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Insights Daily Current Events, 06 March 2015

Insights Daily Current Events, 06 March 2015

No cut in the coverage of National Food Security Act

The Union Minister of Consumer Affairs, Food and Public Distribution recently said that the Government has decided not to accept the recommendation of High Level Committee on restructuring of FCI regarding cut in the coverage of the National Food Security Act. He clarified that beneficiary coverage at the level of 67% as provided by the Nations Food Security Act would continue.

Background:

  • A high level committee was set up by the Government on 20th August, 2014 under the chairmanship of Shanta Kumar to look into the matters related to the restructuring of FCI.
  • The major issue before the Committee was how to make the entire food grain management system more efficient by reorienting the role of FCI in MSP operations, procurement, storage and distribution of grains under Targeted Public Distribution System (TPDS).

About National Food Security Act, 2013:

Also called as the Right to Food act, this act aims to provide subsidized food grains to approximately two thirds of India’s 1.2 billion people.

  • It extends to the whole of India.

Under the provisions of this act, beneficiaries are able to purchase 5 kilograms per eligible person per month of cereals at the following prices:

  • Rice at 3 Rupees per kg
  • Wheat at 2 Rupees per kg
  • Coarse grains (millet) at 1 rupee per kg.

Salient features:

  • 75% rural and 50% of the urban population are entitled for three years from enactment to five kg food grains per month at 3 Rupees , 2 Rupees, 1 Rupee per kg for rice, wheat and coarse grains (millet), respectively.
  • The states are responsible for determining eligibility.
  • Pregnant women and lactating mothers are entitled to a nutritious “take home ration” of 600 Calories and a maternity benefit of at least Rs 6,000 for six months.
  • Children 6 months to 14 years of age are to receive free hot meals or “take home rations”.
  • The central government will provide funds to states in case of short supplies of food grains.
  • The state government will provide a food security allowance to the beneficiaries in case of non-supply of food grains.
  • The Public Distribution System is to be reformed.
  • The eldest woman in the household, 18 years or above, is the head of the household for the issuance of the ration card.
  • There will be state- and district-level redress mechanisms and State Food Commissions will be formed for implementation and monitoring of the provisions of the Act.
  • The poorest who are covered under the Antodaya yojana will remain entitled to the 35 kg of grains allotted to them under the mentioned scheme.

The cost of the implementation is estimated to be $22 billion(1.25 lac crore), approximately 1.5% of GDP.

Sources: PIB, ET, Prsindia.org.

 

 

 

Maharashtra scraps Muslim quota

The Maharashtra government has officially scrapped the five per cent reservation for Muslims in educational institutions, despite a Bombay High Court ruling in its favour. The government has also said that admissions in educational institutions and jobs already granted under the quota would be protected.

  • The previous government had announced reservation in education and jobs for Marathas (16%) and Muslims (5%) ahead of the Assembly polls in October 2014.
  • This was challenged in court through several petitions. Eventually, the court scrapped the reservation altogether for Marathas, but allowed it for Muslims in education alone.
  • The Maharashtra state government had challenged the Bombay High Court order in the Supreme Court, which refused to interfere with the interim decision of the High Court but asked the Maharashtra state government to go back to the Bombay High Court on the issue.

Why was it scrapped?

The government says that the Muslim quota in educational institutions was scrapped because the ordinance granting it had lapsed on the penultimate day of the Winter Session of the Assembly.

Reservations in Maharashtra:

  • The demand for reservation for Muslims in Maharashtra was based on the findings of various government panels, primarily the Sachar and the Mehmood-ur-Rehman committees.
  • The reports found that Muslims make up around 10-12% of Maharashtra’s population, but have little presence in government jobs and educational institutions. Unemployment was high among its youth and they were often subjected to bias, official apathy and police brutality.
  • Around 60% of urban and rural Muslims in Maharashtra live below the poverty line (BPL), and just about 25% of them are marginally above the poverty line. The Mehmood-ur-Rehman committee had recommended for 8-10% reservation in government jobs.
  • Reservation for Marathas has been highly contested and their claims of backwardness fiercely debated.
  • The 22nd report of the Maharashtra State Commission for Backward Classes, headed by Justice R.M. Bapat, rejected their demand for reservation. That view has been endorsed by numerous other experts.

Sources: The Hindu.

