Daily Current Affairs (MCQ) | Date 17.02.22

Q1. Consider the following statements

1. Constitutionally, states need prior approval of the Centre for undertaking market borrowings
2. States can only carry a fiscal deficit upto 3 percent of their GSDP

Which of the above is/are correct?

a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

Answer : a

Why is the Question ?

In 2022-23, in accordance with the recommendations of the 15th Finance Commission, the states will be allowed a fiscal deficit of 4 per cent of GSDP of which 0.5 per cent will be tied to power sector reforms, for which the conditions have already been communicated in 2021-22.
Constitutionally, states need prior approval of the Centre for undertaking market borrowings. The states, in coordination with the Reserve Bank of India (RBI), schedule the actual borrowings, subject to the threshold.

Article 293 in The Constitution Of India 293. Borrowing by States
1. Subject to the provisions of this article, the executive power of a State extends to borrowing within the territory of India upon the security of the Consolidated Fund of the State within such limits, if any, as may from time to time be fixed by the Legislature of such State by law and to the giving of guarantees within such limits, if any, as may be so fixed
2. The Government of India may, subject to such conditions as may be laid down by or under any law made by Parliament, make loans to any State or, so long as any limits fixed under Article 292 are not exceeded, give guarantees in respect of loans raised by any State, and any sums required for the purpose of making such loans shall be charged on the Consolidated Fund of India
3. A State may not without the consent of the Government of India raise any loan if there is still outstanding any part of a loan which has been made to the State by the Government of India or by its predecessor Government, or in respect of which a guarantee has been given by the Government of India or by its predecessor Government
4. A consent under clause ( 3 ) may be granted subject to such conditions, if any, as the Government of India may think fit to impose CHAPTER III PROPERTY, CONTRACTS, RIGHTS, LIABILITIES, OBLIGATIONS AND SUITS

Q2. Consider the following statements
1. Besides sharing of taxes between the Centre and the States, the Constitution provides for Grants-in-aid to the States from the Central resources
2. Statutory grants under article 275 are distributed to states based on recommendations of the Finance Commission
3. Centre is also empowered to give discretionary grants to states

Which of the above statements is/are correct?

a. 1 only
b. 2 and 3 only
c. 3 only
d. 1, 2 and 3

Answer : d

Why is the Question ?

Grants-in-Aid
Besides sharing of taxes between the Centre and the States, the Constitution provides for Grants-in-aid to the States from the Central resources.
There are two types of grants:-
1. Statutory Grants: These grants are given by the Parliament out of the Consolidated Fund of India to such States which are in need of assistance. Different States may be granted different sums. Specific grants are also given to promote the welfare of scheduled tribes in a state or to raise the level of administration of the Scheduled areas therein (Art.275).

2. Discretionary Grants: Centre provides certain grants to the states on the recommendations of the Planning Commission which are at the discretion of the Union Government. These are given to help the state financially to fulfil plan targets (Art.282).
The manner of distribution of powers under the Seventh Schedule, rather inevitably, creates a fiscal gap between the Centre and the states, and a consequent vertical fiscal imbalance. The Constitution, under the Seventh Schedule, assigned greater revenue-raising powers to the Union, whereas much of the expenditure responsibilities, particularly those pertaining to welfare and development of the citizens, were assigned to the states. The report of the 15th Finance Commission notes that in 2018-19, the states had only 37.3 per cent of the resources but were responsible for 62.4 percent of the expenditure that was incurred.
To address this vertical fiscal imbalance, the Constitution’s fiscal federal architecture allows multiple channels for the flow of funds from the Centre to the states. Predominantly, intergovernmental transfers are channelled through the following routes:
1. Article 270 provides for distribution between the Union and the states of taxes and duties which are collected by the Government of India.
2. Article 275 provides for grants-in-aid to supplement the revenues of states which need assistance. Different sums may be fixed for different states based on their specific needs. For instance, grants under Article 275 have been made to Tamil Nadu for promoting the welfare of Scheduled Tribes. Grants have also been made to Nagaland and Meghalaya for welfare of vulnerable groups and communities.
3. Article 282 under which the Union or the state can make any grants for any public purpose, even if such purpose is one that lies beyond the respective legislative competence (as per the Seventh Schedule) of the Union or the state.
4. While transfers under Articles 270 and 275 are based on the recommendations of the Finance Commission (established under Article 280), transfers under Article 282 are outside the Commission’s formal purview.
Article 282 and CSSs — The source of federal tensions The use of Article 282 to implement CSSs emerged as a source of tension for the fiscal federal architecture soon after the Constitution came into force. CSSs began to be conceptualised and implemented based on recommendations of the Planning Commission and the National Development Council, both institutions established by Cabinet Resolutions (and not the Constitution). After the dissolution of these two institutions, CSSs are made and effected by concerned ministries of the central government (for example, the nodal ministry for the National Health Mission is the Ministry of Health and Family Welfare).

