UPSC Exam Short Current Affairs Notes and Quiz – March 2021-II | Nalanda IAS Academy

A country’s fiscal balance is measured by its government’s revenue vis-a-vis its expenditure in a given financial year.
Fiscal deficit, the condition when the expenditure of the government exceeds its revenue in a year, is the difference between the two.
The fiscal deficit is calculated both in absolute terms and as a percentage of the country’s gross domestic product (GDP).
The fiscal deficit of a country is calculated as a percentage of its GDP or simply as the total money spent by the government in excess of its income.
In either case, the income figure includes only taxes and other revenues and excludes money borrowed to make up the shortfall.

How is the fiscal deficit calculated?

The fiscal deficit, in mathematical terms, is (total revenue generated — total expenditure).
The total revenue is the sum of revenue receipts, recovery of loans and other receipts of the government.
While most countries continue to project a deficit in their economies, a surplus is a rare phenomenon.
A high deficit at times also emerges if the government is spending on developmental works like construction of highways, ports, roads, airports which will later generate revenue for the government.

What are the components of the fiscal deficit calculation?

The fiscal deficit calculations are based on two components — income and expenditure.

Income component:

The income component is made of two variables, revenue generated from taxes levied by the Centre and the income generated from non-tax variables.
The taxable income consists of the amount generated from corporation tax, income tax, customs duties, excise duties, GST, among others. Meanwhile, the non-taxable income comes from external grants, interest receipts, dividends and profits, receipts from Union Territories, among others.

Expenditure component:

The government in its Budget allocates funds for several works, including payments of salaries, pensions, emoluments, creation of assets, funds for infrastructure, development, health, and numerous other sectors that form the expenditure component.

How is the fiscal deficit balanced out?

While a rising deficit is a challenge for the government in the long term, to balance it out in short-term macroeconomics, the government looks at market borrowings by issuing bonds and selling them in through banks.
Banks buy these bonds with currency deposits and then sell them to investors.
Government bonds are considered an extremely safe investment instrument, so the interest rate paid on loans to the government represents risk-free investment.
The government also sees a deficit situation as an opportunity to expand policies and schemes, including welfare programmes, without having to raise taxes or cut spending in the Budget.

India’s fiscal deficit for the ongoing financial year will the highest since at least liberalisation in 1991. The country’s fiscal deficit settled at 9.5% in 2020-21 and will be targeted at 6.8% in 2021-22, Finance Minister Nirmala Sitharaman announced in her Budget 2021 speech.

Difference between Fiscal Deficit and Revenue Deficit

The fiscal deficit is the excess of Budget Expenditure over Budget receipts other than borrowings.
Revenue deficit is the surplus of Revenue Expenditure over Revenue Receipts. It reflects the total government borrowings during a fiscal

2. HOW MANY COUNTRIES SHARE BORDER WITH IRAN?

Iran borders Afghanistan, Armenia, Azerbaijan, Iraq, Pakistan, Turkey, and Turkmenistan.
It shares maritime borders with Bahrain, Kuwait, Oman, Saudi Arabia, and the United Arab Emirates.

3. WHAT IS THE JOINT COMPREHENSIVE PLAN OF ACTION (JCPOA)?

JCPOA is an agreement signed by Iran and the P5+1+1 (China, France, Germany, Russia, the United Kingdom, the United States and EU) on July 14, 2015.
This nuclear deal or JCPOA seeks to prevent Iran from producing a nuclear weapon — something Iran insists it does not want to do — by putting curbs on its atomic programme in exchange for economic incentives.
As per the deal, Iran reduced the number of its centrifuges used for enriching uranium by two-thirds, restricted its uranium enrichment to 3.67%, and removed the core of its heavy water facility in Arak.
The nuclear deal was endorsed by UN Security Council Resolution 2231, adopted on July 20, 2015.
Iran’s compliance with the nuclear-related provisions of the JCPOA is verified by the International Atomic Energy Agency (IAEA) according to certain requirements set forth in the agreement.
Following the issuance of an IAEA report verifying implementation by Iran of the nuclear-related measures, the UN sanctions against Iran and some EU sanctions will terminate and some will be suspended.
15-year term: After the 15 years, the treaty will come to its term; then the extraordinary restrictions will no longer be applicable.

4. PUBLIC SECTOR UNDERTAKINGS IN INDIA

A state-owned enterprise in India is called a Public Sector Undertaking or a Public Sector Enterprise.
These companies are owned by the Union Government of India or one of the many state or territorial governments or both together in parts.
The company stock is majority-owned by the government in a PSU.

Is Sebi a PSU?

The Securities and Exchange Board of India (SEBI) is the regulator of the securities and commodity market in India owned by the Government of India.
It was established on 12 April 1988 and given Statutory Powers on 30 January 1992 through the SEBI Act, 1992.

How many members are there in Sebi?

SEBI is run by a board of directors, including a chairman who is elected by the parliament, two officers from the Ministry of Finance, one member from the Reserve Bank of India, and five members who are also elected by the parliament

5. WHAT IS FATF?

The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society.
As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

What is the role of the Financial Action Task Force?

The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory, and operational measures for combating money laundering, terrorist financing, and other related threats to the integrity of the international financial

Is India part of FATF?

India became an Observer at FATF in 2006. Since then, it had been working towards full-fledged membership. On June 25, 2010 India was taken in as the 34th country member of FATF.

Which countries are blacklisted by FATF?

As of 21 February 2020, only two countries were on the FATF blacklist: North Koreaand Iran.
The FATF maintains two lists– a blacklist and a grey list. Countries on its blacklist are those that the watchdog deems non-cooperative in the global effort to curb money laundering and terror-financing.

6. WHAT IS KALADAN MULTIMODAL PROJECT?

The Kaladan projectconnects Sittwe Port in Myanmar to the India-Myanmar border.
The projectwas jointly initiated by India and Myanmar to create a multi-modal platform for cargo shipments from the eastern ports to Myanmar and to the North-eastern parts of the country through Myanmar

When was Kaladan project started?

First conceived in 2003, India and Myanmar signed an agreement for the Kaladan projectin 2008. The objective of the project comprising of four segments is to link India’s landlocked northeast with the country’s eastern coast through the southern coast of Myanmar.

Where is Sittwe port?

Sittwe Portis a deepwater port constructed by India in 2016 at Sittwe, the capital of Rakhine State in Myanmar, on the Bay of Bengal.

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March 2021 Current Affairs Quiz UPSC-II

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