CURRENT AFFAIRS – 28/11/2023

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CURRENT AFFAIRS – 28/11/2023

CURRENT AFFAIRS – 28/11/2023

Favourable Fiscal Trends in First Half

(General Studies- Paper III)

Source : The Indian Express

The Union government’s fiscal performance in the initial half of the year demonstrates positive trends, with notable growth in revenue receipts compared to expenditure.

Despite a widening fiscal deficit, robust capital spending compensates, and the government appears on track to meet its fiscal deficit target for the year.

Key Highlights

In the first half, provisional data from the Controller General of Accounts reveals a substantial 20% growth in the government’s revenue receipts.
This surge is notably supported by a 50% increase in non-tax revenues, primarily due to a higher-than-budgeted dividend surplus transfer from the RBI.
Net tax revenues also exhibit a commendable 15% expansion, considering the back-ended structure of advance tax instalments.
Direct Tax Outlook:
- Looking ahead, corporation tax collections require a modest 5% rise in the second half, and income tax collections may even witness a slight contraction of up to 3% while still meeting the full-year target.
- Assuming a 10% growth in direct taxes during the second half, collections could exceed expectations by Rs 0.85 trillion, contributing positively to fiscal dynamics.
GST and Excise Duty Forecasts:
- Anticipating a mild overshoot in central GST inflows compared to the budgeted target, although Union excise duty collections are expected to lag.
- This suggests a potential upside in gross tax revenues, of which 42% will be devolved to states, leaving an additional Rs 0.3 trillion with the Centre.
Expenditure Dynamics:
- Contrary to the targeted 7.5% growth, total spending by the Centre escalated sharply by 16.2% in the first half.
- Recent announcements indicate the necessity for enhanced allocations in the supplementary demand for grants.
Despite challenges such as a shortfall in disinvestment proceeds, the optimistic revenue trends, coupled with prudent fiscal management, position the Union government favourably to achieve its fiscal goals for the year.
Challenges in Fiscal Management:
- The Union government faces fiscal challenges with potential overshooting of budget allocations and additional spending requirements, posing risks to its fiscal consolidation goals.
- Food Subsidy Pressures:
  - The extension of free foodgrains under the National Food Security Act (NFSA) for January-March 2024 may surpass the budget allocation by Rs 300-400 billion, contributing to food subsidy pressures.
- LPG and Fertilizer Subsidies:
  - An increase in LPG subsidy by Rs 100/cylinder is expected to incur an additional Rs 95 billion.
  - The subsidy on P&K fertilizers is estimated to exceed budget allocation by Rs 150-200 billion.
- NREGA Spending:
  - Expenditure on the Mahatma Gandhi National Rural Employment Guarantee Act (NREGA) has surpassed budgetary allocation, requiring an additional Rs 250-300 billion.
- Fiscal Risks and Expenditure Savings:
  - Fiscal risks could arise from potential new schemes announced before the parliamentary elections.
  - However, the impact on total expenditure this year is limited as the actual outgo occurs once the schemes become fully operational.
  - New schemes or changes in entitlements may be constrained by the model code of conduct.
- Capex Concerns:
  - Achieving the full-year target for capital spending requires a 30% growth in the second half.
  - There is apprehension that capex momentum may slow down before general elections, posing challenges to meeting the target.
- Fiscal Consolidation and Future Challenges:
  - Consolidating the government’s fiscal deficit from 5.9% to 4.5% of GDP in two years necessitates addressing challenges like compressing the revenue deficit or moderating capex growth.
  - To avoid the latter, caution against pre-poll promises that inflate the revenue deficit is advised.

What are Tax Revenues and Non-Tax Revenues of the Government?

