Insights Daily Current Affairs + PIB: 14 August 2019
Relevant articles from PIB:
Context: Railway Protection Force (RPF) Launches “Operation Number Plate” across Indian Railways.
What is it?
The aim is to identify and verify all vehicles parked in Railway premises, circulating area, parkings and even in the ‘No Parking’ areas for longer duration.
Need:
The unidentified vehicles are considered as a serious threat to security and safety of passengers and other stake holders of railways.
GS Paper 3:
Topics covered:
Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Partial credit guarantee scheme to PSBs
What to study?
For prelims and mains: The scheme- need, challenges present and significance.
Context: In pursuance of the announcement made in the Union Budget 2019-20, the Government has issued a scheme regarding partial credit
guarantee.
The scheme provides for a one-time partial credit guarantee to PSBs for purchase of pooled assets of financially sound NBFCs.
Objective: To address temporary asset liability mismatches of otherwise solvent NBFCs/HFCs without having to resort to distress sale of their assets for meeting their commitments.
Validity of the scheme: The window for one-time partial credit guarantee offered by GoI will open from the date of issuance of the Scheme by the Government for a period of six months, or till such date by which Rupees One lakh crore assets get purchased by banks, whichever is earlier.
Significance:
The stress on NBFCs and HFCs is seen as a key reason for a slowdown in the economy, as it has caused reduced credit flow to small businesses and consumers.
The step would provide liquidity to NBFCs and enable them to continue to play their role in meeting the financing requirements of productive sectors of economy.
Notable facts:
- As per the guidelines of the scheme announced in the budget, the Department of Economic Affairs will provide government guarantee of up to 10% of the fair value of assets purchased by a bank from a stressed NBFC or HFC. The scheme is capped at Rs 1 lakh crore and will be open for up to six months.
- The Department of Financial Services will obtain information on transactions in a prescribed format from PSBs and send a copy to the budget division of the Department of Economic Affairs. The government will settle claims by banks within five working days.
- NBFCs will have to pay a fee to the government, at 0.25% per annum of the fair value of assets sold to banks. They will be able to sell 20% of standard assets, worth up to Rs 5,000 crore, as on March 31.
- Assets sold must be at least AA or equivalent rated and the NBFC/HFC selling assets should have appropriate capital, net NPAs of less than 6% and been profitable for the last two financial years.
- NBFCs will also have to rework the asset-liability structure within three months to have a positive asset liability management in each bucket for the first three months and on cumulative basis for the remaining period.
- The one-time guarantee on the pooled assets will be valid for 24 months from the date of purchase and can invoked in specified circumstances. The guarantee shall cease earlier if the purchasing bank sells the pooled assets to the originating NBFC or HFC or any other entity before the validity of the guarantee period.
GS Paper 3:
Topics Covered:
Conservation and pollution related issues.
What to study?
For Prelims and Mains: Crop burning- why, concerns, effects on environment and health, their regulation and the need for a comprehensive policy on this.
Context: Through the various efforts under the Central Sector Scheme on ‘Promotion of Agricultural Mechanization for In-Situ Management of Crop Residue in the State of Punjab, Haryana, Uttar Pradesh & NCT of Delhi’ the paddy residue burning events have reduced by 15% and 41% in 2018 as compared to that in 2017 and 2016, respectively in all these States as per the satellite data.
More than 4500 villages in Punjab and Haryana have been declared as Zero Stubble Burning Villages during 2018 as not a single crop burning incident was reported from these villages during the year.
What is stubble burning?
Stubble burning is a common practice followed by farmers to prepare fields for sowing of wheat in November as there is little time left between the harvesting of paddy and sowing of wheat.
Stubble burning results in emission of harmful gases such carbon diaoxide, sulphur dioxide, nitrogen dioxide along with particulate matter.
Concern of the Farmers: Why they opt for stubble burning?
- Even though farmers are aware that the burning of straw is harmful to health, they do not have alternatives for utilising them effectively.
- The farmers are ill-equipped to deal with waste because they cannot afford the new technologythat is available to handle the waste material.
- Experts say that with less income due to crop damage, farmers are likely to be inclined to light up their fields to cut costs and not spend on scientific ways of stubble management.
