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SECURE SYNOPSIS: 05 May 2017

 


SECURE SYNOPSIS: 05 May 2017


NOTE: Please remember that following ‘answers’ are NOT ‘model answers’. They are NOT synopsis too if we go by definition of the term. What we are providing is content that both meets demand of the question and at the same time gives you extra points in the form of background information.


General Studies – 1;


Topic:  Modern Indian history from about the middle of the eighteenth century until the present- significant events, personalities, issues 

1) Examine why the 1957 Kerala Agrarian Relations Bill is hailed as landmark event. What socio-economic impact this Bill had? Examine. (200 Words)

The Hindu

Introduction-

Kerala has always been a land hungry state of India. The level of development the state has in terms of Human resource and economic income, the land crunch is very high since historical times. Agricultural patters, commercialization of Agriculture and migration patterns has created long term decisive impacts on the land relations in Kerala. 

Background of Land related aspects in Kerala

  • Under the conventional land relations of the State there existed various classes of agrarian community such as petty landowning farmers who directly involved in agricultural production, landless farm laborers or primary producers, cultivators of pattom land, and medium level landholding groups who were engaged in agrarian operations by hired labour.
  • The East India Company commercialized native land and agriculture for profit. Hitherto, land was considered social wealth and agriculture was based on ritualistic and reciprocal relations. The social relations of the day fixed the median for the distribution of the surplus. The socio-economic relations prior to the arrival of the Company were pre-capitalistic and hence the idea of absolute ownership of land did not prevail.
  • Through various land settlements, the Company assigned the land to several individuals and families with unquestionable ownership right through title deeds so as to facilitate collection of land revenues.
  • This was the beginning of the impoverishment of various marginalized and weaker sections in the society. It resulted in unequal social relations. That is why the crisis of land rights came to the forefront of the national movement.
  • Long before independence, an equitable land distribution was a major political concern. That is why almost all political parties adopted the maxim “farm land for farmers”. But after independence, most political parties diluted this dictum. Above all, they miserably failed to identify the actual farming community. Thus, the traditional farm labour classes, particularly from SC communities, even after the much applauded land reforms, remained in the old socio-economic structure.

Importance of Kerala Land Reform Act of 1957:

Main objectives

  1. To bestow on tenants ownership of a minimum of ten cents of land
  2. To end the old feudal relations by legitimising the right of real peasants to own the land they cultivate
  3. To introduce land ceiling and distribute excess land among the landless agricultural labourers
  4. To abolish exploitation and inequalities in the agrarian sector
  5. To ensure the consistent progress and transformation of society
  6. To achieve economic development and modernisation
  7. To end the era of feudalism.

Prior to the Kerala Land Reform Act of 1957, the land owning pattern of the State was more feudalistic. Land ownership was classified under janmam, otti, pattom, etc., by which the big landowners [janmi] had nothing to do with actual agricultural operations but were the chief beneficiaries of the yield.

Even before the formation of the State of Kerala, there had been endeavors at land reforms; the Restriction on Possession and Ownership of Lands Bill, 1954, being the best example for the same.

After the formation of the State of Kerala the first major achievement was the Kerala Agrarian Relations Bill, 1957 which was passed on October 15, 1960. This Act was repealed in 1961 and was substituted by The Kerala Land Reforms Act, 1963.

This act had provisions relating to the fixation of ceiling on land holdings, the vesting of lands in excess of the ceiling in Government, Assignment of surplus lands, abolition of tenancy system, assignment of proprietary right on land to the cultivating tenants, the conferment of the right on Kudikidappukars to purchase land and the constitution of a Kudikidappukars Benefit Fund.

Impacts

  1. Leasing of land became unlawful.
  2. The Jenmis who lived by collecting lease became extinct.
  3. The lease holders were given ownership of the land.
  4. A few big farmers who had cultivated on the leased lands also became owners of that land.
  5. Land owners sold their excess land.
  6. Hundreds of thousands of people got dwelling places of their own.
  7. The labour market was enlarged as former serfs entered it.

Conclusion-

The Agrarian Relations Bill introduced in 1957 was passed with minor amendments. The legislature passed subsequent land reform bills in 1960, 1963, 1964, and 1969. But the historical land reform act, which put an end to the feudal system and ensured the rights of the tenants on land, came into force on 1 January 1970. However, cash crop plantations had been exempted from its purview. There have been many amendments to the act since, the latest having been in 2012.

