India’s space telescope AstroSat has measured X-ray polarisation from the Cygnus X-1, opening new possibilities in the study of the black hole’s environment.

• It is one of the 1^st confirmed black hole systems in our galaxy.
• Discovery – Over 4 decades ago.
• Location – About 400 times more than the distance between Earth and Sun.
• Size – It is 20 times heavier than the Sun.
• It has a companion, a heavy supergiant star (40 times more massive than the Sun) in a binary system.
• Generates soft X-rays – Due to its gravitational pull material from the supergiant falls and spirals-in towards the black hole that forms a thin accretion disk which is responsible for soft X-rays.
• Recent observation – Cygnus X-1 measured the high polarization in 100-380 keV range, implying that the radiation is likely to have originated at the black hole jet.
• Significance – While normal X-ray measurements only reveal the energy or intensity of the radiations, polarisation characteristics reveal the orientation of the oscillating electric field thereby the geometry and other properties of the black hole.

It is the 1^st time hard X-ray radiation is connected to the black hole jet.

Astrosat was launched by Indian Space Research Organisation (ISRO) in September 2015. It has 5 scientific instruments of which the Cadmium Zinc Telluride Imager (CZTI) measured the X-rays from the black hole.

Why in News?

• With the ‘mantra’ of ‘Sabka Saath, Sabka Vikas, and Sabka Vishwas’ and the whole of nation approach of “Sabka Prayas”, the Union Minister for Finance presented the Interim Union Budget 2024-25 in Parliament.
• Here we will try to analyse different aspects of the interim union budget 2024-25.

What’s in Today’s Article?

• Tax buoyancy helps Centre Align with its Fiscal Consolidation Roadmap
• Tax Resolution Scheme to Benefit over One Crore
• Centre to Follow a ‘Calibrated’ Approach to Divestments in FY25
• Rooftop Solar Scheme – Households to get 300 Units Free Power
• Rs 1 Lakh Crore Corpus to Incentivise R&D in Private Sector

Tax buoyancy helps Centre Align with its Fiscal Consolidation Roadmap:

• The government’s aim:To restrict the fiscal deficit to 5.8% of the GDP as against 5.9% budgeted earlier for the financial year and to restrict the fiscal deficit target to below 4.5% by 2025-26.
• How? By riding on the back of a strong buoyancy in tax revenues. Tax buoyancy is defined as the ratio of change in taxes to GDP. Higher tax buoyancy suggests that tax revenue would increase at a quicker rate than income growth.
• Direct tax revenue:
  • Direct tax revenues are estimated to grow 17.2% year-on-year to Rs 19.45 lakh crore in the current financial year 2023-24.
  • For the next financial year, direct tax collections, which include income tax and corporate tax, are estimated to rise 13.1% to Rs 21.99 lakh crore.
• On the indirect taxes side:
  • Central Goods and Services Tax (CGST) collections are estimated to grow 13% to Rs 9.18 lakh crore in 2024-25.
  • Overall, the indirect tax collections, which include customs, excise duties and GST (including compensation cess), are expected to yield Rs 16.22 lakh crore to the government in 2024-25.
• What does this indicate?
  • The growth rate for tax revenues estimated for 2024-25 at nearly 12% (net) is much higher than the 10.5% nominal GDP growth assumed for Budget arithmetic for 2024-25.
  • The strong growth in tax revenues reflects the high tax buoyancy, which works out to be 1.2 for FY 2023-24 as against 1.0 in FY23. For 2024-25, the tax buoyancy is seen at 1.1.
  • These revenue estimates can take care of any unforeseen expenditure or slippage in disinvestments in FY25.

Tax Resolution Scheme to Benefit over One Crore:

• In a relief to tax-payers grappling with outstanding tax demands, the Finance Minister announced a resolution for “disputed direct tax demand” dating back to 1962, the year of enactment of the Income-Tax Act.
• Under this, the government has decided to withdraw outstanding direct tax demands up to Rs 25,000 for the period up to financial year 2009-10 and up to Rs 10,000 for financial years 2010-11 to 2014-15.

Centre to Follow a ‘Calibrated’ Approach to Divestments in FY25:

• The calibrated approach: The government has estimated it will get Rs 50,000 crore in 2024-25 in the form of ‘miscellaneous capital receipts’ without mentioning the word disinvestment.
• Need for a calibrated approach:
  • The government is taking care of the (governance, development and performance) with respect to CPSEs.
  • If we look at CPSEs’ performance – whether it comes to capex of Rs 3.2 lakh crore, their growth story, their investments in green energy, their performance on return on capital employed and equity – they are big market players.
  • They will continue to improve and reward shareholders including the government.
• Future plans: Strategic sale of CPSEslike BEML, SCI, HLL Life Care, NMDC Steel, and IDBI Bank is expected to be completed in the current financial year, although analysts believe it could come to fruition only after the General Elections later this year.

