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Insights Daily Current Affairs, 19 December 2016



Insights Daily Current Affairs, 19 December 2016


Paper 2 Topic: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.


J&K has no sovereignty: SC


Snubbing the Jammu and Kashmir High Court for asserting the state’s “sovereignty” and “sovereign powers”, the Supreme Court has said J&K “has no vestige of sovereignty outside the Constitution of India”.

  • The court has also rejected the J&K High Court’s view that the J&K Constitution was equal to the Constitution of India.



The apex court judgement came on the appeal by State Bank of India (SBI) against the high court verdict which had held that the SARFAESI Act would collide with the Transfer of Property Act of Jammu & Kashmir, 1920. The court held that provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) are within the legislative competence of Parliament and can be enforced in Jammu and Kashmir.

Previously, Jammu and Kashmir High Court had held that any law made by Parliament, which affects the laws made by state legislature, cannot be extended to Jammu and Kashmir.


Other important observations made by the court:

The court observed, “Section 3 of the Constitution of Jammu & Kashmir, which was framed by a Constituent Assembly elected on the basis of universal adult franchise, makes a ringing declaration that the State of Jammu & Kashmir is and shall be an integral part of the Union of India. And this provision is beyond the pale of amendment. It is therefore wholly incorrect to describe it as being sovereign in the sense of its residents constituting a separate and distinct class in themselves. The residents of Jammu & Kashmir are first and foremost citizens of India and that there is no dual citizenship as is contemplated by some other federal Constitutions in other parts of the world.”

Underlining that the quasi-federal structure of the Constitution of India continues even with respect to J&K, the court said: “Article 1 of the Constitution of India and Section 3 of the Jammu & Kashmir Constitution make it clear that India shall be a Union of States, and that the State of Jammu & Kashmir is and shall be an integral part of the Union of India.” It said the J&K Constitution has been made to further define the existing relationship of the state with the Union of India as an integral part thereof.



This act allows banks and financial institutions to auction properties (residential and commercial) when borrowers fail to repay their loans. It enables banks to reduce their non-performing assets (NPAs) by adopting measures for recovery or reconstruction.


Key facts:

  • Upon loan default, banks can seize the securities (except agricultural land) without intervention of the court.
  • SARFAESI is effective only for secured loans where bank can enforce the underlying security. In such cases, court intervention is not necessary, unless the security is invalid or fraudulent. However, if the asset in question is an unsecured asset, the bank would have to move the court to file civil case against the defaulters.
  • The SARFAESI Act also provides for the establishment of Asset Reconstruction Companies (ARCs) regulated by RBI to acquire assets from banks and financial institutions.
  • The Act provides for sale of financial assets by banks and financial institutions to asset reconstruction companies (ARCs). RBI has issued guidelines to banks on the process to be followed for sales of financial assets to ARCs.
  • The provisions of this Act are applicable only for NPA loans with outstanding above Rs. 1lac. NPA loan accounts where the amount is less than 20% of the principal and interest are not eligible to be dealt with under this Act.


The Act provides three alternative methods for recovery of non-performing assets, namely:

  • Securitisation
  • Asset Reconstruction.
  • Enforcement of Security without the intervention of the Court.

Sources: the hindu.


Paper 2 Topic: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.


Single tribunal to arbitrate inter-State water disputes


The Centre has decided to set up a single, permanent Tribunal to adjudicate all inter-State river water disputes, a step which is aimed at resolving grievances of States in a speedy manner. This body will subsume existing tribunals.

  • Besides the tribunal, the government has also proposed to float some Benches by amending the Inter-State Water Disputes Act, 1956 to look into disputes as and when required. Unlike the tribunal, the Benches will cease to exist once the disputes are resolved.


Key facts:

  • The permanent tribunal will have retired Supreme Court judge as its chairperson.
  • There will be benches formed as and when required. The benches though will be wound up once a dispute is resolve.
  • Along with the tribunal, the amendment proposes to set up Dispute Resolution Committee (DRC). The DRC, comprising experts and policy-makers, is proposed to handle disputes prior to the Tribunal.
  • In order to give more teeth to the tribunal, it is proposed that whenever it gives order, the verdict gets notified automatically. Until now, the government required to notify the awards, causing delay in its implementation.



