Insights Daily Current Events, 25 February 2016

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Insights Daily Current Events, 25 February 2016

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Paper 3 Topic: resource mobilization.

Cabinet nod to incentivise cashless transactions

The Union Cabinet has approved several steps to promote cashless transactions in the country.

Approved steps include:

  • Mandatory card-based or electronic payments beyond a prescribed threshold.
  • The withdrawal of any additional charge currently imposed on card or digital payments by various government entities.
  • The introduction of the required infrastructure for digital payments in all government offices.
  • Rationalisation of the merchant discount rate (MDR) on card transactions and telecom service charges for digital financial transactions to promote mobile banking.

Significance of this move:

  • With this decision, the government has completed its promise for such measures made in the previous Budget.
  • Besides, promotion of payments through cards and digital means will be instrumental in reducing tax avoidance, migration of Government payments and collections to cashless mode, discourage transactions in cash by providing access to financial payment services to the citizens to conduct transactions through card/ digital means and shifting payment ecosystem from cash dominated to non-cash/less cash payments.

Previously, the government had also proposed to levy a nominal cash handling charge on cash transactions above a specified level.

sources: the hindu.


 

Paper 3 Topic: resource mobilization.

Pilferage remains a problem for LPG subsidy scheme

According to a recent study, while the direct benefit transfer scheme (DBT) for LPG subsidy has resulted in considerable savings for the government, pilferage still remains a problem.

What’s the issue?

Despite being a well-designed system accruing big savings for the government, the study discovered that cylinders continue to be diverted to the commercial market. It was found that families, irrespective of income levels and family size consume 9.5-10.5 cylinders per year leaving 2-3 unutilised, subsidised cylinders per household. Experts call this as the ‘March problem’.

The survey covered over 100 LPG distributors and 6,000 consumers in Uttarakhand, Bihar and Uttar Pradesh. It found that customers in these states said that they were approached by distributors to book the unused cylinders at the end of the financial year, in March. Once these extra cylinders are booked, the report found, the distributor sells them at market rates while the families receive the subsidy amount in their accounts in the following month.

Financial implications:

The study shows that around Rs.1,800 crore-Rs.3,000 crore (based on a usage of 9.5-10.5 cylinders) out of the total amount transferred under PAHAL (as the LPG subsidy scheme is called) is being pilfered, assuming that only half the eligible population across all states indulged in such activities.

  • That works out to 6-10.5% of the total LPG subsidy payments through this scheme. The actual figure could be more.
  • Government data shows that it has given out Rs.28,713 crore under the PAHAL scheme against a budgeted amount of Rs.21,140 crore.

How can we tackle this problem?

  • A per-cylinder approach to the subsidy payments could remove the incidence of pilferage.
  • At the moment, the government gives a standard subsidy amount regardless of whether it is for the first cylinder consumed or the twelfth. The report recommends a graded approach where the first few cylinders used receive a high subsidy amount while the 10, 11 and 12 cylinders receive no subsidy at all. Using this method, the overall subsidy received by the families for cylinders used will remain the same.

sources: the hindu.


 

Paper 3 Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Make public names of wilful defaulters: panel

The Standing Committee on Finance has recommended that state-owned banks make public the names of their respective top 30 stressed accounts involving wilful defaulters.

Why?

According to the committee, this will act as a deterrent and enable banks to withstand pressure and interference from various quarters in dealing with the promoters for recoveries or sanctioning further loans.

Important recommendations made by the committee:

  • The committee has asked the government to amend the RBI Act and other laws and guidelines to pave the way for PSUs to make the names of wilful defaulters public.
  • The committee also recommended that specially-tasked committees be mandated to continually monitor the status of large loan portfolios and submit periodical reports to government and Parliament on the findings.
  • Since diversion of funds by promoters to unrelated businesses and poor pre-sanction due-diligence have been cited as key reasons for bank loans turning toxic, the committee said it was of the view that forensic audits should be made mandatory for specific class of borrowers.

How bad is the situation?

