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Daily Current Affairs – 2020

Topic: For Prelims and Mains

Long Term Repo Operation (LTRO)

27th Aug 2020

Why in News ?

The Reserve Bank of India has recently received Rs1.71 trillion in the third long-term repo operation (LTRO) conducted for an amount of Rs 25,000 crores.

What is LTRO?

It is a tool under which the central bank provides a one-year to three-year money to banks at the prevailing repo rate.

  • It is accepting government securities with matching or higher tenure as the collateral.
  • While the RBI’s current windows of liquidity adjustment facility (LAF) and marginal standing facility offer banks money for their immediate needs ranging from 1-28 days, the LTRO supplies them with liquidity for their 1- to 3-year needs.
  • LTRO operations are intended to prevent short-term interest rates in the market from drifting a long way away from the policy rate, which is the repo rate.

Why did RBI introduce LTRO?

  • RBI introduced LTRO with a view to assuring banks about the availability of durable liquidity at a reasonable cost relative to prevailing market conditions.
  • It also further encourages banks to undertake maturity transformation smoothly and seamlessly so as to augment credit flows to productive sectors.

When will LTRO start?

RBI will conduct LTRO from the fortnight beginning on February 15, at the policy rate.

How will it work?

  • It is a measure that market participants expect will bring down short-term rates and also boosts investment in corporate bonds.
  • These new measures coupled with RBI’s earlier introduced ‘Operation Twist’ are an attempt by the central bank to manage bond yields and push transmission of earlier rate cuts

Demand & Import of Oil

Topic: For Prelims and Mains

Why in News?

Union Minister of Petroleum & Natural Gas has recently  informed about the Demand and Import of Oil in the Lok Sabha.

Some Statistics

The consumption of petroleum products in the year 2018-19 was 213.2 MMT.

  • The percentage of Import Dependency on Oil based on the consumption of petroleum products during 2018-19 was about 83.8%.

Indian Strategic Petroleum Reserve Limited is a Government of India Special Purpose Vehicle, has established Strategic Petroleum Reserves (SPR) facilities with a total capacity of 5.33 Million Metric Tonnes (MMT) at 3 locations, namely-

  1. Vishakhapatnam
  2. Mangaluru
  3. Padur (Karnataka)

  As per the consumption pattern of 2017-18, the total capacity is estimated to provide for about 9.5 days of crude oil requirement.

  • Oil Marketing Companies (OMCs) currently have stock for 64.5 days. Hence, total capacity storage of petroleum products is 74 days.
  • Government has given ‘in principle’ approval for establishing two additional SPR facilities with a total storage capacity of 6.5 MMT at two locations namely
  1. Chandikhol in Odisha (4 MMT)
  2. Padur in Karnataka (2.5 MMT).

Sin Goods Tax

Why in News?

Finance Minister recently said that two-wheelers are neither a luxury nor sin goods and so, merit a GST rate revision.

Two-wheelers currently attract 28% GST.

Sin goods:

Sin goods are goods which consider harmful to society.

Example of sin goods: Alcohol and Tobacco, Candies, Drugs, Soft drinks, Fast foods, Coffee, Sugar, Gambling and Pornography.

What is sin tax?

It is placed on goods that adversely affect health, most notably tobacco and alcohol.

Three principal arguments are used to justify this type of taxation:

  • It can reduce consumption through increased prices.
  • Compensate society for things like increased health system costs.
  • Increase resources for the health sector.

Regulation in India:

According to the current GST rate structure, some of the sin goods that attract a cess include cigarettes, pan masala and aerated drinks. Apart from sin goods, luxury products like cars also attract a cess.

Global examples:

  • Countries such as the UK, Sweden and Canadaimpose Sin Taxes on a series of products and services, from tobacco and alcohol to lotteries, gambling and fuel, which chip in with sizeable revenues.
  • Mexico imposed a Soda Tax in 2013.

Why is it important?

That excessive consumption of tobacco, alcohol or empty calories heightens health risks such as cancer, heart conditions and obesity, is quite well-documented by now.

Evidence from other countries that have imposed Sin Taxes shows the consumption of cigarettes and soft drinks has fallen significantly, after the new tax.

The huge revenues many State governments in India rake in from liquor sales (and taxes) show that Sin Taxes can mean a bonanza for the State.

FACTS FOR PRELIMS

Prerak Daaur Samman

It is a new category of awards announced as part of Swachh Survekshan 2021.

The award has a total of five additional sub- categories –

  • Divya (Platinum)
  • Anupam (Gold)
  • Ujjwal (Silver)
  • Udit (Bronze)
  • Aarohi (Aspiring) – with top three cities being recognized in each.

Manodarpan Initiative:

It has been recently launched by Ministry of Human Resource Development as a part of the Atma Nirbhar Bharat Abhiyan.

It aims to monitor and provide psychosocial support to students, teachers and families for Mental Health and Emotional Wellbeing during the conditions like COVID outbreak and beyond.

 

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