 


General Studies – 2


Topic:  Important International institutions, agencies and fora- their structure, mandate. 

2) Write a critical note on Agenda 2030, which was adopted in the United Nations General Assembly by member states on September 25, 2015. Also examine process involved in Voluntary National Reviews (VNR) vis a vis India. (200 Words)

The Hindu

Introduction-

The Sustainable Development Goals (SDGs), officially known as transforming our world: the 2030 Agenda for Sustainable Development is a set of 17 “Global Goals” with 169 targets between them. The Resolution is a broader intergovernmental agreement that acts as the Post 2015 Development Agenda (successor to the Millennium Development Goals).Agenda 2030, a comprehensive development agenda, was adopted in the United Nations General Assembly by member states on September 25, 2015. It is ambitious to address several socioeconomic concerns and make the development process inclusive. The voluntary national reviews aim to facilitate the sharing of experiences, including successes, challenges and lessons learned, with a view to accelerating the implementation of the 2030 Agenda.

SDG forms a right balance between economic development, poverty eradication, gender equality, environment protection etc.  SDG follows an action based approach which makes their effectiveness remarkable on the ground.

global goals

The outcome document further specifies that the development of SDGs should:

  • Be useful for pursuing focused and coherent action on sustainable development
  • Contribute to the achievement of sustainable development
  • Serve as a driver for implementation and mainstreaming of sustainable development in the UN system as a whole
  • Address and be focused on priority areas for the achievement of sustainable development.

There are various concerns and issues that are being voiced both by the governments as well as various organizations and NGOs. Some of these are –

  • Language: Although goals look plain English, but targets are written very lengthy and having complex words. It can be easily misinterpreted either intentionally or by mistake.
  • Number: MDG had 8 goals, 18 targets and 53 indicators, while SDGs has 17 goals, 169 targets and indicators yet to be released but we can hope of some 500+ indicators!! No need to mention the complexity it will invite.
  • Data: For a country like India, lack of reliable data is huge concern. Mid-term assessment, continuous updating gets a setback. And in case of SDGs, getting data for all is simply not possible.
  • Fund: Major focus of SDGs is poverty, which is concentrated in developing or LD countries and they don’t have money to deal with that, and developed countries are reluctant to contribute.
  • 17 goals are too many goals and it might be difficult for a country to implement all these.
  • There is an issue regarding funding of these goals as huge amount of capital will be required to finance these projects.
  • Monitoring of these goals will be an issue and for this a separate and independent monitoring agency needs to be established.

On the bright side these goals are all encompassing and will provide for a better and sustainable future for the world. Need of the hour is that targets are set realistic lay such that they are achievable and funding should be made available with the help of International Financial Institutions like world bank, ADB, NDB and AIIB. And there should be greater international cooperation to achieve these targets.

The process in India

  • The voluntary national reviews (VNRs) aim to facilitate the sharing of experiences, including successes, challenges and lessons learned, with a view to accelerating the implementation of the 2030 Agenda. The VNRs also seek to strengthen policies and institutions of governments and to mobilize multi-stakeholder support and partnerships for the implementation of the Sustainable Development Goals.
  • In India, the process is led by NITI Aayog, Research and Information System for Developing Countries, a think tank attached to Ministry of External Affairs, and the Ministry of Statistics and Programme Implementation. Consultations on the larger agenda of SDGs and on particular themes such as gender are being held by inviting civil society, private groups and other stakeholders at the national and State levels. The outcome will be fed to the process of making the VNR.
  • The crucial aspect of the whole process is the active participation of the voluntary organisations in VNR process. The challenges such as Data collection and efficient monitoring needs to be addressed by involvement of all the stakeholders linked with the process.

 


Topic:    Issues relating to development and management of Social Sector/Services relating to Health,

3) What do you understand by Advance Care Directives? Discuss its legal status in India. (200 Words)

The Hindu

Wikipedia

Advanced Care Directives-

An advance healthcare directive, also known as living will, personal directive, advance directive, medical directive or advance decision, is a legal document in which a person specifies what actions should be taken for their health if they are no longer able to make decisions for themselves because of illness or incapacity.

A living will is one form of advance directive, leaving instructions for treatment. Another form is a specific type of power of attorney or health care proxy, in which the person authorizes someone (an agent) to make decisions on their behalf when they are incapacitated. People are often encouraged to complete both documents to provide comprehensive guidance regarding their care, although they may be combined into a single form. 

