What’s in today’s article?

• Background
• Awareness, Legislative Provisions and Initiatives Taken by the Government w.r.t. Tobacco
• Challenges Associated w.r.t. Curbing Tobacco Consumption
• Way Ahead

Background

• Tobacco is a major cause of preventable disease and death worldwide.
• It harms both users and those who grow it.
• With around 26 crore users, India has the second highest number of tobacco users after China.
• The health of over 60 lakh workers in the tobacco industry is also at risk due to skin absorption of tobacco.
• Tobacco farming harms the environment by depleting soil nutrients and causing deforestation.
• Processing tobacco requires a lot of wood, and its production generates a significant amount of waste.
  • Up to 5.4 kg of wood is required to process 1 kg of tobacco.
• In 2017-2018, the health impacts of tobacco cost India over ₹1.7 lakh crore, far exceeding the ₹48,000 crore health budget for that year.
• Additionally, cleaning up tobacco waste costs around ₹6,367 crore annually, not including the costs of soil erosion and deforestation.

Awareness, Legislative Provisions and Initiatives Taken by the Government w.r.t. Tobacco

• Framework Convention on Tobacco Control (FCTC)
  • Launched in 2005, the FCTC aims to reduce tobacco usage worldwide by helping countries develop demand and supply reduction strategies.
  • India is one of the 168 signatories of the WHO’s FCTC programme.
• COTPA Act, 2003
  • COTPA stands for Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply, and Distribution).
  • It has 33 sections governing the production, advertisement, distribution, and consumption of tobacco.
• National Tobacco Control Programme (NTCP)
  • India also launched the National Tobacco Control Program (NTCP) in 2007.
  • NTCP is designed to improve the implementation of COTPA and FCTC, improve awareness about the harms of tobacco use, and help people quit it.
  • Apart from these interventions, tobacco taxation — a globally accepted method to effectively control tobacco use — is also applied in India.

Challenges Associated w.r.t. Curbing Tobacco Consumption

• Poor Implementation of Existing Measures
  • Smokeless tobacco products often don't follow the packaging rules set by COTPA, and smuggled tobacco products are poorly regulated.
  • Fines for breaking these rules are outdated, with companies only facing a maximum fine of ₹5,000 for their first violation.
  • COTPA bans direct tobacco ads but is unclear about indirect ads, leading to surrogate advertisements.
• These ads use products like elaichi to promote tobacco brands indirectly.
• For example, during the ICC Men’s Cricket World Cup 2023, there were surrogate ads for two tobacco brands, endorsed by famous cricketers. These ads indirectly encourage tobacco use.
• NTPC’s Lack of Effectiveness
  • A 2018 study reported no significant difference in the reduction of bidi or cigarette consumption between NTCP and non-NTCP districts.
  • Possible reasons for this included insufficient staffing, resource allocation, and utilisation, and lack of effective monitoring mechanisms.
• Tax Evasion
  • The Indian government's attempts to tax tobacco have been hindered by tax evasion, such as buying tobacco in areas with lower taxes and illegal activities like smuggling, illicit manufacturing, and counterfeiting.
  • Tobacco taxes in India are low and haven't kept up with rising incomes, making tobacco products more affordable over the years.
  • A 2021 study found that cigarettes, bidis, and smokeless tobacco products had become more affordable in the past decade, and the shift to the Goods and Services Tax system made these products even cheaper.
  • Tax burden of 51% for cigarettes, 22% for bidis, and 64% for SLTs, much lower than the FCTC’s recommendation of at least 75% tax.

Way Ahead

• India has strong laws (COTPA, PECA, NTCP) to control tobacco use and production, but they need stricter enforcement.
• Additionally, tobacco taxes should be increased to match recommendations, inflation, and economic growth.
• The government can also help tobacco farmers switch to other crops, preventing job losses.
• Studies show that crops like jowar can be more profitable than tobacco.

Up-to-date data on tobacco use is essential to counter industry tactics and effectively control tobacco. Without this data, efforts to manage tobacco use will fall short.

Q1. Which is the best soil for Tobacco?

A majority of the tobacco is grown on loamy sand or sandy loam soils with an available water-holding capacity between 0.7 and 1.5 in. of water in the root zone.

Q2. Does tobacco naturally contain nicotine?

While nicotine naturally occurs in the tobacco plant itself, some tobacco products contain additives that may make it easier for your body to absorb more nicotine.