Rooftop Solar Scheme – Households to get 300 Units Free Power:

• The Pradhan-mantri Suryodaya Yojana (announced by the PM on January 22):
  • People availing the newly-announced rooftop solar scheme will be entitled to 300 units of free electricity every month.
    • This will help them save up to Rs 18,000 annually by getting free solar electricity and by selling the surplus power to the distribution companies.
  • The PM announced that rooftop solar systems would be installed in “one crore houses”, without specifying a timeframe for the target to be achieved.
  • The Finance Minister said the scheme would also help the adoption of electric vehicles (EVs) by providing charging stations at home.
  • The scheme was also expected to result in entrepreneurship and employment opportunities in supplies, installation and maintenance.
• Need for the new scheme:
  • The new scheme adds on to an ongoing rooftop solarisation programme running for at least a decade now.
  • About 40% or 40 gigawatts (GW) of the government’s initial target of setting up 100 GW of solar capacity by 2022 was meant to be through rooftop systems.
  • However, by 2023 end, the country’s total solar capacity stood at 73.3 GW, of which grid-connected rooftop systems comprised only about 11 GW or 15%.

Rs 1 Lakh Crore Corpus to Incentivise R&D in Private Sector:

• In a significant initiative to incentivise R&D in the private sector, the Finance Minister announced the establishment of a financial corpus of Rs 1 lakh crore that will provide low-cost or zero-interest loans for research and innovation.
• The private companies could avail of interest-free loans for up to 50 years (long-term financing or refinancing facility) through this new mechanism.
• This will encourage the private sector to scale up research and innovation significantly in sunrise domains.
• The new fund is in sync with the government efforts to encourage private sector involvement in research activities.
  • Last year, it had set up a National Research Foundation (NRF) whose main objective is to significantly improve, both in qualitative and quantitative terms, the country’s research output.
  • The NRF earmarks a spending of Rs 50,000 crore on research activities over the next five years.
  • More than 70% of this money is envisaged to come from the private sector.

Why in news?

• The Finance Minister Nirmala Sitharaman presented the Interim Union Budget for 2024-2025 in Parliament.

What’s in today’s article?

• Vote on Account
• Interim Budget
• News Summary

Vote on Account

• Article 116 of the Constitution allows the Lower House to make any grant in advance for the estimated expenditure for part of any financial year by voting and passing such a legislation. This is called vote on account.
• A simple vote on account includes presenting the Centre’s fund requirements for salaries, ongoing projects and other expenditure for the transitional period.
• It cannot make any changes to tax rates. It is also valid only for two months and can be extended up to four months.

Interim Budget

• Background: need for an interim Budget
  • As per Article 112 of the Indian Constitution, annual financial statement is laid before both Houses of Parliament.
    • Annual financial statement is a statement of the estimated receipts and expenditure of the Government of India for a specific financial year.
  • The Centre seeks both Houses’ approval to withdraw the necessary funds from the Consolidated Fund of India.
    • Hence, this statement has to be passed by both Houses.
  • However, in an election year, the incumbent Government cannot present a full Budget as there may be a change in the executive after the polls.
  • Hence, the need for an interim budget.
• Constitutional provisions of interim Budget
  • There is no constitutional provision for an interim budget.
  • Hence, the Centre chooses to seek the Lower House’s approval for the funds required for the transition period (April – July) till the new government presents a full Budget— via the votes on account provision.
• About
  • In an interim budget, the Finance Minister presents the current state of the Indian economy, its fiscal status including India’s revised estimated growth in the next year.
  • S/he will also detail the government’s planned and non-planned expenditure and receipts.
  • While the Centre has to desist from announcing any major scheme which could influence voters or present an Economic Survey, the government is allowed to revise tax rates via an interim budget.
  • The interim budget too is presented to both Houses on February 1 by the Finance Minister, put to vote and then sent for Presidential approval.
  • Like the Union budget, the interim budget too is debated in the Lok Sabha before passage and is valid for the entire year though it is merely a transition arrangement.

