRF that is the National disaster response force is not a part of Central armed police forces. The remaining four are a part so the correct answer here is option C 1 2 3 and 5. Know that the National disaster response force was formed based on the Disaster Management Act of 2005. Though it consists of battalions from border security force then CRP of CISF, Inter-Tibetan border police and even Sahastra Seema Bell. NDRF by itself is not a paramilitary force under this Central armed police forces. To know more on NDRF we request the viewers to watch the 8th August analysis. So here the correct answer is option C 1 2 3 and 5. Now look at this question about gross domestic product. Two statements are given and you need to choose those statement or statements which are correct. Look at the first statement it tells that GDP includes the income generated by nationals of our country outside the country. This statement is incorrect we saw during the discussion that GDP does not include income of the nationals of our country or from outside the country. It means that income from abroad will be included but it is not the case. So the first statement is incorrect here. Now look at the second statement it tells that GDP does not include the income generated by foreigners in a country. This statement is also incorrect because it includes the income generated by foreigners in a country that is inside the territory of any country. So both the statements are incorrect here and this question demands you to choose those statement or statements which are correct. Hence the correct answer is option D neither 1 nor 2. With this we come to the end of the analysis of all the news articles taken up for today's discussion and also the practice questions discussion session. If you like the video press the like button comment and share and do subscribe to Shankar IAS Academy YouTube channel for latest videos and updates. Stay focused and motivated friends. Thank you.