Source: The tobacco epidemic in India

What’s in today’s article?

• Why in News?
• What is Flight-Turbulence, its Types and Causes?
• Impact of Climate Change on Flight-Turbulence

Why in News?

• After a Singapore Airlines flight from London to Singapore was hit by sudden and severe turbulence over Myanmar, a Qatar Airways flight from Doha to Dublin encountered severe turbulence over Turkey.
• Though flights around the world experience varying degrees of turbulence on a daily basis, the recent incidents that result in serious injuries are rarer, pointing towards the impact of explosive growth in air traffic and climate change.

What is Flight-Turbulence, its Causes and Types?

• Meaning of flight-turbulence:
  • Turbulence is an irregular motion of the air resulting from eddies and vertical currents.
  • It may be as insignificant as minor bumps or severe enough to throw an airplane out of control or to cause structural damage.
  • Turbulence is associated with fronts, wind shear, thunderstorms, etc.
• Effects of flight-turbulence:
• Types of flight-turbulence:
  • Light turbulence momentarily causes slight changes in altitude resulting in slight bumpiness.
  • During moderate turbulence, aircraft may experience more notable changes in altitude and attitude, but the plane remains well under control.
  • In severe turbulence, there are significant and sudden changes of altitude and attitude, and the aircraft could momentarily go out of control.
  • In extreme turbulence, the plane is violently tossed about and is practically impossible to control.
• Causes of flight-turbulence:
  • Mechanical turbulence: It is the result of friction between the air and the ground - irregular terrain and man-made obstacles - that leads to formation of eddies.
  • Convective or thermal turbulence: It is caused when hot air from certain ground surfaces rises rapidly while cooler air descends, resulting in convective air currents. Frontal turbulence: It is caused by the friction between two opposing air masses and the lifting of warm air by the sloping frontal surface and is most common close to thunderstorms.
  • Wind shear: It is the change in wind direction/ wind speed (in temperature inversion areas, around jet streams, etc) over a specific horizontal or vertical distance.
    • Clear air turbulence (CAT), which can be sudden and severe and is extremely difficult to forecast or see, may be considered as a type of wind shear turbulence.

Impact of Climate Change on Flight-Turbulence:

• Findings of the study: According to some studies, climate change could make turbulence more frequent and severe.
• How can this be claimed?
  • Climate change is strengthening the jet streams that cause turbulence.
  • A large increase in CAT between 1979 and 2020 in the mid and aircraft cruising altitudes.
  • Over the North Atlantic, severe/ greater CAT durations increased by more than 55% over this period.
• Future predictions:
  • The frequency of severe turbulence would increase more than that of light or moderate turbulence.
  • Not only CAT, but also mountain wave turbulence and near-cloud turbulence will intensify due to climate change.

Q.1. What is the International Civil Aviation Organisation (ICAO)?

The ICAO is a United Nations agency which helps 193 countries to cooperate together and share their skies to their mutual benefit.

Q.2. What is the Directorate General of Civil Aviation (DGCA)?

The DGCA is a statutory body [under the Aircraft (Amendment) Act, 2020] of the Government of India to regulate civil aviation in India. It investigates aviation accidents and incidents, maintains all regulations related to aviation, etc.

Source: Qatar Airways flight suffers turbulence, at least 12 injured | IE

What’s in today’s article?

• Why in News?
• How does the RBI make money?
• Key highlights of the financial performance of RBI in FY 24

Why in News?

The Reserve Bank of India (RBI) reported a 17% increase in its FY24 income to ₹2,75,572.32 crore. Its balance sheet grew 11.07 per cent to Rs 70.47 lakh crore in the fiscal ended March 31, 2024.

How does the RBI make money?

