25 November 2022

 MAINS QUESTIONS

Q1. What propelled India to undertake nuclear weapon development? Track the development of India’s nuclear strategy. (250 words)

Paper & Topic: GS I – India after Independence

Introduction:

• India built its first plutonium reprocessing facility in 1964 and its first research reactor in 1956. When Homi Jehangir Bhabha built the nuclear research centre, the Tata Institute of Fundamental Research, in March 1944, he laid the groundwork for the three-stage technological endeavours of India’s nuclear programme. India was prepared to create nuclear weapons by 1964. While Prime Minister Indira Gandhi was in office, India carried out its first nuclear test, dubbed “Smiling Buddha,” which it described as a “peaceful nuclear explosion.”

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 Indian choice about nuclear weapons development:

• Several factors hastened India’s switch to nuclear power.
• With Pakistan to its west and China to its north, India holds a significant position in South Asia.
• Tension has existed between India and both of its neighbours, Pakistan and China, since 1947.
• With India, China and Pakistan had both participated in a number of traditional wars.
• India’s government was inspired to build nuclear weapons after China beat India in a battle along the Himalayan border in October 1962. This was done in an effort to thwart prospective Chinese strikes.
• Our security situation quickly declined in the 1980s and 1990s as a result of the spread of nuclear weapons and missiles.
• Additionally, as part of its unconventional warfare strategy, Pakistan has always supported terrorism and insurrections against India. In 1964, China also acquired nuclear weapons, posing an even greater threat to India.
• Finally, India’s sovereignty and integrity were threatened by these tense relations with its neighbours, particularly the threat of a nuclear assault from China.
• India continues testing nuclear bombs in an effort to expand its arsenal in light of this.
• We believed that the nations to which we turned for help and consolation were unable to provide us the assurance we required at the time.

India’s nuclear policy is influenced by the following variables:

• Geopolitical Factors: China, Pakistan, and India have close ties. Pakistan has regularly warned nuclear war should India strike them by taking advantage of India’s nuclear embargo. India has strengthened its nuclear deterrence strategy by implementing the following measures in response to Pakistan’s persistent infractions of China’s threat.
• Enhance its Second Strike Capability: For deterrence to be effective, a second strike must guarantee a significant response in the event of an initial attack. By using SSBN and SLBMs, India has completed its nuclear triad and strengthened its deterrence position.
• The Agni-V intercontinental ballistic missile of India can reach the far eastern parts of China. This essentially confirms the assumption that, should Pakistan or China attempt to attack India with nuclear weapons, India can completely destroy them.
• To successfully organise retribution, early warning systems are crucial, and India’s PAD and AAD have taken this into account.
• Because India has indicated in its doctrine that a nuclear attack on its soldiers anywhere would likewise be regarded as a first strike and require tremendous retaliation, Pakistan’s attempt to utilise tactical nuclear weapons against India was also unsuccessful.
• NSG Membership: In spite of not having ratified the NPT for a number of nuclear-related reasons, India received a waiver from the NSG in 2008.
• India pledged in writing in 2008 to never conduct a genuine nuclear weapon test.
• The USA supported India and emphasised that despite not being a signatory, India had adhered strictly to NPT rules. India also demonstrated that it is a responsible nuclear power by exercising complete restraint when using nuclear energy in spite of repeated provocations.

The development of India’s nuclear strategy:

• In 1974, India conducted its first successful nuclear weapon test. The Nuclear Suppliers Group (NSG) was established in 1974 in response to this nuclear test by India with the goal of preventing nuclear proliferation and limiting the export of materials and expertise that could be used to make nuclear weapons. India declared itself to be a de facto nuclear-armed state in 1998 after a second set of five successful nuclear tests.
• The “NO FIRST USE” (NFU) principle-based nuclear doctrine was eventually ratified by India in 1999.

Some of the main elements of the draught were as follows:

• India would never use nuclear weapons to invade another nation.
• India wouldn’t attack non-nuclear states with nuclear weapons.
• The main objective of India’s nuclear weapons is to defend itself and act as a deterrent against foreign nuclear assaults.
• India would employ a nuclear system based on the trio. According to this paradigm, a nuclear-armed state should be able to conduct nuclear attacks on land, air, and sea. This strategy would fall back on submarine-launched ballistic missiles if the first two failed (SLBM).
• This draught was not authorised by the government, though.
• India formally endorsed a nuclear doctrine based on NFU policy in 2003. This has a number of essential qualities, including:
• Only a minimally credible deterrence against nuclear threats will be maintained with nuclear weapons.
• According to NFU doctrine, India would only use a nuclear weapon if it were attacked or if Indian forces were attacked elsewhere.
• India wouldn’t strike a non-nuclear state with nuclear weapons. However, India will have the option of using nuclear weapons in retaliation in the event of a serious chemical or biological attack on India or on Indian military anywhere.
• A second nuclear strike in retaliation for a first strike would be catastrophic and cause the enemy unthinkable destruction.
• India now adheres to the Nuclear Doctrine from 2003. The second strike capacity is necessary for India’s deterrent strategy, which is predicated on nuclear deterrence.

