17 August 2022

DAILY CURRENT AFFAIRS ANALYSIS

1 – Estimates Committee: GS II – Parliament-related issues

• Historical Background:
• The standing finance committee, established in 1921 during the pre-independence era, is where this committee got its start.
• The first estimate committee in the post-independence era was established in 1950 on his recommendation, as was indicated in the then-finance minister John Mathai’s address presenting the 1950–51 budget.

Estimates Committee Members:

• Initially, there were 25 members of the Estimate Committee; in 1956, there were 30.
• Only Loksabha members make up the 30 members.
• There is no Rajya Sabha member on this committee.
• A single transferable vote is used to elect representatives from among the Loksabha members each year in accordance with the proportional representation concept. As a result, the committee is fairly represented for all parties.
• The estimates committee is not allowed to have any ministers on it.
• The Speaker of the Loksabha selects the chairman of the Estimates committee from among its members.
• The chosen chairman is always a member of the ruling party.

Estimate Committee’s Responsibilities:

• The Estimate Committee’s role is to review the budget’s expenditure projections and provide economic recommendations about public spending. As a result, it is also known as the Committee for Continuous Economy.

The Estimates Committee’s specific duties are as follows:

• Progressive organisational, operational, and administrative reforms that are consistent with the estimations’ underlying policy can have an impact on the type of economies that are reported.
• To make alternative policy recommendations that will improve administration’s effectiveness and economy.
• To determine if the money is properly allocated within the parameters of the policy suggested by the estimations.
• To make recommendations on how the estimates should be delivered to Parliament.
• A Government undertaking that has been referred to the Committee on Public Undertakings would not fall under the committee’s purview. Additionally, the committee may periodically examine the estimates during the fiscal year and report to the house on its findings.
• The committee occasionally chooses estimates for a central government ministry or department as well as for other statutory and other bodies that it considers acceptable.
• The committee also looks into issues of particular interest that come up while it is working or are formally brought up by the speaker or the house.
• The committee requests background information on the topics under discussion from pertinent organisations, as well as viewpoints from non-officials who are familiar with the issues for use by committee members.

Challenges to Estimates Committees’ Effectiveness:

• The budget is examined by the estimates committee after it has been approved by the parliament, not before. The Estimate committee becomes a blunt knife as a result.
• It lacks the authority to contest the policy.
• Its work is post-mortem in nature.
• Its advice are merely intended to be advising.
• It only looks at a few chosen ministries and departments each year; hence, it would take years to cover all of the ministries.
• The CAG is not providing enough specialised support.

Strategies for overcoming the difficulties:

• Prior to voting, the government’s projected spending can be scrutinised, which would help to reduce costs to some extent.
• The right to challenge the government should be granted to the estimates committee as it thoroughly examines planned spending. It would aid in increasing the budget’s overall openness.
• The committee’s conclusions ought to be legally obligatory as it assesses whether the funds are properly allocated.
• The Estimate committee might create subcommittees to address all the ministries and departments at simultaneously.
• To assist the estimates committee in carefully reviewing the budget, a different cadre of knowledgeable employees should be added. The committee should also be given access to the CAG’s knowledge and experience.

Conclusion:

• Since the estimates committee is one of the most significant financial committees, it should be given more current duties rather than post-mortem work. The estimates committee can keep a better eye on the public coffers and make the government more responsible and transparent with regard to the people’s money by carefully examining the government expenditures that have been proposed in the budget.

Source The Indian Express

2 – Wholesale Price Index: GS III – Economy-related issues

About:

• An index that follows and assesses price changes for items in the stages prior to retail is known as the wholesale price index.
• Some economies use the WPI as a gauge of inflation.
• WPI consists of three parts:
• Products made in factories: 64.2%
• 6% of items are basic
• Energy and fuel – 13.1%
• The base year for the WPI will be 2011–12 rather than the earlier 2004–05.
• The new series of the WPI now has 697 items instead of the previous 676.

What problems does WPI have?

• The RBI Act has been modified in accordance with the recommendations of the Urjit Patel Committee, and flexible inflation targeting (FIT) has been implemented using CPI inflation as the nominal anchor.
• The usage of WPI inflation has been totally eliminated under the FIT since the RBI is now required to ensure price stability as measured by CPI inflation.
• At this time, CPI is the basis for all inflation predictions.
• WPI is now used mostly to translate GDP/GVA at current prices to the same at constant prices.
• In actuality, the WPI inflation closely mirrors that of the GDP deflator, which is defined as the ratio of GDP at current prices to GDP at constant prices multiplied by 100. This measure is sometimes believed to be the genuine gauge of inflation.
• The huge decrease in WPI inflation and the rapid decline in the GDP deflator occurred at the same time. This has a major impact on India’s actual GDP growth.
• To deflate the GDP of the services sector, for which the WPI is already insufficient, additional input/output price indices are also necessary.
• The use of geometric mean for item level averaging is one of the novel aspects of the new WPI series. This complies with global best practises.
• Along with other reasons like changes in the composition of the basket, the geometric mean alone has greatly reduced WPI inflation.
• Recent years have seen a significant increase in real GDP due to the WPI’s moderation relative to the revised base.
• Excluding excise tax from the WPI calculation has also helped to hold down WPI inflation in recent years, which has helped lift real GDP to some extent.

What is possible to do?

• Using different indices to deflate input and output prices, or double deflation, is a more accurate method of estimating GDP.
• The single deflation technique overestimates GDP/GVA when output prices fluctuate comparatively more quickly than input prices, and vice versa.
• It is past time to abandon the single deflation approach of estimating GDP/GVA by utilizing WPI as a deflator in order to assure accuracy.

Source The Hindu

3 – Super Vasuki: Prelims Specific Topic

• By successfully running the longest freight train ever, made up of five rakes of goods trains combined into one unit of around 3.5 km, the South-East Central Railways (SECR) zone in Chhattisgarh beats its own prior record.
• Its name was “Vasuki,” and it took almost seven hours to travel the 224 kilometers between the railway stations of Bhilai and Korba.
• With the assistance of a pilot, an assistant loco pilot, and a guard, the “Vasuki,” which was made up of 300 long-distance wagons from five different freight trains, operated.
• Additionally, two freight trains have lately run in the South East Central Railway (SECR) zone.
• Due to their length, these freight trains attracted notice.
• Sesh Naag and Super Anaconda were the names of the two freight trains. Super Anaconda was a combination freight train with three rakes that was completely loaded.
• “Sesh Naag” was a 2.8 km long train made up of four empty BOXN rakes. 

Source The Indian Express

4 – LCA Tejas: Prelims Specific Topic

About:

• The Government of India launched the Light Combat Aircraft (LCA) program in 1984 and set up the Aeronautical Development Agency (ADA) to oversee it.
• It took the place of the outdated Mig 21 fighter jets.

Implemented by:

• Department of Defence Research and Development’s Aeronautical Development Agency.

It was produced by:

• Hindustan Aeronautics Limited, which is state-owned (HAL).

Features:

• the class’s most compact, lightweight, and tailless multi-role fighter aircraft.
• designed to transport a variety of precision-guided, air-to-air, and air-to-surface weaponry.
• capabilities for air-to-air refueling.
• 4000 kg is the maximum payload capacity.
• It is capable of traveling at a maximum speed of Mach 1.8.
• The airplane has a 3,000-kilometre range.

Source The Hindu