• Interest on Loans and Advances:
  • To Commercial Banks
    • The RBI lends money to commercial banks and charges interest on these loans, typically through mechanisms like the repo rate.
  • To the Government
    • The RBI also provides temporary loans to the government through mechanisms like Ways and Means Advances (WMA).
    • WMA is a facility for both the Centre and states to borrow from the RBI.
    • These borrowings are meant purely to help them to tide over temporary mismatches in cash flows of their receipts and expenditures.
    • Section 17(5) of the RBI Act, 1934 authorizes the central bank to lend to the Centre and state governments subject to their being repayable “not later than three months from the date of the making of the advance”.
    • The interest rate on WMA is the RBI’s repo rate, which is basically the rate at which it lends short-term money to banks.
• Investments in Government Securities
  • The RBI invests in various government securities (bonds, treasury bills).
  • The interest earned on these investments constitutes a significant portion of its income.
• Foreign Exchange Operations
  • The RBI holds and manages India’s foreign exchange reserves.
  • It earns income from investing these reserves in foreign assets, such as US Treasury bonds and other high-quality foreign securities.
  • The RBI also profits from the buying and selling of foreign currencies.
• Issue of Currency
  • The RBI has the exclusive right to issue currency in India.
  • It earns seigniorage, which is the difference between the value of money and the cost to produce it.
• For instance, if it costs Rs. 1 to print a Rs. 200 note, the seigniorage profit is Rs. 199.
• Management of Government Accounts
  • The RBI acts as a banker to the government.
  • It manages the government’s accounts, collects taxes, and disburses payments. The RBI charges the government for these services.
• Fees and Commissions
  • The RBI charges fees and commissions for various services provided to the government, financial institutions, and the general public, such as managing public debt and conducting auctions of government securities.
• Open Market Operations (OMO)
  • The RBI buys and sells government securities in the open market.
  • Profits are made from the difference between the purchase price and the selling price of these securities.
• Earnings from Discount and Rediscount Operations
  • The RBI provides liquidity to commercial banks by rediscounting their bills and charging interest on these transactions.
• Penalties and Fines
  • The RBI imposes penalties and fines on banks and other financial institutions for non-compliance with regulatory requirements. This also contributes to its income.
• Miscellaneous Income
  • The RBI earns miscellaneous income from various other activities, including income from its subsidiary organizations, sale of data and publications, and other financial services.

Key highlights of the financial performance of RBI in FY 24

• Increase in balance sheet
  • The size of the RBI’s balance sheet increased by 11.08 per cent year-on-year (Y-o-Y) to Rs 70.47 trillion as of March 31, 2024 (FY24).
• The size of the balance sheet was Rs 63.44 trillion a year ago.
  • This increase is driven by its liquidity and foreign exchange (forex) operations.
  • The increase on the asset side was due to a rise in foreign investments (13.9 per cent), gold (18.26 per cent), and loans and advances (30.05 per cent).
  • On the liability side, the expansion was due to an increase in notes issued (3.88 per cent), deposits (27 per cent), and other liabilities (92.57 per cent).
• Balance sheet has now normalised to its pre-pandemic level
  • The bank’s balance sheet size grew to 24.1 per cent of gross domestic product at the end of March 2024 from 23.5 per cent at the end of March 2023.
  • The balance sheet has now normalised to its pre-pandemic level.
• The balance sheet of the central bank reflects activities carried out in pursuit of various functions, including the issuance of currency, monetary policy, and reserve management objectives.
• Surge in net income of RBI
  • The central bank’s net income surged by 141.22 per cent Y-o-Y for the financial year ended March 2024.
  • This is primarily due to a sharp reduction in expenditures, particularly lower provisions.
• RBI’s expenditure declined
  • The RBI’s expenditure declined by 56.29 per cent Y-o-Y to Rs 64,694.33 crore.
  • This included a provision of Rs 42,819.91 crore made and transferred to the contingency fund (CF).
  • The provision for CF is for unexpected and unforeseen contingencies.
  • It covers depreciation in the value of securities. It addresses risks from monetary or exchange rate policies.
  • It also handles systemic risks and other special responsibilities of the RBI.

• The amount is kept within the RBI.
  • In 2022-23 (FY23), the RBI had transferred Rs 1.3 trillion to CF.
• Amount transferred to the central government
  • The surplus transferred to the central government amounted to Rs 2.1 trillion in FY24, up from Rs 87,416.22 crore in FY23.

Q.1. What does Seigniorage mean?

Seigniorage is the difference between the face value of money—both paper bills and coins—and what it costs to produce it. Seigniorage may be counted as positive revenue for a government when the money it creates is worth more than it costs to produce.

Q.2. What are wage and means advances (WMA)?

The Reserve Bank of India (RBI) gives temporary loan facilities to the central and state governments. This loan facility is called Ways and Means Advances (WMA).

Source: RBI balance sheet grows 11.08% to Rs 70.47 trn in FY24, income up 17% | RBI | Indian Express | The Hindu