Tax Revenues:
- Definition: Tax revenues are funds collected by the government through various taxation mechanisms imposed on individuals, businesses, and other entities within its jurisdiction.
- Sources: Tax revenues are generated from direct taxes (income tax, corporate tax) and indirect taxes (goods and services tax, excise duty, customs duty), among others.
- Compulsory Nature: Tax payments are mandatory for eligible entities, and non-compliance may lead to legal consequences.
- Primary Purpose: The primary purpose of tax revenues is to fund government activities, public services, and infrastructure development.
Non-Tax Revenues:
- Definition: Non-tax revenues refer to funds earned by the government through means other than taxation.
- Sources: Non-tax revenues come from various sources such as fees, fines, penalties, interest, dividends, profits from government enterprises, grants, and donations.
- Voluntary and Compulsory Nature: While some non-tax revenues are collected voluntarily, others may be the result of penalties or fines imposed for non-compliance with regulations.
- Diversity of Sources: Non-tax revenues are diverse and may include income from government-owned entities, user fees for services, royalties from natural resources, and income from investments.

China pneumonia outbreak

(General Studies- Paper III)

Source : The Indian Express

China is experiencing a surge in respiratory illnesses during its first winter season post-lifting Covid-19 restrictions in December 2021, causing concern globally.

Reported incidents of respiratory illnesses surged, leading to increased hospitalizations, long waits, and notable impacts on emergency rooms in major hospitals.

Key Highlights

Infections are widespread, particularly in China’s north-eastern regions, with Beijing and Liaoning being major hubs.
Hospitals, including one in Beijing, report a daily influx of around 1,200 patients in their emergency rooms.
Impact on Children:
- Children are notably affected, constituting a large proportion of hospitalized cases.
- Schools in Beijing report high absenteeism, and the outbreak is more prevalent among children, possibly indicating immunity in older individuals.
- Elderly and pregnant women may still be vulnerable.
Attribution to Known Pathogens:
- Chinese authorities attribute the rise in respiratory illnesses to known pathogens, including influenza, mycoplasma pneumoniae, respiratory syncytial virus (RSV), and SARS-CoV-2.
- The World Health Organization (WHO) has requested more data.
As of now, there is no identification of a new disease akin to the emergence of Covid-19.
- Mycoplasma pneumoniae is suggested as the likely cause in patients under 18, a common bacterial infection affecting younger children.
- The WHO has sought additional information from China, expressing concerns after reports on undiagnosed pneumonia clusters in children.
- The request aims to enhance understanding and global preparedness.
Understanding the Respiratory Illness Outbreak in China
- Outbreak Causes:
  - The surge in respiratory illnesses in China is attributed to the lifting of Covid-19 restrictions, causing a potential “immunity debt” due to reduced exposure to respiratory bugs during strict lockdowns.
- Seasonal Factors:
  - Winter onset is considered a contributing factor, as lower temperatures may facilitate the spread of respiratory infections.
  - Chinese authorities predict further temperature drops, potentially worsening the situation.
- Government Response:
  - China has not re-imposed full Covid-19 restrictions but has urged increased vigilance and pre-emptive measures.
  - Recommendations include maintaining distance, testing when necessary, mask-wearing, ensuring ventilation, and regular handwashing.
- Duration of Outbreak:
  - Authorities anticipate influenza peaking during winter and spring, with mycoplasma pneumoniae persisting in some areas.
  - Concerns about a potential Covid-19 resurgence emphasize the need for strengthened reporting.
- Global Impact and Preparedness:
  - While the outbreak is currently contained, global preparedness is heightened.
  - The world, having experienced the Covid-19 pandemic, is better equipped to respond to infectious diseases, with vaccines and medicines available to combat emerging threats.
- Reassurance for India:
  - There is currently no immediate cause for worry in India.
  - The outbreak is being actively managed in China, and global readiness, including vaccines and treatment options, provides a more robust defense against emerging infectious diseases compared to the initial phases of the Covid-19 pandemic.