Legal status in India-

  • There is no clear law about Advance Care Directives in India till date. Further In India, the law is not clear as to when a person really dies. Section 46 of the Indian Penal Code defines ‘death’ as the ‘death of a human being’. Section 2(b) of the Registration of Births and Deaths Act, 1969 does not recognise brain stem deaths.
  • So, hospital authorities continue to sustain the patient till his heart ceases to beat. But the Transplantation of Human Organs Act, 1994 says that if a person is willing to donate his organs, his brain stem death is certified and recognised.
  • Therefore some petitioners have moved the Supreme Court for the right of a person to plan the course of his own treatment or Advance Care Directives, to avoid being subjected to any kind of medical treatment which violates both physical and personal dignity during the last moments of life. This also includes the right to choose to not seek to receive and obtain any kind of medical treatment.
  • The proposed draft law of Medical Treatment of Terminally Ill Patients (Protection of Patients and Medical Practitioners) Bill only addresses the issue of euthanasia and not the right of a person to refuse treatment under Article 21 (right to life) of the Constitution.
  • The right to life entails the right to decide one’s future medical care in the advent of a terminal illness. Nobody can insist upon [the] patient taking invasive treatment in preference to alternative medication. Equally, it is entirely upon a person to decide whether to take any treatment at all.
  • The petitioners argued how the fundamental right to choose one’s medical treatment or even to decide to deny oneself any treatment is confused with euthanasia or other forms of attempts to suicide. “It is submitted even if the result of not taking treatment is enhanced likelihood of death (for nobody can predict with certainty) it does not amount to an attempt to commit suicide if a person who is affected with illness, declines treatment,” the petition said.
  • They contended that as long as a person has the capacity to decide, it is the will of the patient and that alone should decide treatment, the extent of the treatment, the form of the treatment and also the right to completely refuse any kind of treatment. Equally, a patient has the right to terminate at any point of time treatment which he considers unacceptable for any reason.

Petitioner wanted the Supreme Court to judicially declare a legal framework for Advance Care Directives. A bench led by Chief Justice of India J.S. Khehar has asked the Ministry of Health to consider their petition.

 


General Studies – 3


Topic: Indian economy – growth

4) In the light of NPA problems being faced by the Indian banking sector, suggest ways to strengthen the banking sector. (200 Words)

The Indian Express

Introduction :- India’s banking sector has been under stress from a considerable amount of time. Given the growth of financial institutions today and the current growth rate of our economy, we need to improve its health. Suggestions to strengthen the banking sector are as follows

  • Robust evaluation of loans: The fundamental reason behind rising NPAs is lack of robust evaluation of debtor before advancing loans. Moreover, periodic AQR- Asset Quality Review should be undertaken.
  • Capital:Banks need to find multiple avenues to raise their capital especially to meet BASEL-3 Capital Adequacy Ratio
  • Asset Recovery Mechanism: Needs to be strong. DRT,SARFARESI Act and ARCs have not been able to perform effectively
  • Management:The political interference in coercing public sector banks to lend difficult to recover loans for populist measures and lack of professionalism in appointing heads need to be addressed.
  • A special Bank association which only work in the field of debt recovery, policy making, and implementation wing.
  • Autonomy of banks specially the central bank Reserve bank of India needs to be assured in order to let it work effectively and efficiently without political interference.
  • Most foreign banks face huge constraints on their ability to expand and some – including Barclays and RBS – are scaling back as a result.

STEPS FOR PERTICULAR BANKS:-

  • MSMEs: They can be strengthened by providing more support and enabling them to access credit, expertise and technology easily so that they can act as growth engines of the economy.
  • Old Private Sector banks: With proven records and relatively lesser NPA on their balance sheets can be helped out by the government to steady their finances.
  • NBFCs: They have proliferated in number but not impact like financial inclusion etc have to be regulated more stringently.
  • Small and Payment banks: rules which are stifling their development (like invest only in govt bonds etc) have to be redesigned to stimulate growth.
  • Public banks: They have to be bought under companies act, government interference and ownership should be reduced as per recommendations of PJ Nayak committee.
  • Cooperative banks: which suffer from systemic issues should be re looked at via legislation.
  • National Housing Bank: and such other possibly obsolete institutions should be assessed, evaluated and merged with larger entities.

