Insights Daily Current Affairs + PIB: 08 June 2019
Relevant articles from PIB:
Topic: Statutory, regulatory and various quasi-judicial bodies.
What to study?
For Prelims: Composition of NITI Aayog, various initiatives.
For Mains: Cooperative federalism- meaning, significance and efforts by the government.
Context: Prime Minister Narendra Modi approved the reconstitution of government of India’s policy think tank NITI Aayog.
About NITI Aayog:
The Government, in January 2015, replaced Planning Commission with NITI Aayog (National Institution for Transforming India).
Aim: to achieve Sustainable Development Goals and to enhance cooperative federalism by fostering the involvement of State Governments of India in the economic policy-making process using a bottom-up approach.
Role of NITI Aayog:
The institution has to provide governments at the central and state levels with relevant strategic and technical advice across the spectrum of key elements of policy. This includes matters of national and international import on the economic front, dissemination of best practices from within the country as well as from other nations, the infusion of new policy ideas and specific issue-based support. The institution has to be able to respond to the changing and more integrated world that India is part of.
Composition of NITI Aayog:
Chairperson: Prime Minister of India as the Chairperson.
Governing Council comprising the Chief Ministers of all the States and Lt. Governors of Union Territories.
Regional Councils will be formed to address specific issues and contingencies impacting more than one state or a region. These will be formed for a specified tenure.
The Regional Councils will be convened by the Prime Minister and will comprise of the Chief Ministers of States and Lt. Governors of Union Territories in the region. These will be chaired by the Chairperson of the NITI Aayog or his nominee.
Experts, specialists and practitioners with relevant domain knowledge as special invitees nominated by the Prime Minister.
The full-time organizational framework will comprise of, in addition to the Prime Minister as the Chairperson:
Vice-Chairperson: To be appointed by the Prime Minister.
Part-time members: Maximum of 2 from leading universities research organizations and other relevant institutions in an ex-officio capacity. Part time members will be on a rotational basis.
Ex Officio members: Maximum of 4 members of the Union Council of Ministers to be nominated by the Prime Minister.
Chief Executive Officer : To be appointed by the Prime Minister for a fixed tenure, in the rank of Secretary to the Government of India.
Facts for Prelims- Initiatives by NITI Aayog:
Its important initiatives include “15 year road map”, “7-year vision, strategy and action plan”, AMRUT, Digital India and Atal Innovation Mission.
- Food security related issues.
What to study?
For prelims: about FCI, key recommendations.
For mains: FCI- issues, need for reforms and measures to revamp.
Context: Union Minister of Consumer Affairs, Food and Public Distribution, Shri Ram Vilas Paswan lays down the future roadmap for Food Corporation of India (FCI).
He stated that primacy will be given to ensuring that the functioning of FCI is streamlined and fast paced as per recommendations of the Shanta Kumar Committee.
The government had set up a six-member committee to suggest restructuring or unbundling of FCI to improve its financial management and operational efficiency in procurement, storage and distribution of food grains.
Important recommendations made:
- Reduce the number of beneficiaries under the Food Security Act—from the current 67 per cent to 40 per cent.
- Allow private players to procure and store food grains.
- Stop bonuses on minimum support price (MSP) paid by states to farmers, and adopt cash transfer system so that MSP and food subsidy amounts can be directly transferred to the accounts of farmers and food security beneficiaries.
- FCI should involve itself in full-fledged grains procurement only in those states which are poor in procurement. In the case of those states which are performing well, like Haryana, Punjab, Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Odisha, the states should do the procurement.
- Abolishing levy rice: Under levy rice policy, government buys certain percentage of rice (varies from 25 to 75 per cent in states) from the mills compulsorily, which is called levy rice. Mills are allowed to sell only the remainder in the open market.
- Deregulate fertiliser sector and provide cash fertiliser subsidy of Rs 7,000 per hectare to farmers.
- outsource of stocking of grains: The committee calls for setting up of negotiable warehouse receipt (NWR) system. In the new system, farmers can deposit their produce in these registered warehouses and get 80 per cent of the advance from bank against their produce on the basis of MSP.
- Clear and transparent liquidation policy for buffer stock: FCI should be given greater flexibility in doing business; it should offload surplus stock in open market or export, as per need.
Mains Question: Some argue that the report of the Shanta Kumar committee on food management contains several cogent recommendations and they should be implemented to make PDS efficient. Analyse these recommendations and comment if they should indeed be implemented.
Relevant articles from various news sources:
- Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
What to study?
For Prelims: FCRA guidelines on foreign funding to NGOs, eligibility.