Advantages of stubble burning:
- It quickly clears the field and is the cheapest alternative.
- Kills weeds, including those resistant to herbicide.
- Kills slugs and other pests.
- Can reduce nitrogen tie-up.
What’s the issue?
Stubble burning is adversely affecting environment and public health. The problem has not been fully tackled and the adverse impacts on the air quality and consequent impacts on the citizens’ health and lives are undisputed.
Alternative solutions that can avoid Stubble Burning:
- There is great potential for making investments in paddy straw-based power plants which can help avoid stubble burning to a large extent and also create employment opportunities.
- Incorporation of crop residues in the soil can improve soil moisture and help activate the growth of soil microorganisms for better plant growth.
- Convert the removed residues into enriched organic manure through composting.
- New opportunities for industrial use such as extraction of yeast protein can be explored through scientific research.
Need of the hour:
Unless Financial assistance is to be provided by the Centre for boosting farm mechanisation, it is difficult to completely stop stubble burning.
States needs to make alternative arrangements for consumption of paddy straw into the soil as per the directions of the NGT.
What needs to be done- Supreme Court’s observations?
- The problem is required to be resolved by taking all such measures as are possible in the interest of public health and environment protection.
- Incentives could be provided to those who are not burning the stubble and disincentives for those who continue the practice.
- The existing Minimum Support Price (MSP) Scheme must be so interpreted as to enable the States concerned to wholly or partly deny the benefit of MSP to those who continue to burn the crop residue.
- Secretary, Union Ministry of Agriculture and Farmers’ Welfare has also been directed to be present to “find a lasting solution.”
- The Central government should convene a meeting with the States.
Relevant articles from various news sources:
GS Paper 3:
Topics covered:
Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
What to study?
For prelims and mains: What is negative rate policy? Why is it used? Pros and cons?
Context: Negative rate policy – once considered only for economies with chronically low inflation such as Europe and Japan – is becoming a more attractive option for some other central banks to counter unwelcome rises in their currencies.
Why have some central banks adopted negative rates?
- To battle the global financial crisis triggered by the collapse of Lehman Brothers in 2008, many central banks cut interest rates near zero.
- A decade later, interest rates remain low in most countries due to subdued economic growth.
- With little room to cut rates further, some major central banks have resorted to unconventional policy measures, including a negative rate policy.
- The euro area, Switzerland, Denmark, Sweden and Japan have allowed rates to fall slightly below zero.
How does it work?
Under a negative rate policy, financial institutions are required to pay interest for parking excess reserves with the central bank.
That way, central banks penalise financial institutions for holding on to cash in hope of prompting them to boost lending.
What are the pros of negative rates?
- Lowers borrowing costs.
- Help weaken a country’s currency rate by making it a less attractive investment than that of other currencies.
- A weaker currency gives a country’s export a competitive advantage and boosts inflation by pushing up import costs.
What are the cons?
- Negative rates put downward pressure on the entire yield curve.
- Narrow the margin financial institutions earn from lending.
- If prolonged ultra-low rates hurt the health of financial institutions too much, they could hold off on lending and damage the economy.
- There are also limits to how deep central banks can push rates into negative territory – depositors can avoid being charged negative rates on their bank deposits by choosing to hold physical cash instead.
Sources: Indian Express.
GS Paper 1:
Topics covered:
History of the world.
What happened during Gulf War? How was India involved?
What to study?
For prelims and mains: Gulf war- causes, effects and outcomes.
Context: In an emotive gesture, Iraq recently handed over the remains of 48 Kuwaiti nationals, more than 28 years after the Gulf War ended.
What is the Gulf War?
The Gulf War, which lasted between August 1990 and February 1991, was an international conflict that erupted after Iraq, under dictator Saddam Hussain, invaded neighbouring Kuwait, claiming it as its “19th province”. After Hussain defied UN warnings, the US and its allies forced Iraqi forces out of Kuwait.
What happened during the Gulf War?
- On August 2, 1990, Iraq annexed Kuwait, its south-eastern neighbour 25 times smaller in size. Although Hussain claimed Kuwait to be a part of Iraq, he invaded the region so that Baghdad could cancel a massive debt that it owed Kuwait, as well as acquire Kuwait’s large oil reserves. Hussain also sought to link the annexation with the Palestinian conflict.