About Pneumonia

Pneumonia is an inflammatory condition affecting the air sacs in one or both lungs, often caused by infection.
The air sacs, or alveoli, may fill with pus or other liquid, leading to symptoms such as cough, fever, and difficulty breathing.
Pneumonia can range from mild to severe, and the severity depends on factors such as the causative agent, the overall health of the individual, and the presence of underlying medical conditions.
Causes:
- Bacterial Infections: Streptococcus pneumoniae is a common bacterial cause, but other bacteria like Haemophilus influenzae and Staphylococcus aureus can also be responsible.
- Viral Infections: Influenza (flu) viruses, respiratory syncytial virus (RSV), and the novel coronavirus (SARS-CoV-2) are common viral culprits.
- Fungal Infections: In certain cases, fungi such as Pneumocystis jirovecii can cause pneumonia, especially in individuals with weakened immune systems.
- Aspiration: Inhaling food, liquids, saliva, or vomit into the lungs can lead to aspiration pneumonia.
Symptoms:
- Cough: Often with phlegm or pus.
- Fever: May be accompanied by sweating and chills.
- Shortness of Breath: Rapid or labored breathing, especially during physical activity.
- Chest Pain: Sharp or stabbing pain that may worsen with coughing or deep breathing.
- Fatigue: Feeling excessively tired or weak.
- Confusion: Particularly in older adults or individuals with weakened immune systems.
Treatment:
- Antibiotics: If the pneumonia is bacterial, antibiotics are prescribed.
- Antiviral Medications: For viral pneumonia.
- Fungal Medications: In cases of fungal pneumonia.
- Fever Reducers and Pain Relievers: Over-the-counter medications to manage symptoms.
- Hospitalization: Severe cases, especially in older adults or those with underlying health conditions, may require hospitalization.
Prevention:
- Vaccination: Vaccines are available to prevent some types of bacterial and viral pneumonia, including the pneumococcal vaccine and the flu vaccine.
- Good Hygiene Practices: Regular handwashing to prevent the spread of infections.
- Avoiding Smoking: Smoking damages the lungs and increases the risk of pneumonia.
- Healthy Lifestyle: Eating a balanced diet and maintaining overall good health supports a robust immune system.

Over Rs 93,240 crore of stressed unsecured loans in bank portfolios

(General Studies- Paper III)

Source : The Indian Express

Banks, while pointing fingers at non-banking finance companies and fintechs for the surge in unsecured loans, themselves hold over Rs 93,240 crore in the special mention accounts (SMA) category, indicating signs of stress or overdue repayments.

The unsecured loans in the SMA category comprise nearly seven per cent of the total unsecured loan outstanding, totalingRs 13.32 lakh crore.

Key Highlights

Public sector banks have a higher SMA share (9.9%) in unsecured personal advances compared to private banks (4.0%) in the unsecured retail loans category as of March 31, 2023.
The special mention account categories (SMA-0, SMA-1, and SMA-2) are defined by the Reserve Bank of India based on the duration of overdue payments, ranging from signs of incipient stress to 61-90 days overdue.
The SMA share of secured retail advances also stands at around 7 per cent as of March 31, 2023, according to Care Ratings.
The growth of unsecured personal loans, including credit card receivables and other personal loans, in banks has outpaced general personal loan growth, exhibiting a 21 per cent increase from March 2017 to March 2023, compared to a 19 per cent growth in personal loans during the same period.
Unsecured personal loans constitute nearly one-third of the total personal loan credit in banks, amounting to Rs. 40.9 lakh crore as of March 31, 2023.
NBFCs contribute significantly to this, holding Rs. 10.9 lakh crore in personal loans.
A Care Ratings poll assessing the potential impact of souring unsecured personal loans reveals fintech NBFCs as the most susceptible, followed by private sector banks, public sector banks, and other NBFCs in decreasing order of potential impact.
This emphasizes the importance of robust risk management, particularly for fintech NBFCs, in navigating challenges associated with unsecured personal loans.
Banks have increased their loan exposure to NBFCs from Rs. 7.75 lakh crore in March 2021 to Rs. 9.23 lakh crore by September 2022, indicating a rising trend.
Concerns have been raised by the Centre for Advanced Financial Research and Learning (CAFRAL) regarding the potential systemic contagion and the need for tighter preventive measures.
RBI’s Risk Weight Adjustment:
- On November 16, the RBI increased risk weights on banks’ exposure to consumer credit, credit card receivables, and NBFCs by 25 per cent, aiming to discourage aggressive lending in these segments.
- The risk weights on credit card receivables were increased by 25 percentage points to 150 per cent for commercial banks and 125 per cent for NBFCs.
Factors Driving Demand:
- Several factors contribute to the increased demand for unsecured personal loans, including demographic shifts, economic formalization, higher purchasing power, fintech evolution, widespread Internet and phone access, digital payment system adoption, India stack influence, information collateral, and enhanced credit bureau coverage.
- The convergence of technology and finance has transformed the lending landscape in India, making personal loans more accessible and convenient for a broader population segment.
- The influence of technology in reshaping lending practices contributes to the growth of the personal loan market, according to Care Ratings.