BASEL recommendations for strengthening banking sector:-

  • Better coverage of banks’ risk exposures, including for trading book, securitisation, and derivative activities;
  • More and higher quality capital to back these exposures;
  • Countercyclical capital buffers and provisions that can be built up in good times and drawn down in stress;
  • The introduction of a non-risk based measure to supplement Basel II and help contain leverage in the banking system;
  • Higher liquidity buffers;
  • Stronger risk management and governance standards;
  • More regulatory focus on system-wide or “macroprudential” supervision; and
  • Greater transparency about the risk in banks’ portfolios.

Additional information NPA:-

When the borrower stops paying interest or principal on a loan, the lender will lose money. Such a loan is known as Non-Performing Asset (NPA). Indian Banking industry is seriously affected by Non-Performing Assets.

A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.

Banks are required to classify NPAs further into Substandard, Doubtful and Loss assets.

  • Substandard assets: Assets which has remained NPA for a period less than or equal to 12 months.
  • Doubtful assets: An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months.
  • Loss assets: As per RBI, “Loss asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted, although there may be some salvage or recovery value.” 

 

Status of NPA:

NPA problem is one of the most severe plaguing the Indian Banking sector posing questions over the stability of Indian Banking System. Raghuram Rajan, the ex Governor of RBI has identified the NPA problem as a major challenge facing the Indian Banking Sector. The problem which was largely hidden earlier as Banks used to do window dressing of their account statement has now come to the forefront after Rajan exhorted the banks to clean up their asset books by March 2017. Resultantly this led to 29 public sector banks writing off Rs1.14 Lakh Crore of bad debts between 2013 -2015, much more than what they had done in the preceding 9 years.

  • The gross bad loans of 39 listed Indian banks, in absolute term, rose 92% in fiscal year 2016 to Rs.5.79 trillion even as after provisioning, the net bad loans more than doubled to Rs.3.38 trillion.
  • In percentage terms, the average gross non-performing assets (NPAs) of this group of banks rose from 4.41% of loans in 2015 to 7.91% in 2016; net NPAs in the past one year rose from 2.45% to 4.63%.
  • Public sector banks, which have close to 70% market share of loans, are more affected than their private sector peers. Two of them have over 15% gross NPAs and an additional eight close to 10% and more.
  • If we include restructured loans as well as those loans that have been written off, the total stressed assets could be as much as one-fourth of loans, at least for some of the government-owned banks.

 

Impact of NPAs on Banks:

 

  • Banks have to adhere to the provisioning norms set by RBI for the bad loans which eats into their profitability. This leads to banks having lesser capital to deploy, shareholders losing money and banks finding it tough to survive in the market
  • If banks do not classify an asset as NPA, they naturally have more money to advance to earn interest income on. If large NPAs goes unreported, the bank could reach a situation, where it has advanced more money than it has available leading to a situation of technical bankruptcy.
  • In light of attaining the Bessel norms, the burden on maintaining Capital Adequacy Ratio increases
  • It also affects the competitive position of banks
  • For economy, it is disadvantageous as banks become more circumspect in giving loans which affect the credit offtake in economy. India is still an economy which is largely dependent on banks to raise capital as the bond market is not that well developed. This leads to declining Gross Capital Formation affecting economic growth.
  • Rising of NPAs will lead to a crisis of confidence in the market. The price of loans, i.e. the interest rates will shoot up. Shooting of interest rates will directly impact the investors who wish to take loans for setting up infrastructural, industrial projects etc. 
  • It will also impact the retail consumers like us, who will have to shell out a higher interest rate for a loan. 
  • This will hurt the overall demand in the Indian economy which will lead to lower growth rates and of course higher inflation because of the higher cost of capital.
  • The trend may continue in a vicious circle and deepen the crisis.