- Immediately after, the United Nations Security Council strongly reprimanded Iraq and warned of military action if its forces did not retreat by January 15, 1991.
- As Hussain refused to pay heed to the UN’s many warnings, a US-led coalition, consisting of 7 lakh troops from 35 countries assembled in Saudi Arabia — Iraq’s neighbour also threatened by Hussain’s adventures in the region.
- After the January 15 deadline was flouted by Baghdad, coalition forces first launched Operation Desert Storm, which destroyed Iraq’s air defences, oil refineries, and key infrastructure. This was followed by Operation Desert Sabre, a ground offensive that went on to free Kuwait.
- The war finally ended on February 28, 1991, when the US declared a ceasefire.
India during the Gulf War:
New Delhi had been one of the first powers to recognise the Baathist regime when it came to power, and Baghdad, in turn, had consistently maintained a pro-India stance, especially during the era when the rest of the region was seen to have gravitated towards Pakistan.
When the Gulf War started, India, which at the time was led by PM Chandra Shekhar, maintained its signature non-aligned stance. However, it rejected Baghdad’s demand for linking the hostilities that were unfolding then with the Palestinian conflict.
Between August 13 and October 20 of 1990, India evacuated over 1,75,000 of its nationals from war-torn Kuwait, the biggest such operation by the Indian government. The feat has been mentioned in the Guinness Book of World Records as the largest number of people being evacuated by a civilian airliner, and was depicted in the 2016 Hindi film ‘Airlift’.
Sources: Indian Express.
GS Paper 2:
Topics covered:
Statutory, regulatory and various quasi-judicial bodies.
Haryana Administrative Tribunal
What to study?
For prelims and mains: Administrative tribunals- composition, establishments and issues with their functioning.
Context: Punjab and Haryana High Court Bar Association has suspended work indefinitely since a notification came out on July 24 for setting-up the Haryana Administrative Tribunal.
The Tribunal is meant to adjudicate over the service matters of the state employees that earlier would be directly heard by the High Court.
What is Haryana Administrative Tribunal?
The tribunal is a quasi-judicial body on the lines of Central Administrative Tribunal for redressal of the grievance of state employees concerning their employment.
Tribunal orders can be challenged before the High Court.
Under which law are the Tribunals setup?
Article 323-A, which came by way of 42nd constitutional amendment in 1976, enabled the Centre to enact The Administrative Tribunals Act, 1985 for setting-up the Tribunals for adjudication over “disputes and complaints with respect to recruitment and conditions of service of persons”.
The Centre under the Act can establish the Tribunal for its own employees and also has the power to establish one for a state after receiving a request from the state government.
Two or more states can also agree for a single tribunal.
Composition:
- The Tribunal is to be headed by a Chairman or Chairperson – a retired High Court Judge, and a number of Judicial and Administrative Members.
- The Chairperson can be removed only by the President of India.
- The Tribunal can also have benches at different locations.
Need:
In the absence of the Tribunal, the employees have no other option but to directly approach the High Court. The government’s decision to establish the Tribunal had been pending since 2015 and is aimed at reducing a large number of pending cases before the High Court and quick disposal of the grievances of employees, as per the state.
Why is bar association opposing this move?
The Bar Association has been saying the decision encroaches upon the jurisdiction of the Court and is also aimed at circumventing the judicial independence.
They argue that Tribunal members do not enjoy powers like judges who hold constitutional posts.
Tribunals are also seen as a means to encroach upon the jurisdiction and judicial independence of the High Court.
Sources: Indian Express.
GS Paper 3:
Topics Covered:
Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Inclusive growth and issues arising from it.
What to study?
For Prelims and Mains: Regulatory sandbox- meaning, features, need and significance.
Context: The Reserve Bank of India (RBI) has issued the final framework for regulatory sandbox in order to enable innovations in the financial technology space.
Key facts:
- RBI will launch the sandbox for entities that meet the criteria of minimum net worth of ₹25 lakh as per their latest audited balance sheet.
- The entity should either be a company incorporated and registered in the country or banks licensed to operate in India.