News Summary: Summary of the Interim Union Budget 2024-25

Key highlights of the Interim Budget 2024-25

• No change relating to taxation
  • No change relating to taxation has been proposed in the Interim Budget.
  • The same rates for direct taxes and indirect taxes, including import duties, have been retained.
• Withdrawal of Outstanding direct tax demands
  • The Minister announced to improve tax payer services which is in line with the government’s vision to improve ease of living and ease of doing business.
  • The Interim Budget proposes to withdraw such outstanding direct tax demands:
    • up to Rs. 25000/- pertaining to the period up to financial year 2009-10 and
    • up to Rs. 10,000/- for financial years 2010-11 to 2014-15.
  • This is expected to benefit about a crore tax payers.
• Direct tax collections trebled
  • Over the last 10 years the direct tax collections have more than trebled and the return filers swelled to 2.4 times.
  • The Govt has reduced and rationalised the tax rates due to which under the new tax regime there is no tax liability for tax payers with income up to Rs. 7 lakh.
  • The Minister also mentioned about decrease in corporate tax rates for existing domestic companies from 30% to 22%, and for certain new manufacturing companies to 15%.
  • The Government’s focus has been to improve tax-payer services.
    • This has led to transformation of age-old jurisdiction-based assessment system, and filing of tax returns has been made simpler and easier.
    • Average processing time of returns has been reduced from 93 days in the year 2013-14 to a mere ten days this year.
• GST reduced compliance burden
  • GST has reduced the compliance burden on trade and industry by unifying the highly fragmented indirect tax regime in India.
    • Mentioning about a recent survey conducted by a leading consulting firm, she said that 94% of industry leaders view the transition to GST as largely positive.
  • Tax base of GST has more than doubled and average monthly gross GST collection has almost doubled to Rs. 1.66 lakh crore this year.
  • States’ SGST revenue, including compensation released to states, in the post-GST period of 2017-18 to 2022-23, has achieved a buoyancy of 1.22.
  • The biggest beneficiaries are the consumers as reduction in logistics cost and taxes have brought down prices of most goods and services.
• Number of steps taken in customs to facilitate international trade
  • The Minister said, over the last four years since 2019, the import release time declined:
    • by 47 per cent to 71 hours at Inland Container Depots,
    • by 28 per cent to 44 hours at air cargo complexes and
    • by 27 per cent to 85 hours at sea ports.
• Laying of White Paper
  • The Minister announced that the Government will come out with a white paper, on ‘where we were then till 2014 and where we are now, only for the purpose of drawing lessons from the mismanagement of those years’.
    • A white paper is an official government document that provides detailed information, analysis, or proposals on a particular policy issue or matter of public concern.
    • White papers serve to explain complex topics, present government policies, and solicit feedback or discussion from legislators and citizens.
    • They are important tools for transparency, accountability, and policymaking in the Indian parliamentary system.

Headlines of the Day 02-02-2024

PIB, The Hindu, Indian Express, Mint, AIR

What’s in Today’s Article?

• About Hybrid Vehicles (Meaning, Difference w.r.t. EVs, Importance of Hybrid Vehicles)
• Challenges w.r.t. EVs

What is a Hybrid Vehicle?

• Hybrid cars are powered by two engines: one petrol, one electric.
• Both work with each other to spin the wheels. This leads to lesser petrol being burned and therefore better fuel efficiency.
• When compared to conventional vehicles, hybrids offer better power and fuel efficiency as they combine the benefits of high fuel efficiency and low emissions.
• When hybrid vehicles are cruising or while braking, the result is excess power which is used to charge the batteries. This, in turn, aids higher fuel efficiency or range.

Difference Between Hybrid & Electric Vehicles:

Why Hybrid Vehicle is a Practical Solution for Decarbonisation Drive?

• According to a report by HSBC Global Research, India needs to embrace hybrid vehicles over the next 5-10 years on the way to full electrification.
• Such vehicles are the more practical medium-term solution for the country’s decarbonisation efforts and, more importantly, less polluting, according to the note.
• The note says that currently, overall carbon emissions are lower in hybrids compared to both electrics and those that run on petrol and diesel for similarly proportioned vehicles.
• In fact, it could take as long as a decade for EV and hybrid vehicle emissions to come to the same level, it says.
• Currently, India’s electric mobility plan is largely focussed on battery electric vehicles or BEVs replacing internal combustion engine (ICE) vehicles.
• Carbon Emission Comparison:
  • The note said that total (well-to-wheel, or WTW) carbon emissions from an EV is currently 158 g/km, compared to 133 g/km for hybrids — which means that a hybrid is at least 16% less polluting than the corresponding EV.
  • These numbers are 176 g/km and 201 g/km for corresponding petrol and diesel vehicles respectively.
  • EV and hybrid emissions could converge after 7-10 years, according to estimates made by the HSBC analysis.
  • According to the note, total emissions from hybrid cars and EVs will converge if non-fossil power generation in India moves up to 44%.
  • By 2030, even if India’s share of non-fossil fuels is 40%, hybrids will still release 8% less emissions than EVs, which, however, will be half of the 16% of today, the note said.