  • Total credit off-take of public sector banks as on December 2014 stood at Rs. 60,60,699 crore and as on September 2015, the net NPAs were Rs. 2,05,024 crore, according to the report.
  • Wilful defaulters owe PSU banks a total of Rs.64,335 crore or 21% of total non-performing assets, (NPA).
  • The gross NPAs were Rs. 3,69,990 crore. Certain estimates indicate that the gross NPAs could reach Rs. 4 lakh crore by the end of this fiscal year.
  • The sharpest increase in NPAs in the banking industry was observed in mid size corporates (Rs.25 crore—Rs.100 crore exposure to commercial entities) as they rose to 9.7% in September 2015 from 6.4% in March 2014.
  • Retail loans also saw an industry-wise reduction to 4.7% from 8.8%.
  • Taking the gross NPAs and the restructured advances together, the stress on public sector banks is 13.03% to total advances as on December 2014 and 8.71% as on September 2015.
  • Also alarming is stressed category. As on September 2015, nearly Rs. 6.8 lakh crore worth of bank loans were in the ‘stressed category’ as against Rs.5.91 lakh crore in the previous year.

sources: the hindu.


 

Paper 3 Topic: constitutional bodies.

Ex-CJI Justice Dattu to head NHRC

The government has selected former Chief Justice of India H L Dattu as the next chairperson of the National Human Rights Commission (NHRC).

  • The post of NHRC chairperson had been lying vacant since May 2015 after Justice K G Balakrishnan completed his nearly five-year-long tenure.
  • On appointment, Justice Dattu will have a tenure of five years at the post.

Selection committee:

Under the Protection of Human Rights Act, 1993, the President appoints the chairperson and members of the NHRC on the recommendation of a committee comprising the Prime Minister, Lok Sabha Speaker, Union Home Minister, leaders of Opposition in Lok Sabha and Rajya Sabha, and Deputy Chairman of Rajya Sabha.

About NHRC:

  • It is a statutory body established in 1993.
  • It consists of a Chairman and 4 members. Chairman should be a retired Chief Justice of India. Members should be either sitting or retired judges of the Supreme Court or a serving or retired Chief Justice of a High Court and 2 persons having practical knowledge in this field.
  • Ex officio members are the chairmen of National Commission for Scheduled Caste, National Commission for Scheduled Tribes, National Commission for Minorities and National Commission for Women.
  • Term of the chairman and members is 5 years or 70 years whichever is earlier.
  • After retirement they are not eligible for further reappointment.
  • Removal: President has to refer the matter to Supreme Court and if after enquiry Supreme Court holds it right then they can be removed by the President.
  • The commission is not empowered to enquire into matters which were committed one year before.
  • Its recommendations are just advisory and not binding in nature.
  • It submits Annual report to the Central government and to the concerned state governments.

sources: the hindu, nhrc.


 

Paper 1 Topic: urbanization, their problems and their remedies.

Atal Mission plans

Ministry of Urban Development has approved an investment of Rs.495.11 cr in water supply, sewerage networks and septage management, storm water drains, urban transport and provision of green spaces in 13 cities in 6 states under Atal Mission for Rejuvenation & Urban Transformation (AMRUT) Action Plans for 2015-16.

  • Six states are- Assam, Jammu & Kashmir, Goa, Tripura, Meghalaya and Puducherry.
  • Out of the total project cost of Rs.495.11 cr, Central Government will provide an assistance of Rs.425 cr.
  • Central Government will bear 90% of the project costs in respect of North-Eastern States and J&K, 100% for Puducherry and 50% of the cost in case of Goa.
  • With these approvals, the Ministry of Urban Development has so far approved Atal Mission Action Plans for 2015-16 for 483 mission cities in 26 states and Union Territories with a total investment of Rs.20,491 cr.

Atal Mission for Rejuvenation and Urban Transformation (AMRUT):

  • AMRUT is the new avatar of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM).
  • It adopts a project approach to ensure basic infrastructure services relating to water supply, sewerage, storm-water drains, transportation and development of green spaces and parks with special provision for meeting the needs of children.
  • Under this mission, 10% of the budget allocation will be given to states and union territories as incentive based on the achievement of reforms during the previous year.
  • It is being implemented in 500 locations with a population of one lakh and above.
  • It would cover some cities situated on stems of main rivers; a few state capitals and important cities located in hilly areas, islands and tourist areas.
  • Under this mission, states get the flexibility of designing schemes based on the needs of identified cities and in their execution and monitoring.
  • States will only submit state annual action Plans to the centre for broad concurrence based on which funds will be released.
  • Under the mission, states will transfer funds to urban local bodies within 7 days of transfer by central government and no diversion of funds to be made failing which penal interest would be charged besides taking other adverse action by the centre.

sources: pib.


