Centre gets time to reply on Fundamental Duties

The Supreme Court has allowed the Centre’s request for two months’ time to file a reply to a petition seeking the enforcement of fundamental duties of citizens, including patriotism and unity of nation, through “comprehensive, and well-defined laws”.

Why in news?

The need to enforce fundamental duties arises due to new illegal trend of protest by protesters in the garb of freedom of speech and expression.

Vandalism, blocking of road and rail routes in order to compel the government to meet their demands is a sheer violation of the FDs which are generally not enforceable.

What are Fundamental Duties?

The fundamental duties of citizens were added to the constitution by the 42nd Amendment in 1976, upon the recommendations of the Swaran Singh Committee.

It basically imply the moral obligations of all citizens of a country and today, there are 11 fundamental duties in India, which are written in Part IV-A of the Constitution, to promote patriotism and strengthen the unity of India.

The FDs obligate all citizens to respect the national symbols of India, including the constitution, to cherish its heritage, preserve its composite culture and assist in its defence.

They also obligate all Indians to promote the spirit of common brotherhood, protect the environment and public property, develop scientific temper, abjure violence, and strive towards excellence in all spheres of life.

Judicial interpretation of FDs

The Supreme Court has held that FDs are not enforceable in any Court of Law.

It ruled that these fundamental duties can also help the court to decide the constitutionality of a law passed by the legislature.

There is a reference to such duties in international instruments such as the Universal Declaration of Human Rights and International Covenant on Civil and Political Rights, and Article 51A brings the Indian constitution into conformity with these treaties.

Total FDs

Originally ten in number, the fundamental duties were increased to eleven by the 86th Amendment in 2002.

Pradhan Mantri Fasal Bima Yojana (PMFBY)

Andhra Pradesh has decided to rejoin the crop insurance scheme Pradhan Mantri Fasal Bima Yojana (PMFBY) from the ongoing kharif season.

Why in news?

Andhra Pradesh was one of six states that have stopped the implementation of the scheme over the last four years.

The other five, which remain out, are Bihar, Jharkhand, West Bengal, Jharkhand, and Telangana.

What is PMFBY?

The PMFBY was launched in February 2016. It is being administered by Ministry of Agriculture.

It provides a comprehensive insurance cover against failure of the crop thus helping in stabilising the income of the farmers.

It is implemented by general insurance companies.

Its functioning

PMFBY insures farmers against all non-preventable natural risks from pre-sowing to post-harvest.

Farmers have to pay a maximum of 2 per cent of the total premium of the insured amount for kharif crops, 1.5 per cent for rabi food crops and oilseeds as well as 5 per cent for commercial / horticultural crops.

The balance premium is shared by the Union and state governments on a 50:50 basis and on a 90:10 basis in the case of northeastern states.

Farmers covered

All farmers growing notified crops in a notified area during the season who have insurable interest in the crop are eligible.

Earlier to Kharif 2020, the enrolment under the scheme was compulsory for following categories of farmers:

Farmers in the notified area who possess a Crop Loan account/KCC account (called as Loanee Farmers) to whom credit limit is sanctioned/renewed for the notified crop during the crop season. and

Such other farmers whom the Government may decide to include from time to time.

Risks covered under the scheme

Comprehensive risk insurance is provided to cover yield losses due to non-preventable risks, such as Natural Fire and Lightning, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado.

Risks due to Flood, Inundation and Landslide, Drought, Dry spells, Pests/ Diseases also will be covered.

Post-harvest losses coverage will be available up to a maximum period of 14 days from harvesting for those crops which are kept in “cut & spread” condition to dry in the field.

For certain localized problems such as loss/damage resulting from the occurrence of identified localized risks like hailstorm, landslide, and Inundation affecting isolated farms in the notified area would also be covered.

Why many states has opted out?

The opting-out states had mentioned several reasons:

The scheme should be voluntary.

States should be given options to choose the risks covered and the scheme should be universal.

State should be given option to use their own database of E-crop, an application used by the state government to collect information about crops.

Many state government wanted zero premium for farmers (meaning the entire premium should be paid by the government.