What are the Challenges w.r.t. Overall Global Push for EVs?

• Cumulative EV industry sales, comprising the two- and three-wheeler, passenger vehicle and commercial vehicle sub-segments, for 2023 are ~13.8 lakh units, which constitutes 50% year-on-year growth (January-November 2022: ~9 lakh units).
• However, there are a few challenges on the way to rapid adoption of battery electrics at scale.
• Upfront Subsidy:
  • The experience in markets from Norway to the US and China shows that the electric push works only if it is backed by state subsidies.
  • An elaborate system of incentives is central to Norway’s EV policy, which has fostered the world’s most advanced EV market.
  • So, the government waives the high taxes it imposes on sales of non-electrics; it lets electric cars run in bus lanes; toll roads are free for electric vehicles; and parking lots offer a free charge.
  • The problem with this kind of overt subsidisation of EVs, especially in developing countries like India, is that much of the subsidy ends up in the hands of the middle or upper middle classes, who are typically the buyers of battery electric four-wheelers.
• Charging Stations:
  • An analysis by the World Bank has found that investing in charging infrastructure is between four and seven times more effective in ensuring EV adoption compared with providing upfront purchase subsidies.
  • Both Norway and China, while offering purchase subsidies, have seen faster adoption of EVs also as a result of sustained efforts at expanding the public charging infrastructure.
  • China, the leader in the number of publicly available chargers, accounts for 85% of global fast chargers and 55% slow chargers.
  • The situation in India is very different from these countries.
    • While the number of EVs had crossed 1 million by mid-2022 and will likely grow to 45-50 million by 2030, only about 2,000 public charging stations are currently operational across the country.
• Electricity Source:
  • In several countries that have pushed EVs, much of the electricity is generated from renewables — Norway, for example, has 99% hydroelectric power.
  • In India, the grid is still fed largely by coal-fired thermal plants.
  • Therefore, unless the generation mix changes significantly, India would be using fossil fuel generation to power EVs.
  • Theoretically, this would mean reduced tailpipe emissions in the cities, but continuing pollution from the running of the thermal plant.
• Value Chain:
  • As India struggles to make inroads into the global lithium value chain, there is discussion on the need to diversify the country’s dependency on Li-ion batteries in the EV mix.
  • The demand for Li-ion batteries from India is projected to grow at a CAGR of more than 30% by volume up to 2030, which translates to more than 50,000 tonnes of lithium requirement for the country to manufacture EV batteries alone.
  • However, more than 90% of the global Li production is concentrated in Chile, Argentina, and Bolivia, alongside Australia and China, and other key inputs such as cobalt and nickel are mined in the Congo and Indonesia.
  • India would, therefore, be almost entirely dependent on imports from a small pool of countries to cater to its demand.
  • While other options to Li-ion are being explored, viability remains a key factor.

World Wetlands Day is celebrated every year on 2 February.

• This day marks the date of the adoption of the Convention on Wetlands on 2 February 1971, in the
• Iranian city of Ramsar on the shores of the Caspian Sea.
• In 2024, India has increased its tally of Ramsar sites (Wetlands of International Importance) to 80 from existing 75 by designating 5 more wetlands as Ramsar sites.

The interim Budget, a ‘stop-gap’ arrangement, will be presented by Union Finance Minister of India on February 1 2024 as a full Budget will be presented in June-July.

• Definition – It is a shorter-term financial statement that allows for the smooth functioning of the government until a new administration can present a full budget for the entire fiscal year.

Budget or Annual financial statement is a statement of the estimated receipts and expenditure of the Government of India for a specific financial year according to Article 112 of the Indian Constitution.

• Need – In an election year, the incumbent Government cannot present a full Budget as there may be a change in the executive.
• Legality – There is no constitutional provision, so the Centre can seek the Lower House’s approval for the funds for the transition period via the vote on account provision.

• Convention – It has been the trend for outgoing governments to present an interim budget instead of a vote on account.
• Features – It will present the current state of the Indian economy, its fiscal status including India’s revised estimated growth in the next year and also detail the government’s planned and non-planned expenditure and receipts.
• The government is allowed to revise tax rates.

• In 2024 – India is likely go to polls in April-May, thus Interim Budget will be presented for the 1^st 4 months of this fiscal year.

If the Budget is not passed by the Lok Sabha, the Prime Minister and his Cabinet will have to resign.