What are Special Mention Accounts (SMA)?

Special Mention Accounts (SMA) refer to those accounts where the repayment of principal or interest is overdue for a specified period but the account has not yet been classified as a Non-Performing Asset (NPA).
SMAs are an intermediate category used by banks to identify and monitor accounts showing signs of incipient stress or potential default.
Purpose:
- The classification of accounts into SMAs allows banks and financial institutions to proactively identify accounts that are at risk of turning into NPAs.
- It helps in early detection and timely intervention to prevent the deterioration of asset quality.
Categorization of SMA:
- SMAs are categorized into three stages based on the extent of overdue payments.
- The Reserve Bank of India (RBI) has provided guidelines for the categorization of SMAs, which include the following stages:
  - SMA-0 (Principal or Interest Payment Overdue for 1-30 Days):
    - In this stage, the repayment of principal or interest is overdue for a period of 1 to 30 days.
    - Banks need to closely monitor these accounts and take corrective action to prevent further slippage.
  - SMA-1 (Principal or Interest Payment Overdue for 31-60 Days):
    - SMA-1 category includes accounts where the repayment is overdue for a period of 31 to 60 days.
    - Banks are required to create a system of early identification of stress and initiate corrective action.
  - SMA-2 (Principal or Interest Payment Overdue for 61-90 Days):
    - SMA-2 accounts have principal or interest overdue for a period of 61 to 90 days.
    - At this stage, the stress in the account is higher, and banks are expected to take prompt corrective measures to prevent the account from slipping into the NPA category.
  - Banks are required to report the status of SMA accounts to the RBI as part of their regular reporting obligations.
  - This enables the RBI to assess the overall health of the banking sector and take appropriate regulatory measures.

EC stops Telangana farmer aid scheme

(General Studies- Paper II)

Source : TH

The Election Commission (EC) initially granted permission to the State Government for the disbursement of RythuBandhu money to farmers.

Three days after the approval, the EC abruptly withdrew the order, citing a violation of the model code of conduct.

Key Highlights

RythuBandhu Scheme Overview
- RythuBandhu is an initiative by the Government of Telangana providing farmers with investment support for agriculture and horticulture crops.
- The scheme aims to reduce farmers’ debt burden, offering a Direct Benefit Transfer (DBT) of ₹5,000 per acre each season for seeds, fertilizers, pesticides, etc.
EC noted that the Finance Minister violated the model code of conduct and disrupted the level playing field by publicizing the release under the RythuBandhu scheme.

About Model Code of Conduct (MCC)

The Model Code of Conduct (MCC) is a set of guidelines and ethical standards that regulate the behavior of political parties and candidates during elections.
It is designed to ensure free and fair elections, prevent the misuse of government machinery for electoral purposes, and maintain the dignity of the electoral process.
The Model Code of Conduct comes into effect as soon as the Election Commission of India (ECI) announces the schedule for elections.
It remains in force until the election process is completed.

It’s time to revamp the structure of the Supreme Court

(General Studies- Paper II)

Source : TH

The Supreme Court of India functions in three key jurisdictions: original, appellate, and advisory.

It serves as both a Constitutional Court and a Court of Appeal.