 

 

Investors rue absence of triple E status for NPS

The Union budget recently proposed an additional tax deduction of Rs.50, 000 for investments in National Pension Scheme (NPS) under Section 80 CCD, with a view to giving a major boost to the new pension scheme.

  • This will be over and above the deduction of Rs.1.5 lakh available under Section 80C of the Income-Tax Act.
  • This is a welcome move to rope in more investors into NPS.

However, investors are disappointed. For, the accumulated investment in NPS will continue to be taxable at the time of withdrawal. The government has not made investments in NPS tax-free at the time of withdrawal. The accumulated corpus at the time of withdrawal will continue to be taxable.

  • Experts also say that the absence of EEE (triple E) status for NPS was preventing faster enrolment into the scheme.

 

 

What is EEE status?

  • Employee Provident Fund (EPF) and PPF schemes enjoy this status.
  • EEE status (exempt-exempt-exempt in income-tax jargon) refers to the money that is deposited in EPF or PPF schemes and is exempt from income-tax under Section 80C.
  • Any interest or returns earned during the accumulation phase is also exempted from income-tax Also, during withdrawal (after maturity), the money one gets is also exempted from income-tax.

Currently, NPS has more than 80 lakh subscribers with total asset under management of over Rs.76,000 crore.

About National Pension System:

The NPS was launched on 1st January, 2004 with the objective of providing retirement income to all the citizens. NPS aims to institute pension reforms and to inculcate the habit of saving for retirement amongst the citizens.

  • Initially, NPS was introduced for the new government recruits (except armed forces). With effect from 1st May, 2009, NPS has been provided for all citizens of the country including the unorganised sector workers on voluntary basis.
  • Additionally, to encourage people from the unorganised sector to voluntarily save for their retirement the Central Government launched a co-contributory pension scheme, called ‘Swavalamban Scheme’.
  • Under Swavalamban Scheme, the government will contribute a sum of Rs.1,000 to each eligible NPS subscriber who contributes a minimum of Rs.1,000 and maximum Rs.12,000 per annum.
  • The subscriber will be allotted a unique Permanent Retirement Account Number (PRAN). This unique account number will remain the same for the rest of subscriber’s life. This unique PRAN can be used from any location in India.

PRAN will provide access to two personal accounts:

  1. Tier I Account: This is a non-withdrawable account meant for savings for retirement.
  2. Tier II Account: This is simply a voluntary savings facility. The subscriber is free to withdraw savings from this account whenever subscriber wishes. No tax benefit is available on this account.

Sources: The Hindu, Wiki, india.gov.in.

 

 

DBTL scheme PaHaL enrolls 80% LPG consumers in Guj

The Direct Benefit transfer of LPG (DBTL) scheme Pratyaksh Hanstantrit Labh (PaHaL) has now seen penetration among 80% of the total active LPG consumers in Gujarat.

  • The success of the scheme is a result of an intensive information education campaign comprising of advertising through various means and directly reaching out to consumers, several innovative measures such as guardian officers for each district, deployment of technology by use of SMS, and a single window portal to enable consumers to join the scheme.

PaHaL scheme:

Pratyaksh Hanstantrit Labh (PaHaL) aims to reduce diversion and eliminate duplicate or bogus LPG connections. Under PaHaL, LPG cylinders are sold at market rates and entitled consumers get the subsidy directly into their bank accounts. This is done either through an Aadhaar linkage or a bank account linkage.

  • The scheme has witnessed massive enrolment in a short span of time.
  • The scheme will cover over 15.3 crore consumers across 676 districts of the country. Currently over 6.5 crore consumers i.e. 43% have already joined the scheme and will receive subsidy in their bank account.
  • It has also has put in place various mechanisms to simplify enrolment and enhance consumer convenience, and thus, only 1.09 lakh complaints have been received so far, which constitute a mere 0.1% of the transactions. Over 85% of the complaints have been resolved.
  • Preliminary data from 54 districts indicate that the growth of subsidised LPG has reduced significantly accompanied by a corresponding increase in sale of commercial LPG. This indicates that the scheme will enable substantive savings in subsidy which can then be deployed for other productive purposes, without reducing any entitlements of existing consumers.
  • The success of the scheme is a result of an intensive Information Education Campaign comprising advertising through various means, direct reaching out to consumers, and dealer level campaigns.
  • DBTL is designed to ensure that the benefit meant for the genuine domestic customer reaches them directly and is not diverted. By this process public money will be saved.

Sources: PIB, BS.

 

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