bad loans raising

Reasons for growth

  • Governance Issues
  • Diversion of funds by companies for purposes other than for which loans were taken
  • Due diligence not done in initial disbursement of loans. Eg: loans given to road sector even before acquisition of land by the contractors. Agreed to TPCs (Total project costs) much higher than assessed by NHAI.
  • Inefficiencies in post disbursement monitoring of the problem
  • Restructuring of loans done by banks earlier to avoid provisioning. Post crackdown by RBI, banks are forced to clear their asset books  which has led to sudden spurt in NPAs
  • During the time of economic boom, overt optimism shown by corporates was taken on face value by banks and adequate background check was not done in advancing loans
  • In the absence of adequate governance mechanism, double leveraging by corporates, as pointed out by RBI’s Financial Stability Report, is also a reason for increasing bad loans
  • RBI Governor Rajan has pointed to the prevalence of “riskless capitalism” wherein time of economic swing, the corporate make hay, but when they face problems, resort to legal route, leveraging etc leading to problems galore for the banks
  • Economic Reasons
  • Economic downturn seen since 2008 has been a reason for increasing bad loans
  • Global demand is still low due to which exports across all sector has shown a declining trend for a long while now
  • In the case of sectors like electricity, the poor financial condition of most SEBs is the problem; in areas like steel, the collapse in global prices suggests that a lot more loans will get stressed in the months ahead. Other stressed sectors include infrastructure, textiles and mining
  • Other stressed sectors include infrastructure, textiles and mining
  • Economic Survey 2015 mentioned over leveraging by corporate as one of the reasons behind rising bad loans
  • Political reasons
  • Policy Paralysis seen during UPA 2 regime affected several PPP projects and key economic decisions were delayed which affected the macroeconomic stability leading to poorer corporate performance
  • Crony capitalism is also to be blamed. Under political pressure banks are compelled to provide loans for certain sectors which are mostly stressed
  • Resolution issues
  • In the absence of a proper bankruptcy law, corporate faced exit barriers which led to piling up of bad loans
  • Corporates often take the legal route which is time consuming leading to problems for the banks
  • Traditional solution
  • Appointment of nodal officers in banks for recovery at their head office, zonal office
  • Thrust on recovery of loss assets by banks
  • Close watch on NPA by picking up early warning signals and ensuring corrective action
  • Directing state level bankers to be more proactive in resolving issues with state govt
  • Designating ARC as resolution agent of banks

Laws relating to NPA and Bankruptcy

  • SARFAESI– The Act empowers Banks/ Financial Institutions to recover their NPAs without the intervention of the court, through acquiring and disposing secured assets without the intervention of the court in case of outstanding amounts greater than 1 lakh. SARFAESI, it is accused, has been used only against the small borrowers primarily from MSME sector
  • Recovery of Debts Due to Banks and Financial Institutions (DRT) Act: The Act provides setting up of Debt Recovery Tribunals (DRTs) and Debt Recovery Appellate Tribunals (DRATs) for expeditious and exclusive disposal of suits filed by banks / FIs for recovery of their dues in NPA accounts with outstanding amount of Rs. 10 lac and above. DRTs are overburdened leading to slow disposal of cases  
  • Lok Adalats:  Section 89 of the Civil Procedure Code provides resolution of disputes through ADR methods such as Arbitration, Conciliation, Lok Adalats and Mediation. Lok Adalat mechanism offers expeditious, in-expensive and mutually acceptable way of settlement of dispute
  • Under banking regulation act 1949, RBI is empowered to monitor the asset quality of banks by inspecting record books

Solutions proposed by RBI:

  • Restructured standard account provisioning has been increased to 5% making it easier for banks to go for restructuring. On the flip side, this has the potential to enhance tendency of evergreening of loans
  • RBI has directed banks to give loans by looking at CIBIL score and is encouraging banks to start sharing information amongst themselves. This is to deal with cases of information asymmetry. RBI has directed banks to report to Central Repository of Information on Large Credit (CRILC) when principle/interest payment not paid between 61-90 days
  • RBI has asked banks to conduct sector wise/activity wise analysis of NPA
  • SEBI has eased norms for banks to convert debt of distressed borrowers into equity
  • 5/25 scheme
    • For existing and new projects greater than 500 crores and also for existing projects which have been classified as bad debt or stressed asset, bank can provide longer amortization periods of 25 years with the option of restructuring loans every 5 or 7 years
    • The advantage of this scheme is that it provides for longer lending period with inbuilt flexibility. Shorter lending periods leads to companies stretching their balance sheet to pay back loans
    • From bank’s point of view it is helpful as freshly restructured asset is considered as bad debt and requires 15% provisioning by banks against such loans leading to erosion of profitability for banks
  • Strategic Debt Restructuring Scheme
    • This scheme provides for an alternative to restructuring. Wherever restructuring has not helped, banks can convert existing loans into equity. The scheme provides for creation of Joint Lenders Forum which is to be given additional powers with respect to
      • Management change in company getting restructured
      • Sale of non core assets in case company has diversified into sectors other than for which loans were guaranteed
      • Decision by JLF on debt restructuring by a majority of 75% by value and 60% by number
    • On the positive side, willful defaulters are dissuaded as they fear the loss of their company
    • However there are several issues with the scheme
      • Banks do not have expertise of managing companies
      • The Joint Lenders Forum mechanism has an inherent conflict between large banks and small lenders. The large banks have huge exposure and thus they want to restructure the loans so as to avoid provisioning. The smaller lenders fear arm twisting by large banks. Since they have less exposure they are unwilling to throw good money after bad and prefer to sell their exposure to ARCs as HDFC did in case of Essar Steel
    • Assessment of SDR
      • SDR is not performing too well. Of the 21 cases in which SDR has been invoked, only 4 have been closed. The problems are:
        • Difficulty in finding buyers
          • Buyers demanding prices that are unacceptable 
          • Creditor’s concern over their source of funding and credibility 
          • In the absence of potential buyers, bank wouldn’t want to hold onto these assets indefinitely. Unless and until a mechanism is devised which charts out a course of what to do thereafter, it doesn’t make much sense to do this conversion 
        • Disagreement over valuations 
          • Banks not willing to take severe haircuts 
          • Problem particularly acute in the infra sector where the valuations have drastically declined over the past 2-3 years 
        • Choice of merchant bankers used in SDR Process has a huge impact on the pace of the process. Quick resolution is necessary as otherwise provisioning for bad loans eats a major chunk of the bank’s profit
      • Scheme for sustainable structuring of stressed assets – This allows banks to split the stressed account into two heads – a sustainable portion that the bank deems that the borrower can pay on existing terms and the remaining portion that the borrower is unable to pay(unsustainable). The latter can be converted into equity or convertible debt giving lenders a chance to eventually recover funds if the borrower is unable to pay. The Scheme will help those projects which have started commercial operations and have outstanding loan of over Rs 500crore. Banks will also need to set aside higher provisions if they choose to follow this route.
        • Advantages of new scheme
          • To help restore credit flow to stressed sectors such as steel etc as credit lending condition have been eased in the scheme 
          • Banks can rework their stressed accounts under the oversight of an external agency. This means greater transparency in functioning of banks. This is a provision of the scheme itself. Banks had earlier complained of activism by investigative agencies in probing bad debt which made it difficult for them to go for restructuring in even genuine cases 
          • This scheme would not only strengthen the lenders’ ability to deal with stressed assets, but would also put real assets back on track, benefitting both banks and the promoters of troubled entities.
        • Challenges
          • Evergreening of loans by banks  
          • Distinction between sustainable and unsustainable debt might lead to problems later on 
          • In its current form, S4A favours promoters more than banks as banks have to provide for the loss of interest from their profit, while promoters get away with lower interest payment
          • The scheme can only be used for operational projects. Banks cannot reschedule or reprice the debt that is remaining after converting part of it into equity. Also, they have to assess the sustainable portion of the debt based on current cash flows rather than any future projection of cash flows. Due to this, many firms would not be able to do much for some power projects which are still under implementation.
          • It also does not allow for banks to change the terms and conditions of the loan. This would mean that not too much support to the sustainable part of the debt can be extended.
          • Another concern could be the high level of equity dilution that may result from a scheme of this nature. This could be negative for shareholders and may also reduce the incentive for promoters to actually turn around the company.

Measures announced by government

  • Government has announced recapitalization of the bank to the tune of 70000crore. However, given the situation, this amount is grossly inadequate. Government will have to find a way to increase the capital it provides to state-owned banks. An upfront capital infusion, along with reforms to ensure its proper usage, is the best way to reduce the pain of the bad loan clean-up.
  • Finance Minister has recently mentioned setting up of stressed asset fund in association with banks that can provide equity or debt capital
    • It  is different from an ARC as the assets would remain on the books of the banks whereas ARC transfer the acquired assets to one or more trusts at the price at which financial assets were acquired from the originator
    • A different mechanism from ARC has been proposed as experiences so far say that setting up yet another ARC is pointless. There are a number of existing ARCs in the market, and many large global funds are planning to enter the segment. Among these, many are bank-sponsored ARCs. They have done little good because the banks and the ARCs have failed to agree on the price at which assets are to be sold. Besides, the recovery track record of ARCs has been modest at best.