CSSs, by nature, are discretionary transfers made by the Union to the states, and routinely pertain to subjects within the State or Concurrent Lists. Effectively, via the instrument of CSSs, the central government can determine how and on what activities states are to spend their money. Resultantly, the autonomy which arises from the working of the List system is offset, to an extent, by the manner in which Article 282 is used.

Q3. Consider the following statements about the Central Bank Digital Currency (CBDC)

1. It will be based on quantum encryption

2. It will lead to a more efficient and cheaper currency management system

Which of the above is/are correct?

a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

Answer : b

Why is the Question ?

Digital Rupee
Introduction of Central Bank Digital Currency (CBDC) will give a big boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system. It is, therefore, proposed to introduce Digital Rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23.

Q4. Consider the following statements about the Harmonised Master List of Infrastructure sub-sectors

1. Inclusion in the list implies access to concessional funds, promotion of projects and continuity of construction for the specified sub-sectors.
2. It also includes tax breaks for projects
3. It is notified by the Ministry of Road Transport and Highways of India

Which of the above statements is/are correct? 

a. 1 only
b. 2 and 3 only
c. 3 only
d. 1, 2 and 3

Answer : a

Why is the Question ?

Harmonised Master List of Infrastructure sub-sectors:
The list is notified by the Ministry of Finance and included following categories:
1. Transport and Logistics: Roads and bridges, Inland waterways, Airport, etc.
2. Energy: Electricity Generation, Electricity Transmission, etc.
3. Water and Sanitation: Solid Waste Management, Water treatment plants, etc.
4. Communication: Telecommunication, etc.
5. Social and Commercial Infrastructure: Education Institutions (capital stock), Sports Infrastructure, Hospitals (capital stock), Tourism infrastructure, etc.
Inclusion in the list implies access to concessional funds, promotion of projects and continuity of construction for the specified sub-sectors. However, the infrastructure tag now does not include vital tax breaks.

Infrastructure Status: Budget 2022-2023
Data Centres and Energy Storage Systems including dense charging infrastructure and grid-scale battery systems will be included in the harmonised list of infrastructure. This will facilitate credit availability for digital infrastructure and clean energy storage.

Q5. Consider the following statements

1. 5G signals may interfere with civil aviation safety
2. Both the 5G services and some flight equipment operate on the same C-band radio spectrum

Which of the above is/are correct?

a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

Answer : c

Why is the Question ?

Technology tangle
The roll-out of 5G services near airports is posing a challenge to airlines

Highlights:
1. Almost 11 months after the United States’ leading telecommunications companies won bids for $81 billion worth of C-band radio spectrum to roll out 5G services, the much-awaited introduction hit a major snag this week after the country’s leading airlines warned of massive flight disruptions if the wireless technology was put into operation, especially around the nation’s airports.
2. In a compromise on the eve of the planned roll-out on January 19, AT&T and Verizon agreed to delay the introduction of the new wireless service near key airports.
3. The two major telcos’ commitments notwithstanding, several domestic and international airlines flying to the U.S. have announced major rescheduling as well as the possibility of cancellation of flights to several destinations citing warnings from the Federal Aviation Administration (FAA) and aircraft makers that accurate functioning of radar altimeters in some aircraft may be affected by the 5G radio frequencies.

4. The altimeters provide information on an aircraft’s altitude and are a crucial part of flight operations for pilots,particularly while seeking to make low-visibility landings in inclement weather.
5. At the heart of the impasse lies the fact that both the 5G services and some flight equipment operate on the same Cband radio spectrum, with only the frequencies varying.
6. The FAA has said it is working with altimeter manufacturers to evaluate data from the wireless companies to determine how robust each model is, and, if required, have the devices retrofitted or replaced.