- While money transfer services, digital know-your customer, financial inclusion and cybersecurity products are included, crypto currency, credit registry and credit information have been left out.
What is a regulatory sandbox?
A regulatory sandbox is a safe harbour, where businesses can test innovative products under relaxed regulatory conditions. Typically, participating companies release new products in a controlled environment to a limited number of customers for a limited period of time.
Significance and benefits of a regulatory sandbox:
- The “regulatory sandbox” will help fintech companies launch innovative products at a lower cost and in less time.
- The sandbox will enable fintech companies to conduct live or virtual testing of their new products and services.
- These companies will also be able to test the viability of the product without a wider and expensive rollout.
- It will help companies to experiment with fintech solutions, where the consequences of failure can be contained and reasons for failure analysed.
Need:
- According to NITI Aayog, India is one of the fastest growing fintech markets globally, and industry research has projected that $1 trillion, or 60% of retail and SME (small and medium sized enterprises) credit, will be digitally disbursed by 2029.
- The Indian fintech ecosystem is the third largest in the world, attracting nearly $6 billion in investments since 2014. Fintech or financial technology companies use technology to provide financial services such as payments, peer-to-peer lending and crowdfunding, among others.
- Therefore, in order to protect customers and safeguard the interests of all stakeholders, and streamline their influence on the financial system, there is need for a regulatory and supervisory framework for fintech firms.
Way ahead:
Regardless of their specific terms, structures or mandates, regulatory sandboxes clearly work. They act as an impetus to innovation, build trust among stakeholders, protect consumers and result in sensible and forward-looking regulations. By introducing a sandbox for payments, the RBI could achieve the much-needed balance between innovation and regulation and help the Indian fintech industry achieve its full potential.
Sources: the hindu.
Facts for Prelims:
Boko Haram:
Who are they? Boko Haram is a violent Islamist insurgent group that has spread from northeast Nigeria to neighbouring West African nations of Niger, Chad and Cameroon in the Lake Chad Basin.
Emergence: In the 2000s, Boko Haram emerged in Nigeria as a small Sunni Islamic sect advocating a strict interpretation and implementation of Islamic law. The group, officially called Jama’a Ahl as-Sunna Li-da’wa wa-al Jihad, is more commonly known as Boko Haram, a nickname given by the country’s local Hausa-speaking population, because of the group’s call for rejection of Western education and culture that it viewed as un-Islamic—haram or forbidden—guided by Salafism, a conservative interpretation of Islam.
States with most dense tree, forest cover:
Context: Data related to forest cover was recently shared in Parliament by the Ministry of Environment, Forest and Climate Change. These assessments are done by the Forest Survey of India, whose findings are published in the India State of Forest Report (ISFR). The last report was published in 2017.
Key facts:
- Total forest cover: A quarter of India’s geographical area (24.49 per cent) is under forest and tree cover.
- The lowest forest and tree cover in the country is in Haryana, at 6.79 per cent of its geographical area. Punjab follows with 6.87 per cent. Rajasthan’s forest and tree cover is over 7.26 per cent of its geographical area while Madhya Pradesh’s is 27.73 per cent.
- Highest: At 97 per cent, the Union Territory of Lakshadweep is on top – its geographical area is only 30 square km. Among the six states with the highest forest and tree cover, four are in the Northeast – Manipur, Arunachal Pradesh, Mizoram and Meghalaya.
- Goa and Kerala are two other states with more than 50 per cent of their geographical area under forest and tree cover.
- In terms of geographical area, the highest tree and forest cover is in Madhya Pradesh, with 85,487 sq km.
Kajin Sara lake:
Context: Newly discovered Kajin Sara lake in Nepal is likely to set a new record of being the world’s highest lake. It is located in Nepal.
Palani panchamirtham:
Context: The famous Palani panchamirtham, given as ‘prasadam’ at the Murugan temple at Palani has been granted the Geographical Indication (GI) tag.
- This is the first time a temple ‘prasadam’ from Tamil Nadu has been given the GI tag.
- The panchamirtham is a combination of five natural substances — banana, jaggery, cow ghee, honey and cardamom. Dates and diamond sugar candies are added for flavour.