For Mains: Misuse of foreign funds, issues and the need for stringent measures to prevent the misuse of foreign funds.
Context: The Home Ministry has warned NGOs, who have changed their office-bearers and key functionaries without informing the Ministry, with penal action, if they fail to do so within a month.
All NGOs and associations registered under the Foreign Contribution Regulation Act (FCRA), 2010 have to submit online application for addition, deletion and change of details about office-bearers and key functionaries within one month.
Regulation of Foreign Funding:
The Foreign Contribution (Regulation) Act, 2010 and rules framed under it (the “FCRA” or “Act”) regulate the receipt and usage of foreign contribution by non-governmental organisations (“NGOs”) in India.
Scope and objective of FCRA:
The intent of the Act is to prevent use of foreign contribution or foreign hospitality for any activity detrimental to the national interest. It has a very wide scope and is applicable to a natural person, body corporate, all other types of Indian entities (whether incorporated or not) as well as NRIs and overseas branches/subsidiaries of Indian companies and other entities formed or registered in India. It is implemented by the Ministry of Home Affairs, Government of India.
In order to achieve the above objective, the Act:
Prohibits acceptance and use of foreign contribution or foreign hospitality by a certain specified category of persons such as a candidate for election, judge, journalist, columnist, newspaper publication, cartoonist and others.
Regulates the inflow to and usage of foreign contribution by NGOs by prescribing a mechanism to accept, use and report usage of the same.
It defines the term ‘foreign contribution’ to include currency, article other than gift for personal use and securities received from foreign source. While foreign hospitality refers to any offer from a foreign source to provide foreign travel, boarding, lodging, transportation or medical treatment cost.
Acceptance of foreign funds:
The Act permits only NGOs having a definite cultural, economic, educational, religious or social programme to accept foreign contribution, that too after such NGOs either obtain a certificate of registration or prior permission under the Act.
Registration and prior approval under FCRA:
- In order to be registered under the FCRA, an NGO must be in existence for at least three years and must have undertaken reasonable activity in its field for which the foreign contribution is proposed to be utilised. Further, it must have spent at least INR 1,000,000 over three years preceding the date of its application on its activities.
- The registration certificate is valid for a period of five years and must be thereafter renewed in the prescribed manner.
- NGOs not eligible for registration can seek prior approval from FCRA for receiving foreign funding. This permission is granted only for a specific amount of foreign funding from a specified foreign source for a specific purpose. It remains valid till receipt and full utilisation of such amount.
The Act imposes various conditions on the use of foreign funds and some of them are as follows:
All funds received by a NGO must be used only for the purpose for which they were received.
Such funds must not be used in speculative activities identified under the Act.
Except with the prior approval of the Authority, such funds must not be given or transferred to any entity not registered under the Act or having prior approval under the Act.
Every asset purchased with such fund must be in the name of the NGO and not its office bearers or members.
Every NGO registered or having prior approval under the Act must file an annual report with the Authority in the prescribed form. This report must be accompanied by an income and expenditure statement, receipt and payment account, and balance sheet for the relevant financial year. For financial years where no foreign contribution is received, a ‘NIL’ report must be furnished with the Authority.
Sources: The Hindu.
Mains Question: Do you think that the FCRA [Foreign Contribution (Regulation) Act] violates international human rights standards on freedom of association? Critically examine
- Salient features of the Representation of People’s Act.
What to study?
For Prelims and Mains: Registration of political parties and provisions governing them, benefits of registration.
Context:The Election Commission of India has declared the National People’s Party as a national party. This made the NPP, formed in 2013, the first from the north-eastern region to earn the tag.
The NPP is recognised as a State party in Arunachal Pradesh, Manipur, Meghalaya and Nagaland.
Registration of political parties:
Registration of Political parties is governed by the provisions of Section 29A of the Representation of the People Act, 1951. A party seeking registration under the said Section with the Commission has to submit an application to the Commission within a period of 30 days following the date of its formation as per guidelines prescribed by the Election Commission of India in exercise of the powers conferred by Article 324 of the Commission of India and Section 29A of the Representation of the People Act, 1951.
To be eligible for a ‘National Political Party of India,’ the Election Commission has set the following criteria:
- It secures at least six percent of the valid votes polled in any four or more states, at a general election to the House of the People or, to the State Legislative Assembly; and
- In addition, it wins at least four seats in the House of the People from any State or States. OR
- It wins at least two percent seats in the House of the People (i.e., 11 seats in the existing House having 543 members), and these members are elected from at least three different States.
