Daily Current Affairs : 1st September 2020

Daily Current Affairs for UPSC CSE

Topics Covered

1. GDP falls 23.9%
2. Renati Chola era inscription
3. India – China
4. Review of the Framework Agreement (FA)

1 . GDP falls 23.9%

Context: As per the data released by the National Statistical Office (NSO), under the Ministry of Statistics and Programme Implementation (MoSPI), India’s Gross Domestic Product (GDP) for the April-June quarter (Q1) slipped by a sharp 23.9 per cent.

What does this mean

• GDP falling by 23.9% means that the total value of goods and services produced in India in April, May and June this year is 23.9% less than the total value of goods and services produced in India in the same three months last year

What causes GDP contraction?

• In any economy, the total demand for goods and services — that is the GDP — is generated from one of the four engines of growth.
  • The biggest engine is consumption demand from private individuals. Let’s call it C, and in the Indian economy, this accounted for 56.4% of all GDP before this quarter.
  • The second biggest engine is the demand generated by private sector businesses. Let’s call it I, and this accounted for 32% of all GDP in India.
  • The third engine is the demand for goods and services generated by the government. Let’s call it G, and it accounted for 11% of India’s GDP.
  • The last engine is the net demand on GDP after we subtract imports from India’s exports. Let’s call it NX. In India’s case, it is the smallest engine and, since India typically imports more than it exports, its effect is negative on the GDP.
• So total GDP = C + I + G + NX

The current state of the Indian economy

• The Indian economy is said to be in a deeply vicious cycle as the demand is contracting heavily whereas the capacity to neutralise this contraction has also contracted equally because of the tax revenue contraction.

Sectors wise performance

• In terms of the gross value added (a proxy for production and incomes) by different sectors of the economy, data show that barring agriculture, where GVA grew by 3.4%, all other sectors of the economy saw their incomes fall.
• The worst affected were construction (–50%), trade, hotels and other services (–47%), manufacturing (–39%), and mining (–23%). It is important to note that these are the sectors that create the maximum new jobs in the country. In a scenario where each of these sectors is contracting so sharply — that is, their output and incomes are falling — it would lead to more and more people either losing jobs (decline in employment) or failing to get one (rise in unemployment).

Main Reasons

• The severe impact is of the COVID-19 lockdown, which halted most economic activities.
• Even in the pre- COVID time there was a slowdown trend in the economy.
• The private final consumption which holds almost 60% by weight in the GDP has seen a major contraction.

Reasons for the contraction in GDP based on Engines of Growth

• Private consumption — the biggest engine driving the Indian economy — has fallen by 27%.
• The second biggest engine — investments by businesses — has fallen even harder — it is half of what it was last year same quarter.
  • So the two biggest engines, which accounted for over 88% of Indian total GDP, Q1 saw a massive contraction.
• The NX or the net export demand has turned positive in this Q1 because India’s imports have crashed more than its exports. While on paper, this provides a boost to overall GDP, it also points to an economy where economic activity has plummeted.
• Last engine of growth — the government. As the data shows, government’s expenditure went up by 16% but this was nowhere near enough to compensate for the loss of demand (power) in other sectors (engines) of the economy.
  • When the demand from C and I fell by Rs 10,64,803 crore, the government’s spending increased by just Rs 68,387 crore. In other words, government’s spending increased but it was so meagre that it could cover just 6% of the total fall in demand being experienced by people and businesses.
  • The net result is that while, on paper, government expenditure’s share in the GDP has gone up from 11% to 18% yet the reality is that the overall GDP has declined by 24%.
  • It is the lower level of absolute GDP that is making the government look like a bigger engine of growth than what it is.

What will be the impact of the quarterly GDP contraction?

• According to economists, the quarterly contraction might contribute to a contraction in annual GDP this year.
• The annual GDP might contract to 5%-7% in 2020-21 which might be the worst since Independence.
• The last such contraction of the economy occurred in 1979-80, when GDP shrank 5.2%.
• Four other instances of minor contraction between 1965-68, and 1972-73.

Measures suggested

• When incomes fall sharply, private individuals cut back consumption. When private consumption falls sharply, businesses stop investing. Since both of these are voluntary decisions, there is no way to force people to spend more and/or coerce businesses to invest more in the current scenario.
• The same logic holds for exports and imports as well.
• Under the circumstances, there is only one engine that can boost GDP and that is the government (G). Only when government spend more — either by building roads and bridges and paying salaries or by directly handing out money — can the economy revive in the short to medium term. If the government does not spend adequately enough then the economy will take a long time to recover.