The non-payment of the State Share of premium subsidy within the prescribed timelines as defined in the seasonality discipline lea to the disqualification of the State Government.

The reason for West Bengal not implementing the PMFBY is purely “political” as it wants to implement the scheme without mentioning Pradhan Mantri in the name.

How was the scheme structured, and what has changed since?

Initially, the scheme was compulsory for loanee farmers; in February 2020, the Centre revised it to make it optional for all farmers.

Now states and UTs are free to extend additional subsidy over and above the normal subsidy from their budgets.

In February 2020, the Centre decided to restrict its premium subsidy to 30% for unirrigated areas and 25% for irrigated areas (from the existing unlimited). Earlier, there was no upper limit.

Food crops (cereals, millets and pulses); oilseeds; and annual commercial / annual horticultural crops are broadly covered under the scheme.

Increase in Current Account Deficit (CAD)

The Finance Ministry has asserted that the current account deficit (CAD) could, however, deteriorate this year mainly due to rising trade deficits.

What is Current Account Deficit (CAD)?

A current account is a key component of balance of payments, which is the account of transactions or exchanges made between entities in a country and the rest of the world.

This includes a nation’s net trade in products and services, its net earnings on cross border investments including interest and dividends, and its net transfer payments such as remittances and foreign aid.

A CAD arises when the value of goods and services imported exceeds the value of exports, while the trade balance refers to the net balance of export and import of goods or merchandise trade.

Components of Current Account

Current Account Deficit (CAD) = Trade Deficit + Net Income + Net Transfers

(1) Trade Deficit

Trade Deficit = Imports – Exports

A Country is said to have a trade deficit when it imports more goods and services than it exports.

Trade deficit is an economic measure of a negative balance of trade in which a country’s imports exceeds its exports.

A trade deficit represents an outflow of domestic currency to foreign markets.

(2) Net Income

Net Income = Income Earned by MNCs from their investments in India.

When foreign investment income exceeds the savings of the country’s residents, then the country has net income deficit.

This foreign investment can help a country’s economy grow. But if foreign investors worry they won’t get a return in a reasonable amount of time, they will cut off funding.

Net income is measured by the following things:

Payments made to foreigners in the form of dividends of domestic stocks.

Interest payments on bonds.

Wages paid to foreigners working in the country.

(3) Net Transfers

In Net Transfers, foreign residents send back money to their home countries. It also includes government grants to foreigners.

It Includes Remittances, Gifts, Donation etc

How Current Account Transaction does takes place?

While understanding the Current Account Deficit in detail, it is important to understand what the current account transactions are.

Current account transactions are transactions that require foreign currency.

Following transactions with from which component these transactions belong to :

Component 1 : Payments connection with Foreign trade – Import & Export

Component 2 : Interest on loans to other countries and Net income from investments in other countries

Component 3 : Remittances for living expenses of parents, spouse and children residing abroad, and Expenses in connection with Foreign travel, Education and Medical care of parents, spouse and children

What has been the recent trend?

In Q4 FY 2021-22, CAD improved to 1.5% of GDP or $13.4 billion from 2.6% of GDP in Q3 FY 2021-22 ($22.2 billion).

The difference between the value of goods imported and exported fell to $54.48 million in Q4FY 2021-22 from $59.75 million in Q3 FY2021-22.

However, based on robust performance by computer and business services, net service receipts rose both sequentially and on a year-on-year basis.

Remittances by Indians abroad also rose.

What are the reasons for the current account deficit?

Intensifying geopolitical tensions and supply chain disruptions leading to crude oil and commodity prices soaring globally have been exerting upward pressure on the import bill.

A rise in prices of coal, natural gas, fertilizers, and edible oils have added to the pressure on trade deficit.

However, with global demand picking up, merchandise exports have also been rising.

How will a large CAD affect the economy?

A large CAD will result in demand for foreign currency rising, thus leading to depreciation of the home currency.

Nations balance CAD by attracting capital inflows and running a surplus in capital accounts through increased foreign direct investments (FDI).

However, worsening CAD will put pressure on inflow under the capital account.

Nevertheless, if an increase in the import bill is because of imports for technological upgradation it would help in long-term development.