To be eligible for a ‘State Political Party,’ the Election Commission has set the following criteria:
- It secures at least six percent of the valid votes polled in the State at a general election, either to the House of the People or to the Legislative Assembly of the State concerned; and
- In addition, it wins at least two seats in the Legislative Assembly of the State concerned. OR
- It wins at least three percent (3%) of the total number of seats in the Legislative Assembly of the State, or at least three seats in the Assembly, whichever is more.
- If a party is recognised as a State Party’, it is entitled for exclusive allotment of its reserved symbol to the candidates set up by it in the State in which it is so recognised, and if a party is recognised as a `National Party’ it is entitled for exclusive allotment of its reserved symbol to the candidates set up by it throughout India.
- Recognised `State’ and `National’ parties need only one proposer for filing the nomination and are also entitled for two sets of electoral rolls free of cost at the time of revision of rolls and their candidates get one copy of electoral roll free of cost during General Elections.
- They also get broadcast/telecast facilities over Akashvani/Doordarshan during general elections.
- Political parties are entitled to nominate “Star Campaigners” during General Elections. A recognized National or State party can have a maximum of 40 “Star campaigners” and a registered un-recognised party can nominate a maximum of 20 ‘Star Campaigners”.
- The travel expenses of star campaigners are not to be accounted for in the election expense accounts of candidates of their party.
Sources: the Hindu.
Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
What to study?
For prelims: key highlights of the guidelines, about ICA.
For mains: need for and significance of these guidelines.
Context: Following the quashing of its ‘revised framework for resolution of stressed assets’ by the Supreme Court in April, the Reserve Bank of India has issued a ‘prudential framework for resolution of stressed assets’.
Highlights of the latest norms:
- The new framework gives lenders a breather from the one-day default rule whereby they had to draw up an resolution plan (RP) for implementation within 180 days of the first default.
- It gives lenders (scheduled commercial banks, all-India financial institutions and small finance banks) 30 days to review the borrower account on default.
- During this review period, lenders may decide on the resolution strategy, including the nature of the RP and the approach for its implementation.
- Lenders may also choose to initiate legal proceedings for insolvency or recovery.
- The new circular is also applicable to small finance banks and systemically important non-deposit taking non-banking financial companies (NBFCs) and deposit-taking NBFCs.
- In cases where the RP is to be implemented, all lenders have to enter into an inter-creditor agreement (ICA) for the resolution of stressed assets during the review period to provide for ground rules for finalisation and implementation of the RP in respect of borrowers with credit facilities from more than one lender.
- Under the ICA, any decision agreed to by the lenders representing 75 per cent of total outstanding credit facilities by value and 60 per cent by number will be binding upon all the lenders. In particular, the RPs will provide for payment which will not be less than the liquidation value due to the dissenting lenders.
- In cases where the aggregate exposure of a borrower to lenders (scheduled commercial banks, all-India financial institutions and small finance banks) is ₹2,000 crore and above, the RP has to be implemented within 180 days from the end of the review period, and the reference date has been set as June 7, 2019.
- In the case of borrowers in the ₹1,500 crore and above but less than ₹2,000 crore category, January 1, 2020 has been set as the reference date for implementing the RP. In the less than ₹1,500 crore category, the RBI will announce the reference date in due course.
If the implementation of an RP crosses the stipulated 180 days from the end of the review period, the lenders have to make additional provisions of 20 per cent of the outstanding loan. If this timeline exceeds 365 days, they further have to make a provision of 15 per cent.
These additional provisions are over and above the provisions already held or the provisions required to be made as per the asset classification status of the borrower account.
What is Inter-Creditor Agreement (ICA)?
The inter-creditor agreement is aimed at the resolution of loan accounts with a size of ₹50 crore and above that are under the control of a group of lenders. It is part of the “Sashakt” plan approved by the government to address the problem of resolving bad loans.
The agreement is based on a recommendation by the Sunil Mehta committee that looked into resolution of stressed assets.
Sources: the Hindu.
Mains Question: An agency like PARA is much needed to alleviate the NPA issue being faced by Indian banks. Discuss.
Awareness in space.
What to study?
For prelims: Key facts on InSIght Mission.
For mains: Why study mars, Objectives of the mission and its significance.
Context: NASA’s InSight lander is having some problems. The instrument, called a “mole,” was designed to hammer itself deep under the Martian surface and monitor temperature changes. NASA figured it would be able to push itself as deep as 16 feet into the Martian crust, but the consistency of the soil has made that difficult. In fact, the mole has only made it around a foot deep, and now InSight’s science team has come up with a new plan.