2 . Renati Chola era inscription

Context: A rare inscription dating back to the Renati Chola era has been unearthed in a remote village of Kadapa district, Andhra Pradesh.

About the inscription

• Inscription was found engraved on a dolomite slab and shale, which are part of a fragmentary pillar excavated
• Based on the language and characters, the inscription was written in archaic Telugu, which was readable in 25 lines — the first side with 11 lines and the remaining on the other side.
• The last lines are indicative of the priority given to morality in those days.
• It was assigned to the 8th Century A.D., when the region was under the rule of the Chola Maharaja of Renadu.
• The inscription throws light on the record of a gift of six marttus (a measuring unit) of land gifted to a person Sidyamayu, one of the Brahmins serving the temple at Pidukula village
• According to the inscription the people who safeguard this inscription for future generations will acquire the status of conducting Aswamedha Yaga, and those destroying it will incur sin equivalent to causing a death in Varanasi.

About Renati Cholas

• The Telugu Cholas of Renadu (also called as Renati Cholas) ruled over Renadu region, the present day Cuddapah district.
• They were originally independent, later forced to the suzerainty of the Eastern Chalukyas.
• They had the unique honour of using the Telugu language in their inscriptions belonging to the 6th and 8th centuries. The inscriptions at Gandikota at Jammulamadugu and Proddatur are proof of this fact.
• The earliest of this family was Nandivarman (500 AD) who claimed descent from the family of Karikala and the Kasyapa gotra. He had three sons Simhavishnu, Sundarananda and Dhananjaya, all of whom were ruling different territories simultaneously. Dhananjaya is described as Erigal-mutturaju and as ruling Renadu.
• In the first half of the seventh century, we find Punyakumara, a descendant of Nandivarman, ruling over Renadu and Hiranyarashtra. He too bears the title Erikal-mutturaju

Chola Dynasty

• The Cholas are remembered as one of the longest ruling dynasties in the southern regions of India.

Origin of the Chola Dynasty :

• The reign of the Cholas began in the 9th century when they defeated the Pallavas to come into power. This rule stretched over for over five long centuries until the 13th century. However, around the 2nd  century, the state Andhra has a Chola kingdom that flourished far and wide.
• The Early periods of the Chola rule saw the onset of the Sangam literature. Kantaman was one of the prominent rulers of this era.  
• The medieval period was the era of absolute power and development for the Cholas. This is when kings like Aditya I and Parantaka I. From here Rajaraj Chola and Rajendra Chola further expanded the kingdom into the Tamil region. Later Kulothunga Chola took over Kalinga to establish a strong rule.
• This magnificence lasted until the arrival of the Pandyas in the early 13th century.

Main Rulers

• Vijayalaya :The Chola Empire was founded by Vijayalaya. He took over the Tanjore kingdom in the 8th century and led to the rise of the mighty Cholas by defeating the Pallavas. Tanjore was hence made the first capital of the eminent Chola Empire.
• Aditya I : Aditya I succeeded Vijayalaya to become the ruler of the empire. He defeated king Aparajita and the empire gained massive power under his reign. He conquered the Pandya Kings along with the Vadumbas and establishes control over the Pallavas power in the region.
• Rajendra Chola : He succeeded the mighty Rajaraja Chola. Rajendra I was the first to venture to the banks of Ganges. He was popularly called the Victor of the Ganges. His new empire capital was called the Gangaikondacholapuram where he received the title of ‘Gangaikonda’. This period is referred to as the golden age of the Cholas. After his rule, the kingdom witnessed a widespread downfall.

Culture and Roots

• In this era, the temple was the main centre for all social and religious meetings. The surroundings of this region became a school for the folks where Holy Scriptures and the ancient Vedas were taught to students. This also was a secure place in times of warfare and political uproar.
• There are links of the relevance of the Chola Empire with the Trimula deity at Sri Venkateshwara temple. The religious roots of the Chola Empire go far back to this time. The Srirangam temple stands to be a highlight from this era. It was submerged in water for centuries and was renovated later to its former glory.
• Art, religion and literature benefited greatly during this period. Several temples were built across the banks of the Kaveri river. Several of these sites have been classified as World Heritage Sites by UNESCO. These include the Brihadisvara temple, the Gangaikondacholisvaram and the Airavatesvara temples.
• Sculpting and art were also at an all-time high in this reign. Sculptures of gods and goddesses like Shiva, Vishnu and Lakshmi have been carved out of bronze and serve as a golden reminder of this period.
• Literature was another crucial highlight of this period. Not only did devotional literature take shape but Jain and Buddhist writings also got appreciation and recognition during this phase. The popular Nalayira Divya Prabandham from this period is a compilation of 4000 Tamil verses and is widely savoured by literary scholars even to this day.