Key Highlights

The Supreme Court operates in benches of varying sizes, determined by the Chief Justice of India (CJI), who is the Master of the Roster.
The CJI’s directions influence the composition of the benches.
Constitution Benches
- Constitution Benches, typically comprising five, seven, or nine judges, focus on specific constitutional law issues.
- Article 145(3) of the Constitution mandates a minimum of five judges for cases involving substantial constitutional questions or references under Article 143.
Division and Full Benches
- Cases before the Supreme Court are usually heard by Division Benches (two judges) or Full Benches (three judges), addressing a wide range of topics, including issues like film restrictions and allegations of abuse of authority.
The Supreme Court’s broad jurisdiction has allowed it to entertain diverse cases, including public interest litigations on various matters.
Pending Cases and Demand for Structural Change
- Currently, the Supreme Court faces a backlog of 79,813 cases before its 34 judges, prompting repeated calls for structural reforms.
- The backlog underscores the need for changes in the functioning of the court.
- Chief Justice D.Y. Chandrachud has recently announced plans to establish Constitution Benches with varied strengths as a permanent feature of the Supreme Court.
- This proposal aims to address the challenges posed by the large number of pending cases.
Historical Context and Law Commission Recommendations:
- In 1984, the Tenth Law Commission suggested dividing the Supreme Court into two divisions: the Constitutional Division and the Legal Division.
- The focus of the proposed Constitutional Division would be on issues related to constitutional law.
- The Eleventh Law Commission in 1988 reiterated this proposal, emphasizing that such a division would enhance accessibility to justice and reduce litigants’ fees.
Accessibility and Regional Benches:
- Accessibility issues were highlighted, noting that the majority of appeals in the Supreme Court originated from High Courts in closer proximity.
- The idea of a National Court of Appeal, as mentioned in Bihar Legal Support Society v. Chief Justice of India (1986), was considered desirable.
- Additionally, the 229th Law Commission Report (2009) recommended the establishment of four regional benches in Delhi, Chennai or Hyderabad, Kolkata, and Mumbai to handle non-constitutional issues.
- The report suggested that regional benches could alleviate the backlog of non-constitutional cases, allowing the Supreme Court to focus on constitutional matters and cases of national importance.
Historical Evolution of the Supreme Court:
- The historical evolution of the Supreme Court was discussed, highlighting the existence of three Supreme Courts during colonial times in Bombay, Calcutta, and Madras.
- The Indian High Courts Act of 1861 replaced these with High Courts for separate regions.
- The Government of India Act, 1935, led to the creation of the Federal Court of India, serving as an appellate body.
- The current Supreme Court was established in 1950 under Article 124 of the Constitution.
Overburdened Court and Increasing Workload:
- The increasing workload of the Supreme Court over the years is also highlighted.
- The number of judges has been expanded several times to address rising case arrears, from eight in 1950 to 34 in 2019.
- However, the court remains overburdened, with only a limited number of Constitution Bench decisions issued annually.
Proposal for a Final Court of Appeal and Permanent Constitution Bench:
- The possibility of restructuring the Supreme Court into a Final Court of Appeal and a permanent Constitution Bench is suggested.
- This distinction aims to provide greater judicial stability and consistency by explicitly separating cases filed under constitutional authority from those under appellate and review jurisdiction.
A Constitution Bench, specifically in the case V. Vasanthkumar v. H.C. Bhatia, is currently analyzing the issues and considering measures to protect citizens’ basic right to access the Supreme Court.
There is an opportunity, under the guidance of the Chief Justice of India (CJI), to address the structural gap by designating some of the court’s appeal benches as regional benches.