 

Topic:Various Security forces and agencies and their mandate ; Role of external state and non-state actors in creating challenges to internal security

5) It is argued that there is a need to restore the primacy of the uniformed forces in society, especially in Kashmir, by concerted effort, at all levels to bring the situation in Kashmir under control. Do you agree with this line of argument? Critically comment. (200 Words)

The Indian Express

Introduction :- Long-term deployment of soldiers inevitably leads to friction with local communities. In Kashmir, uniformed forces have played important role in maintaining peace at the same time the tensions have been heightened by the failure of the government to curb their role and sanction them for their misbehaving like human rights violations, sexual offences.

  • The primacy of uniformed forces in society is needed to be established in order to bring the much needed peace and stability.
  • Army role is crucial from insulating societies like Kashmir from both internal non state threats and external state sponsored terrorism.
  • Force must be repealed by force. Going by this principle uniformed forces assumes crucial importance

However such role of army and dependence on uniformed forces to bring situation in Kashmir under control is largely being criticised and other approaches are being explored:-

  • There must be a consensus amongst political parties on the national narrative; national and state political leaders need to speak in unison. This will lend clarity of thought and direction to the people in the Valley while strengthening the hand of the elected leaders and governmental agencies.
  • The local leadership needs to interact at the grassroots with village and urban elders and teachers, so as to ensure that young boys and girls are not influenced by malicious propaganda.
  • There an urgent need for the intelligence agencies to infiltrate the ranks of the anti-national elements in the Valley. By this they will get a whiff of the nefarious designs of the anti-national elements at an early stage. It will also help them to initiate a change in the mindset of the misguided youth.
  • The army, which has done brilliantly in the counter insurgency grid, is now urgently required to step into the intellectual domain. The time to move out of the barracks to ensure only law and order is now gone. The army now needs to move into the intellectual space and implement Sadhbhavna 2.0.

Conclusion :- The success of the Indian state hinges on understanding the changing dynamics in Kashmir in a pro-active manner and instituting timely measures to arrest the changing trends. It is incumbent on the army to stop restricting itself to its primary duties of anti-terror drives in the interiors of the state and defending the external borders. It is high time that they join the mind games being played from across the border. Modern warfare is won more in the mind, by influencing the adversary, than on the battle fields. It is this war the army now needs to venture into.

 


Topic:  Issues relating to intellectual property rights

6) What do you understand by Geographical Indication (GI) tag? Examine why GI tag is given and why it’s useful for India. (200 Words)

Livemint

Introduction :- A geographical indication (GI) is a name or sign used on certain products which corresponds to a specific geographical location or origin (e.g. a town, region, or country). India, as a member of the World Trade Organization (WTO), enacted the Geographical Indications of Goods (Registration and Protection) Act, 1999 has come into force with effect from 15 September 2003. GIs have been defined under Article 22(1) of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights(TRIPS) Agreement as: “Indications which identify a good as originating in the territory of a member, or a region or a locality in that territory, where a given quality, reputation or characteristic of the good is essentially attributable to its geographic origin”

The GI tag ensures that none other than those registered as authorised users (or at least those residing inside the geographic territory) are allowed to use the popular product name. Darjeeling tea became the first GI tagged product in India, in 2004-05, since then by November 2015, 272 had been added to the list.

 

Significance of GI Tag and why its given:-

  • A geographical indication right facilitates those who have the right to use the indication to prohibit its usage by a third party whose product does not conform to the applicable standards. For example, in the purview in which the Darjeeling geographical indication is protected, producers of Darjeeling tea can omit the term “Darjeeling” for tea not grown in their tea gardens or not produced according to the norms set out in the code of practice for the geographical indication.
  • To avoid plagiarism: A third party which doesn’t conform to the standards of a GI product is barred from manufacturing it.
  • A type of IP: It is a type of Intellectual property, whereby only region specific people can produce that product.
  • International acceptance: A GI Tag gives international acceptance to such products thereby increasing the market base of such products.

Importance for India:-

  • Economic benefits: A GI tag helps in fetching a premium that helps improve the economic prospects of the producer and the region. This especially hold true for regions that are not economically advanced.
  • Increased opportunities of export: Once a product gets a GI tag, exports will swell , due to its increased international market base.
  • Recognition: GI works as great marketing tool to put its mark on world map. This strengthens region’s and India’s soft power.
  • Employment: GI indicator increases the demand of the product resulting in higher production and employment. If proper skills are imparted, this can reduce the high dependency on agriculture.
  • Authenticity: GI tag ensures that the product is original and not of spurious quality.

gi indicators