Administration, Governance & Navy

• During the governance by the Cholas, the entire southern region was brought under the umbrella of a single governing force. The Cholas ruled in a sustained Monarchy.
• The Chola Empire consisted of the current day territories of Tiruchirapalli, Tiruvarur, Perambalur, Ariyalur, Nagapattinam, Pudukkottai, Vridhachalam, Pichvaram and Thanjavur districts of Tamil Nadu. Here the massive kingdom was divided into provinces which were known as mandalams.
• Separate governors were held in charge for each mandalam. These were further divided into districts called nadus which consisted of tehsils.
• The system of rule was such that each village acted as a self-governing unit during the era of the Cholas.
• The earliest records of India’s maritime history are found in the Vedic literature, but the first instances of naval wars are only found during the Cholas reign over southern India.
  • When the two other Tamil dynasty — the Pandyas and Cheras allied with the Sri Lankan kingdom of Sinhalas against the Cholas, Rajaraja I defeated the Chera navy at Kandalur, perhaps to break the their monopoly in trade. Tamil inscriptions from his rule draw a record of his victory.
  • Rajaraja conquered Southern India, Sri Lanka and the Maldives, his successor Rajendra extended a naval expedition to Southeast Asia in 1025 conquering the maritime power Srivijaya (present-day Palembang) and its harbour cities on Sumatra and the Malay Peninsula.

3 . India – China

Context: Chinese troops carried out aggressive moves on the night of August 29 to change the status quo on the south bank of Pangong Tso but those attempts were thwarted by the Indian Army.

About the News

• Indian Army thwarted an attempt by China to change the status quo near the Line of Actual Control (LAC) by deploying its troops to a previously un-deployed area on the southern bank of the Pangong Tso Lake in eastern Ladakh.
• According to the Army that Chinese troops “violated the previous consensus arrived at during military and diplomatic engagements during the ongoing standoff in Eastern Ladakh and carried out provocative military movements to change the status quo”
• Indian troops pre-empted this PLA activity on the southern bank of Pangong lake, and undertook measures to strengthen Indian positions and thwart Chinese intentions to unilaterally change facts on ground.
• China in response has accused the Indian Army of illegally crossing the line on August 31 at two points — at the south bank of Pangong lake and near the Reqin mountain pass (near Rezang La) — and blatantly provoking and causing tensions on the border.
• The current attempt by China shows that it is aiming to move to South Bank as North bank of Pangong has been secured.
• The move is also considered to be a diversion tactic by China from Depsang Plains where construction by PLA is on in full swing and their excavators continue to build roads.
• While the Pangong Lake has been among the most contentious sectors in the ongoing military standoff in eastern Ladakh for nearly four months now, the activity until now had been restricted to the northern bank.

What is Pangong Lake?

• Pangong Tso is an endorheic lake (landlocked) that is partly in India’s Ladakh region and partly in Tibet. The name reflects the mixed heritage of the lake: Pangong in Ladakhi means extensive concavity, the word Tso is Tibetan for lake.
• Situated at an elevation of about 4,270 m, it is a nearly 135-km long, narrow lake — 6 km at its widest point — and shaped liked a boomerang. Its total area is over 600 sq km.
• The Karakoram Mountain range, which crosses Tajikistan, Afghanistan, Pakistan, China and India, with heights of over 6,000 metres including K2, the world’s second highest peak, ends at the north bank of Pangong Tso. Its southern bank too has high broken mountains sloping towards Spangur Lake in the south.
• The lake’s water, while crystal clear, is brackish, making it undrinkable. The lake freezes during the winter, allowing some vehicular movement on it as well.

Who controls Pangong Tso?