About Supreme Court of India

The Supreme Court of India is established under Article 124 to 147 of the Constitution of India.
The Chief Justice of India (CJI) and a maximum of 34 other judges make up the Supreme Court.
Appointment: Judges of the Supreme Court are appointed by the President of India.
Eligibility:
- A person must be a citizen of India to be eligible for appointment as a judge of the Supreme Court.
- To qualify for appointment, a person must have been a judge of a High Court (or High Courts in succession) for at least five years or an advocate in a High Court for at least ten years.
A judge of the Supreme Court must not be more than 65 years of age.
- A judge holds office until the age of 65, unless they resign or are removed in accordance with the procedure established by law.
Powers and Jurisdiction:
- Original Jurisdiction: The Supreme Court has original jurisdiction in disputes between the Government of India and one or more States or between the Government of India and any State(s) on one side and one or more States on the other or between two or more States.
- Appellate Jurisdiction: It is the highest court of appeal. It hears appeals from the High Courts and other courts and tribunals in the country.
- Advisory Jurisdiction: The President of India can seek the Supreme Court’s opinion on questions of law or fact of public importance.
Advisory Role:
- The Supreme Court, through its judgments, interprets the Constitution, lays down legal principles, and ensures the protection of fundamental rights. It acts as a guardian of the Constitution.
Writ Jurisdiction:
- The Supreme Court has the power to issue writs, including habeas corpus, mandamus, prohibition, quo warranto, and certiorari for the enforcement of fundamental rights and for other purposes.
Judicial Review:
- The Supreme Court has the authority of judicial review, allowing it to review and strike down laws or government actions that are found to be unconstitutional.

Can dollarisation save an economy?

(General Studies- Paper III)

Source : TH

Javier Milei, the recent winner of Argentina’s presidential election, has gained attention for his unconventional views, including opposition to abortion and ambivalence towards the military government’s undemocratic actions.

Milei, a self-professed “anarcho-capitalist,” campaigned on bold economic proposals, such as replacing Argentina’s peso with the dollar, eliminating the Central Bank, and slashing government spending.

Key Highlights

Economic Challenges in Argentina
- Argentina faces severe economic challenges, with inflation exceeding 100% and a significant portion of the population below the poverty level due to eroding purchasing power.
- Despite campaign promises, Milei has begun walking back on some proposals, citing dollarization as a “medium-term” goal and ruling out the immediate lifting of currency controls upon taking office.
Dollarization as a Solution to Hyperinflation
- Dollarization is proposed as a solution to hyperinflation by breaking the link between rising prices and increasing money supply.
- The theory suggests that replacing the domestic currency with dollars limits the control of money supply by political interests.
- Dollarization is argued to have positive effects on economic growth.
- With a stable dollar, the economy is incentivized to focus on export successes and attract foreign capital.
- The stable currency allows for long-term planning by economic agents.
Potential Problems with Dollarization
- There are potential problems with dollarization, including the loss of policy leverage as monetary policy can no longer control money supply.
- Countries would lose the ability to use depreciation for boosting exports, relying solely on export promotion to counter economic downturns.
Proponents of dollarization see the loss of policy leverage as positive, arguing that it would encourage governments to adopt productivity-boosting measures to combat recessions instead of relying on changing exchange rates.
Ecuador’s Economic Crisis and Decision to Dollarise
- In the late 1990s, Ecuador faced severe economic crises, including a contracting economy, high inflation, and a depreciating currency.
- President Jamil Mahuad’s announcement of dollarisation in January 2000 led to widespread protests, forcing his resignation.
- However, Ecuador persisted with the dollarisation process.
- Ecuador has shown considerable economic progress post-dollarisation.
- According to World Bank estimates, real GDP grew by 4.5% between 2001 and 2014.
- Poverty rates and inequality decreased significantly during this period.
- Despite the 2008 recession, the economy rebounded quickly, and inflation rates were brought under control.
Role of Policy in Economic Success
- Dollarisation alone is not credited for Ecuador’s success.
- The country’s significant reserves of oil and gas played a crucial role, benefiting from the commodity price boom in the 2000s.
- The government, led by Rafael Correa from 2007 to 2017, played an active role, expanding the State’s involvement in the economy.
Fiscal Policy and Social Spending
- The Correa government increased government expenditure and deficits, negotiating new contracts with oil exploration companies and restructuring foreign debt.
- Social spending rose from 5% of GDP in 2006 to 10.3% in 2011.
- The Central Bank was not independent during this period, challenging mainstream monetary policy consensus.
Challenges and Dangers of Dollarisation
- While dollarisation broke the back of inflation, active fiscal policy played a crucial role in ensuring sustainable growth.
- The article warns against a return to austerity economics, as seen in the case of Greece during the Eurozone crisis.
Lessons from Greece and Caution for Argentina
- The Greek experience highlights the dangers of adopting an external currency without independent policy control.
- Dollarisation, while not a silver bullet, can be successful when used in conjunction with nimble domestic policy.
- The article raises concerns about the policy direction in Argentina under the president-elect, Javier Milei.