The new plan involves using InSight’s robotic arm to push on the soil surrounding the probe. This, InSight team members suggest, could give the mole enough friction to hammer itself deeper underground.
About InSight Mission:
InSight is part of NASA’s Discovery Program, managed by the agency’s Marshall Space Flight Center in Huntsville, Alabama.
It will be the first mission to peer deep beneath the Martian surface, studying the planet’s interior by measuring its heat output and listening for marsquakes, which are seismic events similar to earthquakes on Earth.
It will use the seismic waves generated by marsquakes to develop a map of the planet’s deep interior.
Significance of the mission:
- The findings of Mars’ formation will help better understand how other rocky planets, including Earth, were and are created. But InSight is more than a Mars mission – it is a terrestrial planet explorer that would address one of the most fundamental issues of planetary and solar system science – understanding the processes that shaped the rocky planets of the inner solar system (including Earth) more than four billion years ago.
- InSight would delve deep beneath the surface of Mars, detecting the fingerprints of the processes of terrestrial planet formation, as well as measuring the planet’s “vital signs”: Its “pulse” (seismology), “temperature” (heat flow probe), and “reflexes” (precision tracking).
- InSight seeks to answer one of science’s most fundamental questions: How did the terrestrial planets form?
Previous missions to Mars have investigated the surface history of the Red Planet by examining features like canyons, volcanoes, rocks and soil. However, signatures of the planet’s formation can only be found by sensing and studying its “vital signs” far below the surface.
In comparison to the other terrestrial planets, Mars is neither too big nor too small. This means that it preserves the record of its formation and can give us insight into how the terrestrial planets formed. It is the perfect laboratory from which to study the formation and evolution of rocky planets. Scientists know that Mars has low levels of geological activity. But a lander like InSight can also reveal just how active Mars really is.
Summaries of important Editorials:
Crisis in NBFC:
Context: The woes of non-banking finance companies and housing finance companies continue to reverberate through the financial system.
Financial conditions have worsened with spreads of NBFC bonds rising significantly in the recent past. Lenders are re-evaluating their risk.
What needs to be done?
RBI should open a special borrowing window to provide liquidity to NBFCs/HFCs.
RBI, under sections 17 and 18 of the RBI act, can provide short term liquidity to NBFCs, till financial conditions normalise.
It could also nudge banks to increase their lending to NBFCs.
Risk-averse banks may be unwilling to lend.
There is difficulty in differentiating between illiquid NBFCs from those that are insolvent.
Need of the hour:
NBFC crisis could accentuate contagion risk in the financial sector. Cabinet committee on investment and growth must address it.
And, the RBI could identify systemically important NBFCs and backstop them through banks.
Unemployment related issues:
Context: India’s problem is not unemployment — this has bounced in the low and narrow range of 4-7 per cent for 50 years — but employed poverty.
Larger percentage of workforce in informal sector.
India’s labour laws have an insane reverse payroll wedge — employers are forced to deduct 40 per cent-plus of gross wages for employees with monthly wages up to Rs 25,000.
Our skill development system faces the difficult trinity of cost, quality and quantity combining with challenging changes to the world of education.
Apprenticeships are the future of learning, yet India only has 5 lakh apprentices.
India’s credit to GDP ratio is 50 per cent (rich countries are at 100 per cent).
What needs to be done?
- Massive ease-of-doing business that rationalises (cuts down ministries, compliances, and filings), simplifies (adopts a universal enterprise number and one labour code) and digitises (adopts a paperless, presenceless and cashless process for all employer compliance by shifting from uploads to websites to an API architecture with straight-through-processing).
- Employee contribution must be made optional, employees must choose who handles their employer contributions, and social security programme fees must be capped to their costs.
- To improve Apprenticeship, the two central government initiatives, Regional Directorates Of Apprenticeship Training (RDAT) and Board of Apprentice Training (BOAT) could be merged.
- An effective online matching platforms could be launched and the regulatory legitimacy of apprenticeships could be reinforced as classrooms to overcome the trust deficit with employers.
- It’s also time to enable degree-linked apprentices (skill universities await clearance for linking apprentices to degrees via distance and online delivery).
- There must also be a focus on financialisation reform and sustainable competition.
- A higher credit to GDP ratio needs more bank licences, fixing the governance at nationalised banks, blunting the asset liability mismatch at NBFCs (some irrationally funded 30 per cent of their balance sheet with commercial paper) and restoring the sanctity of the 270-day IBC bankruptcy deadline.
- We should consider making labour a state subject and must continue the decentralisation of funds, functions and functionaries to states while simultaneously creating accountability, capabilities and resources in city governance.