Conclusion:

• In order to implement its nuclear strategy, which aims to deploy nuclear weapons as a deterrent, India currently has all the necessary resources. Although the current regulations do not require modification, the same cannot be true for the coming regulations. Nuclear strategy must be constantly reviewed and revised to account for shifting circumstances since it is dynamic. Even if future revisions for India may be required, the NFU and deterrent basic aspects must be maintained because doing otherwise will significantly affect the strategic stability of South Asia.

Q2. What is the fiscal deficit? What impacts does the budget deficit have on the economy? What options are there for financing the budget deficit? Provide budgetary consolidation recommendations in light of the measures the Union Budget suggests. (250 words)

 Paper & Topic: GS I – India after Independence

Introduction:

• A “fiscal deficit” is a reduction in government revenue over the course of a fiscal year. When the government’s entire spending exceeds its total receipts, there is a fiscal imbalance (excluding borrowed funds). “Reflective of the overall borrowing requirements of Government,” is how the fiscal deficit is stated. Government estimates indicate that the fiscal deficit in 2020–21 will be 9.5% of GDP (GDP). The market borrowing amount for FY22 (2021-2022) is expected to be close to Rs 12 lakh crore with a budget deficit set at 6.8%.

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 Budgetary Deficit:

• A fiscal deficit is the gap between all of the government’s income and all of its expenses.
• It serves as a gauge for the total amount of borrowing the government will eventually need to do.
• Typically, either a loss in revenue or a significant increase in capital expenditures leads to a fiscal deficit.
• To build long-term assets like factories, buildings, and other structures, capital investments are made.

Relevance of fiscal deficit:

• The amount of savings that can be invested is constrained. Using these savings, banks and other financial institutions provide loans to governments and both small- and large-scale private firms (Centre and state).
• If the fiscal deficit ratio is too large, there would be less money available on the market for private business owners and entrepreneurs to borrow.
• Higher interest rates are imposed on these loans because there is less of this money available.
• A greater budget deficit causes the government to borrow more, which, to put it simply, raises interest rates for everyone in the economy.
• The Reserve Bank of India’s efforts to lower rates would likewise be defeated by a sizable fiscal deficit and higher interest rates.

Fiscal Deficit Effects:

• It can imply that the government is wasting money on initiatives that don’t boost economic output. The Sarpanch and local officers use the majority of the middle-income funds under MNREGA, for example.
• The amount of money in circulation rises as a result of government borrowing from the RBI, and the RBI then produces additional currency notes to satisfy this demand (a practise known as deficit financing). This might increase economic inflation pressure.
• Bond rates will rise if the government continues to borrow money to cover its budget deficit. It is unfavourable because a decreasing number of taxpayer money, or incoming funds, will be utilised to fund public services like healthcare and education.
• The government might need to borrow money to pay even interest, which might result in a vicious cycle and debt trap.
• Because the government borrows the majority of the funds, the fiscal imbalance “crowds out” investment from the private sector.
• Borrowing actually slows economic growth because future generations will be responsible for repaying the debt plus interest.

Fiscal Deficit Reduction Strategies:

• The NK Singh committee’s recommendations regarding the fiscal deficit must be implemented if the economy is to remain stable.
• showed a possible fiscal deviation range of 5%.
• This implies that if the economy is sluggish, the government may stray 0.5% from the Budget Deficit goal.
• The administration is free to make room for programmes designed to stimulate the economy.
• On the other side, the deficit can be reduced by 0.5% when the economy is doing well.
• Two typical methods of financing a deficit are borrowing from the nation’s central bank or raising money on the capital markets by issuing different securities like treasury bills and bonds.
• a significant decrease in the cost of important subsidies. LTC cost reductions, paid time off, bonuses, etc. fiscal restraints to reduce non-plan spending
• While expanding the revenue base, tax breaks and reductions should be limited. It’s imperative to combat tax evasion efficiently. More emphasis should be placed on direct taxes in order to boost revenue. reorganisation and the sale of public sector unit shares.
• John Maynard Keynes, a well-known economist, asserted that deficits help countries get through economic downturns.
• However, fiscal conservatives think that the government should steer clear of deficits and instead choose a balanced budget strategy.

 Budgetary recommendations for fiscal consolidation for 2021–2022:

• For the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 to incorporate these modifications to the fiscal consolidation road map, the Center advises amending it.
• The Center wants to get back on the path of fiscal consolidation by increasing tax buoyancy and compliance on the one hand, and expanding the monetization of its assets, such as land and PSEs, on the other.
• India’s emergency fund would like to quadruple from 500 billion to 30,000 billion.
• Short-term borrowings from the government, multilateral, small savings funds, and small savings funds have all been used to cover this year’s budget deficit.

Conclusion:

• The budget imbalance should be taken into account while evaluating various initiatives and challenges for better economic management and long-term economic growth. Currently, regaining consumer and corporate confidence is of utmost importance. This will contribute in some way to the economic recovery.