Understanding: Dollarization

Dollarization refers to the process by which a country adopts a foreign currency, typically the United States dollar, as its official legal tender in parallel with or instead of its domestic currency.
In a dollarized economy, transactions, prices, wages, and other financial elements are denominated in the adopted foreign currency.
Key Elements of Dollarization:
- Adoption of Foreign Currency:
  - Dollarization involves a country deciding to use a foreign currency (usually the U.S. dollar) for conducting everyday economic transactions.
  - This can be a result of economic instability, hyperinflation, or a loss of confidence in the domestic currency.
- Coexistence or Replacement:
  - Dollarization can take different forms.
  - In some cases, the foreign currency coexists with the domestic currency, and both are used for transactions.
  - In other cases, the foreign currency completely replaces the domestic currency as the sole legal tender.
- Implications for Monetary Policy:
  - One of the significant consequences of dollarization is the loss of control over monetary policy.
  - The country adopting the foreign currency surrenders its ability to independently influence interest rates, money supply, and other monetary policy tools, as these are determined by the central bank of the foreign currency.
- Stability and Inflation Control:
  - Countries may opt for dollarization to achieve greater economic stability and control inflation.
  - By using a stable foreign currency, the country aims to provide a more reliable medium of exchange, store of value, and unit of account, reducing the risks associated with fluctuations in the domestic currency.
- Reasons for Dollarization:
  - Hyperinflation:
    - Dollarization is often prompted by hyperinflation in the domestic currency.
    - The local population may lose confidence in the value of their money, leading them to prefer a more stable and widely accepted foreign currency like the U.S. dollar.
  - Currency Crisis:
    - During times of currency crises, when a country’s currency experiences rapid depreciation and loses its value, people and businesses may seek refuge in a stronger and more stable foreign currency to preserve the value of their assets and facilitate trade.
  - Financial Stability:
    - Adopting a foreign currency can provide financial stability by reducing uncertainty and promoting confidence in the monetary system.
    - This is especially relevant for countries that have faced repeated currency devaluations and financial crises.
  - Challenges of Dollarization:
    - Loss of Monetary Policy Autonomy:
      - Dollarization limits the ability of the country’s central bank to implement independent monetary policies.
      - Interest rates, money supply, and other monetary tools are dictated by the U.S. Federal Reserve rather than being determined domestically.
    - Adjustment Costs:
      - The transition to a foreign currency can be challenging, involving adjustment costs for businesses, financial institutions, and the government.
      - Prices, contracts, and accounting systems may need to be recalibrated to the adopted currency.
    - Dependence on External Factors:
      - Dollarized economies become dependent on the economic policies of the country issuing the foreign currency.
      - Changes in the U.S. economy, interest rates, or other factors can have direct and immediate effects on the dollarized economy.

SC rejects undertrial’s plea to use its powers to club 30 FIRs

(General Studies- Paper II)

Source : TH

The Supreme Court has rejected the plea of an undertrial, Amandeep Singh Saran, who sought the court’s extraordinary powers under Article 142 of the Constitution to consolidate 30 FIRs filed against him across seven different States.

The petitioner urged the court to utilize its powers under Article 142 to deliver “complete justice” by clubbing the FIRs together.

Key Highlights

Court’s Decision and Jurisdiction Concerns:
- The Supreme Court, led by Justice B.V. Nagarathna, declined the plea, emphasizing that it cannot club FIRs involving not only offences under the Indian Penal Code but also charges under specific State laws.
- The court highlighted that each State has designated special courts to handle these offences, and combining FIRs would undermine the jurisdiction of these specialized courts.
- The case involves allegations of cheating investors in multiple States, including Tamil Nadu, Rajasthan, Haryana, Chhattisgarh, Maharashtra, Delhi, and Madhya Pradesh.
- Amandeep Singh Saran faces FIRs in Chhattisgarh, Tamil Nadu, Rajasthan, Maharashtra, Delhi, Madhya Pradesh, and Haryana.
Court’s Consideration and Legal Implications:
- While acknowledging that the court could consider clubbing FIRs if they involve the same offence across different police stations, the Supreme Court noted that the States have also charged the petitioner under their specific laws.
- The court agreed with the prosecution’s argument that consolidating FIRs would infringe upon the jurisdiction of special courts established by each State.
- The Supreme Court granted Saran the liberty to approach the High Courts of the respective seven States to seek the clubbing of FIRs within each State.
- The petitioner was given the option to appear in the trial through video conferencing if permitted, considering his current confinement in a Chhattisgarh jail.