As per the current provisions of the 1956 Act, a tribunal can be formed after a state government approaches Union Government with such request and the Centre is convinced of the need to form the tribunal.

At present, there are eight tribunals, including those on Cauvery, Mahadayi, Ravi and Beas, Vansadhara and Krishna rivers.


Way ahead:

A decision to approve an amendment to the Act was taken at the recently held Union Cabinet’s meeting. The amendment is likely to be introduced in Parliament in its next session.

Sources: the hindu.


Paper 2 Topic: Important aspects of governance, transparency and accountability, e-governance- applications, models, successes, limitations, and potential; citizens charters, transparency & accountability and institutional and other measures.


EC seeks end to nameless donations


Seeking to stop financing of election campaigns using black money, the Election Commission has urged the government to amend laws to ban anonymous contributions of Rs. 2,000 and above made to political parties.


Present scenario:

There is no constitutional or statutory prohibition on receipt of anonymous donations by political parties. But there is an indirect partial ban on anonymous donations through the requirement of declaration of donations under Section 29C of the Representation of the People Act, 1951. But, such declarations are mandated only for contributions above Rs. 20,000.


What has the Election Commission proposed?

  • As per the proposal, sent by the commission to the government, and made part of its compendium on proposed electoral reforms, “Anonymous contributions above or equal to the amount of Rs. 2,000 should be prohibited.”
  • EC has also proposed that exemption of income tax should be extended only to political parties that contest elections and win seats in Lok Sabha or Assembly polls. Section 13A of the Income-Tax Act, 1961 confers tax exemption to political parties for income from house property, voluntary contributions, capital gains and other sources.
  • EC has also asked the Law Ministry to ensure that political parties are made to register details of donors for coupons of all amounts on the basis of a Supreme Court order of 1996.


Why this is necessary?

At present, only income under the head ‘salaries and income from business or profession’ are chargeable to tax in the hands of political parties in India. Utilizing this space, political parties are formed merely for availing of provisions of income tax exemption. Hence, to curb such moves EC has proposed these reforms.

Sources: the hindu.


Facts for Prelims


New Army and Navy Chiefs:

  • The government has announced Lt Gen Bipin Rawat as the next Chief of Army Staff. The appointment goes against the long held tradition of appointing the senior most eligible officer to the post.
  • Air Marshal B.S. Dhanoa, presently the Vice Chief of Indian Air Force (IAF) has been appointed the next Air Chief.


World’s first cloned goat with Cashmere:

  • The world’s first cloned goat bearing superfine Cashmere wool was recently born in north China’s Inner Mongolia Autonomous Region. The goat will be raised in a base for animal husbandry research.
  • The Cashmere fibre from the goat is less than 13.8 micrometers thick, much finer than the average of 15.8 micrometers grown by the famous Erlang Mountain goats in Inner Mongolia.
  • Cashmere wool is obtained from Cashmere goats and other types of goat.


China opens 1st fully-owned satellite ground station:

  • China has launched its first fully- owned overseas satellite ground station near the North Pole which could enable Beijing to collect satellite data anywhere on the Earth at a speed it said was the fastest in the world.
  • The facility, located in Sweden about 200 kms north of the Arctic Circle, would allow China to collect satellite data anywhere on Earth at speeds that were more than twice as fast as before.
  • The new facility would play an important role in China’s Gaofen project – a network of observation satellites orbiting the Earth to provide global surveillance capabilities – which was due to be completed in 2020.
  • Domestic ground stations have needed up to seven hours to download the data from satellites orbiting the Earth in the past, but with the facility in Sweden, the maximum delay for downloading data would be less than 3.5 hours. The shorter time is because the mapping, weather, reconnaissance and military satellites orbiting the North Pole are able to pass around the Earth about 12 times each day, while those flying over China can orbit the Earth only about five times each day.