• Nearly two-thirds of the lake is controlled by China, with just about 45 km under Indian control. The LAC, running north-south, cuts the western part of the lake, aligned east-west.
• But India and China have unsettled borders, and the perception of the LAC differs in multiple sectors, including on Pangong Tso. At the lake’s north bank, according to India, the international boundary is close to Khurnak Fort, a 19th-century ruin. But the LAC, according to India, is around 15 km west. On the north bank are spurs that jut into the lake, identified as fingers. India says the LAC passes through Finger 8; China claims it is farther west.
• Compared to the north bank, the difference in perception of the LAC is not very wide in the south bank. A former brigade commander from the region said the perception may differ by 100 to 200 m, and lacks prominent features like fingers.
• These “differing perceptions of the LAC”, as the Army has called it, are one of the main causes of face-offs

What is the current status of Pangong Tso?

• The north bank was one of the two points in eastern Ladakh that saw friction in early May that led to the standoff that is now nearly four months old. On the night of May 5-6, troops were involved in violent hand-to-hand fights, though Chinese soldiers were armed with rods and nail-studded batons.
• There was a similar fight in Galwan Valley on May 6. However, these violent face-offs did not result in any fatalities, unlike the June 15 clash in Galwan Valley in which India lost 20 soldiers and an undeclared number of Chinese troops were also killed.
• Since then China changed the status quo and its troops had occupied the region between Finger 8 and Finger 4, which was patrolled by both but occupied by neither side earlier. Chinese troops continue to occupy the Finger 4 ridgeline, though they have stepped back from the base of Finger 4 to the base of Finger 5. But China has fortified its positions in the area.
• The slight rearward movement was part of the initial disengagement process after the June 15 clashes. However, there has not been any improvement in the situation since mid-July and the talks are stuck in a stalemate

How are the two banks different?

• Until this weekend, the south bank had been quiet during the standoff. Army sources said India has traditionally had a stronger presence in the southern bank compared to the north bank, because of its proximity to areas like Chushul and Rezang La.
• The former brigade commander explained that the north bank has come into the limelight only in the last few years, due to clashes between patrolling units. Traditionally the southern bank has been in the limelight, because it is just north of the Chushul approach. This is also the reason why the south bank has traditionally had a stronger presence of Indian forces.
• The region south of the lake is also strategically important for both countries
• The area, known as the Chushul approach, is one of the few sectors that can be used as launchpads for an offensive, because of the plains. During the 1962 conflict, both banks witnessed a Chinese offensive, and India lost territory on both — first Sirijiap, then the entire north bank by October 22; on the south bank India had to abandon its complex of posts in Yula, and move to a high area north of Gurung Hill.
• Over the weekend, the Army mentioned that Indian troops “pre-empted this PLA activity on the Southern Bank of Pangong Tso Lake, undertook measures to strengthen our positions and thwart Chinese intentions to unilaterally change facts on ground”. India has occupied a more advantageous position, though still on its side of the LAC, to prevent China from any intrusions in the area

4 . Review of the Framework Agreement (FA)

Context: The Working Committee of the Naga National Political Groups (NNPGs) has sought a review of the Framework Agreement (FA) the Centre had signed with the rival Isak-Muivah faction of the National Socialist Council of Nagaland, or NSCN (I-M), in August 2015.

About Naga National Political Groups (NNPGs)

• The NNPGs comprise seven rival factions of the NSCN (I-M) and older armed groups.

Background

• The NSCN (I-M) had in the second week of August released the FA after accusing Nagaland Governor R.N. Ravi of tweaking its content to put the Naga political issue “under the purview of the Indian Constitution.
• The outfit had also stated that the agreement was based on shared sovereignty between India and the Naga domain.

Points raised by NNPG

• Naga History and Struggle erased: According to the Working Committee of the Naga National Political Groups (NNPGs) the FA had erased a “greater part of Naga history and struggle” by stating that the “Indo-Naga political conflict” had started around 1955-56. The NNPGs have said that the six decades mentioned accounted for a fraction of the conflict and was tantamount to dismissing a “people’s political journey” in an “abject manner”. The conglomerate said that “after five years and much secrecy”, the FA “reflects lack of Naga people’s consultation and participation prior to signing”.
• Nagalim: The NNPGs have also sought reasons for referring to Nagaland instead of Nagalim in the FA. ‘Nagalim’ is the greater sovereign Naga homeland envisaged by the NSCN (I-M) and includes all Naga-inhabited areas around Nagaland, including in Myanmar.
• Intangki Reserve Forest : The NNPGs also alleged that the NSCN (I-M) was seeking from the Centre the permission to make the Intangki Reserve Forest near Nagaland’s commercial hub Dimapur as their resettlement and rehabilitation area as part of the solution to the Naga peace process.