Article 142 of the Indian Constitution

Article 142 states that the Supreme Court, in the exercise of its jurisdiction, may pass any decree or make any order necessary for doing complete justice in any cause or matter pending before it.
This provision empowers the court to issue orders that may not strictly fall within the purview of existing laws but are essential for delivering justice in specific situations.
The language of Article 142 provides the Supreme Court with wide discretionary powers.
It allows the court to take into account the peculiar facts and circumstances of a case, enabling it to pass orders that may be necessary to meet the ends of justice.
Article 142 is often invoked in cases where the court finds a gap in existing legal provisions or where strict adherence to statutory laws may not lead to a just outcome.
While Article 142 grants discretionary powers, it is not unlimited. The Supreme Court is expected to exercise these powers cautiously and judiciously.
The use of Article 142 is guided by the principles of justice, fairness, and equity, and it is not a license to act arbitrarily.

As deaths due to work-related factors increase, ILO report calls for countries to strengthen safety net

(General Studies- Paper II)

Source : TH

According to a report by the International Labour Organization (ILO), nearly 30 lakh workers die annually due to work-related accidents and diseases globally.

Asia-Pacific region bears the brunt, accounting for over 63% of these deaths.

Key Highlights

Leading Causes of Work-Related Deaths:
- Long Working Hours: Exposure to long working hours (55 hours or more per week) was the leading cause, resulting in almost 7.45 lakh deaths in 2016.
- Occupational Hazards: Exposure to occupational particulate matter, gases, and fumes caused 4.5 lakh deaths, while occupational injuries led to 3.63 lakh deaths.
- The report identifies mining and quarrying, construction, and utilities sectors as the three most hazardous globally based on the fatal occupational injury rate.
The report, titled ‘A Call for Safer and Healthier Working Environments,’ will be discussed at the 23rd World Congress on Safety and Health at Work in Sydney.
ILO Conventions and India:
- The report notes that 79 out of 187 member countries have ratified the ILO Occupational Safety and Health Convention (No. 155), and 62 countries have ratified the Promotional Framework for Occupational Safety and Health Convention, 2006 (No. 187).
- India has not ratified these conventions.
Work-Related Deaths Breakdown:
- Work-related diseases account for the majority (26 lakh) of deaths, while accidents result in 3.3 lakh deaths.
- Circulatory diseases, malignant neoplasms, and respiratory diseases are the leading causes of work-related deaths.
- Africa has the highest attributable fraction of work-related deaths (7.39%), followed by Asia and the Pacific (7.13%), and Oceania (6.52%).
- The report highlights an increase in trachea, bronchus, and lung cancers attributable to occupational exposure to chromium and a 40% rise in mesothelioma due to asbestos exposure.
The report recommends fundamental principles and rights at work to ensure safety and health, including freedom of association, elimination of forced labor and child labor, and a safe working environment.

About ILO Occupational Safety and Health Convention (No. 155)

The ILO Occupational Safety and Health Convention (No. 155) is an international labor standard adopted by the International Labour Organization (ILO).
It addresses occupational safety and health issues with the aim of ensuring a safe and healthy working environment for workers.

Promotional Framework for Occupational Safety and Health Convention, 2006 (No. 187)

The Promotional Framework for Occupational Safety and Health Convention, 2006 (No. 187) is another international labour standard developed by the ILO.
It complements Convention No. 155 and emphasizes the need for a comprehensive approach to occupational safety and health promotion.