 

Paper 2 Topic: India and its neighborhood- relations.

Credit for Chabahar Port Development

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval to the proposal of the Ministry of Shipping for provision and operationalization of credit of 150 million USD from EXIM Bank for development of Chabahar Port in Iran.

Background:

An MoU was signed between India and Iran in May 2015. As per the MoU, India is to equip and operate two berths in Chabahar Port Phase-I with capital investment of USD 85.21 million and annual revenue expenditure of USD 22.95 million on a ten year lease.

  • Ownership of equipment will be transferred to Iranian side on completion of 10 year period or for an extended period, based on mutual agreement.
  • The Iranian side had requested for provision of a credit of USD 150 million in accordance with the MoU.
  • As per the MoU, operation of two berths will commence within a period of maximum 18 months after the signing of the Contract.
  • The two berths will be operated by the India Ports Global Private Limited, a Company promoted by the Jawaharlal Nehru Port Trust and Kandla Port Trust – two major ports working under the Ministry of Shipping.

Way ahead:

The Union Cabinet has now authorized the Ministers of Finance, External Affairs and Shipping to approve the final contract with Iran and for resolution of any issue arising in implementation of the project.

  • The Union Cabinet has also authorized the Ministry of Shipping to form a Company in Iran for implementing the Chabahar Port Development Project and related activities.

Significance of Chabahar port:

Chabahar Port lies outside the Persian Gulf in Iran and will help in expanding maritime commerce in the region. India is negotiating this project to facilitate the growing trade and investment with Iran and other countries in the region, notably Afghanistan and also to provide opportunities to Indian companies to penetrate and enhance their footprint in the region.

sources: pib.


 

Paper 2 Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

India And UK Institutions Sign Agreements for Collaboration in Crop Sciences

Department of Biotechnology, Ministry of Science and Technology and a consortium of top UK research institutions recently signed Memorandum of Understanding for establishment of a joint India-UK collaboration programme in crop science.

  • The aim of the agreement is to enhance collaborative research, promote knowledge exchange, and support capacity building to develop resilience in food security.
  • This collaboration will create opportunities for leading experts in the UK and India to come together to tackle global challenges in the areas of food security, crop science and biotechnology.
  • The agreement foresees joint projects focusing on the fundamental science underpinning yield enhancement, disease resistance and drought resistance; research into crop re-breeding; and the translation of fundamental research into sustainable agriculture practice.
  • It also contemplates the establishment of a joint Indo-UK Plant Science Centre in India.

sources: pib.


 

Paper 3 Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

Agreement between India and Maldives for avoidance of double taxation of income from International air transport

The Union Cabinet has given its approval for signing of an Agreement between India and Maldives for the avoidance of double taxation of income from international air transport.

  • The Agreement provides for relief from double taxation for airline enterprises of India and Maldives by way of exemption of income derived by the enterprise of India from the operation of aircraft in international traffic, from Maldivian tax and vice-versa.
  • Under the agreement, profits from the operation of aircraft in international traffic will be taxed in one country alone.
  • Accordingly the taxing right is conferred upon the country to which the enterprise belongs. The Agreement will provide tax certainty for airline enterprises of India and Maldives.
  • The Agreement further provides for Mutual Agreement Procedure for resolving any difficulties or doubts arising as to the interpretation or application of the Agreement.

sources: pib.


Prelims Related Facts:

 

  1. According to Hurun (Hurun Report) Global Rich List 2016, India is home to 111 billionaires and most of them are from Mumbai. India has added 27 new billionaires to the list in last one year.
  2. The fifth edition of IBSAMR (India-Brazil-South Africa Maritime) 2016 trilateral naval exercise between Brazil, India and South Africa has begun in Goa. It is for the first time this naval exercise is being held in India.
  3. India’s first indigenously built nuclear armed submarine INS Arihant has successfully passed deep sea tests.