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Insights Daily Current Events, November 18, 2013



18 November 2013



Re-engineer healthcare to tackle antibiotic resistance

  • The entire structure of healthcare delivery for effective antibiotics – from research and development, to distribution and rational use – needs to be re-engineered to address the looming global threat of antibiotic resistance.
  • The report (published in The Lancet Infectious Diseases) presents a comprehensive global overview of the growing problem of ‘antibiotic resistance’, its major causes and consequences, and identifies key areas in which action is urgently needed.

What is Antibiotic resistance? What are the reasons for the spread?

  • Antibiotic resistance arises when bacteria evolve mechanisms to withstand the drugs which are used to fight infection. Recent decades have seen vast increases in the use of antibiotics across medicine and agriculture, and in the absence of adequate regulatory controls, treatment guidelines, and patient awareness, this has led to a huge global surge in antibiotic resistance. The problem is compounded by a desperate shortage of new drugs to treat multi-drug resistant bacterial infections.
  • According to a professor, the causes of antibiotic resistance are complex and include human behaviour at many levels of society; the consequences affect everybody in the world. Within just a few years, we might be faced with unimaginable setbacks, medically, socially, and economically, unless real and unprecedented global coordinated actions to improve surveillance and transform the way antibiotics are regulated and developed are taken immediately.
  • Investment in new drugs is based on expectations of large volume sales. In the case of antibiotics, this can lead to aggressive marketing and sales activity, which in turn results in over-prescription. In many countries, financial incentives for doctors and health care systems means that over-prescription of antibiotics makes sound financial sense. Hence, non-prescription sales of antibiotics must be banned to reduce overuse.

Way forward:

  • Addressing these problems will require nothing less than a fundamental shift in how antibiotics are developed, financed, and prescribed.
  • Rebuilding the infrastructure of academia and industry to face the threat of antibiotic resistance will not only require national and international political commitment and investment, but also new ways of financing drug development.
  • The academic research institutes and small and medium enterprises across the world need to play a greater role in antibiotic discovery to address the inadequate infrastructure and innovative capacity.


Integrated Check post (ICP)

  • India has recently built an ICP on its border with Bangladesh. An ICP already works at Atari in Punjab on the border with Pakistan. The ICP boasts modern infrastructure to facilitate better trade and immigration. India plans to open 13 ICPs along the border with Pakistan, Bangladesh, Nepal and Myanmar.
  • This will increase people-to-people contact and cross-border trade with Bangladesh.

(ICP was also covered in our previous ‘News Analysis’)

Abdulla Yaameen sworn in as Maldivian President

  • Maldivian President Abdulla Yaameen was instated as the new President of Maldives after his shocking election victory which ended two years of turmoil (constitutional crisis) in Maldives. The President has promised to maintain good neighbourly relations with regional countries and others.
  • India had an uneasy relationship with Male after the toppling of the former President, Mr. Nasheed, who once took refuge at the Indian High Commission in Male to avoid arrest.


EPFO to pay at least 8.5% interest on PF deposits

  • Retirement fund body EPFO will pay at least 8.5% of return on PF deposits for 2013-14 to it’s over 5 crore subscribers as provided in the previous fiscal.


  • EPFO is a Statutory Body under Ministry of Labour & Employment, Government of India. It is the largest Social Security Organisation.
  • It administers a compulsory contributory Provident Fund Scheme, Pension Scheme and an Insurance Scheme for the workforce engaged in the organized sector. It is one of the largest social security organisations in the India in terms of the number of covered beneficiaries and the volume of financial transactions undertaken.


  • EPFOs mission is to extend the reach and quality of publicly managed old-age income security programs through consistent and ever-improving standards of compliance and benefit delivery in a manner that wins the approval and confidence of members by fairness, honesty and integrity, thereby contributing to the economic and social well-being of members.

History (Overview):

  • The Employees’ Provident Fund came into existence with the promulgation of the Employees’ Provident Funds Ordinance on the 15th November, 1951. It was replaced by the Employees’ Provident Funds Act, 1952. It is now referred as the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 which extends to the whole of Indian except Jammu and Kashmir.
  • The Employees’ Provident Funds Bill was introduced in the Parliament in 1952 to provide for the institution of provident funds for employees in factories and other establishments.
  • The Act and Schemes framed there under are administered by a tri-partite Board known as the Central Board of Trustees (CBT – apex decision making body), Employees’ Provident Fund, consisting of representatives of :-

Government (Both Central and State);   Employers, and Employees.

  • The Board operates three schemes viz. :-

ü  The Employees’ Provident Funds Scheme 1952 (EPF)

ü  The Employees’ Pension Scheme 1995 (EPS)

ü  The Employees’ Deposit Linked Insurance Scheme 1976 (EDLI)

Courtesy –

A new deal for foreign banks

  • Even while the issue of granting bank licences to a few private banks has been opposed from some quarters, the RBI has released important guidelines for foreign banks to participate in the Indian financial sector in a bigger way than what has been possible so far.

Significance of the move:

  • The two developments have one common objective, they are meant to deepen the financial sector. If all goes well, a few new private sector banks will come up in early 2014. At the moment, there are 26 applicants, who have met the stiff eligibility criteria, and are being reviewed by an independent committee of experts headed by former RBI Governor Bimal Jalan.
  • Awarding licences to corporates has been the most contentious issue in the new licensing policy, but once the decision was made, a few of the India’s biggest companies have put in their applications.
  • The framework for foreign banks has one major theme — the formation of wholly-owned subsidiaries (WOS) for furthering their business in India. The RBI guidelines make it clear that the WOS model is what the regulator would prefer the foreign banks to have. Suitable incentives are being given to new as well as existing players operating through their branches in India to adopt the subsidiary route and incorporate locally.


  • Like the new private bank licensing policy, the framework for foreign banks has passed through several stages.
  • The origin of the new policy can be traced to the year 2004 when the government relaxed the foreign direct investment (FDI) limits to 74% in private sector banks. Simultaneously, foreign banks were permitted to set up a 100% wholly-owned subsidiary in India subject to certain conditions. A detailed roadmap for operationalising the FDI guidelines, in two stages, was issued subsequently.
  • The objective was to encourage foreign banks to take the WOS route. But in the absence of any incentives, no bank came forward to set up or convert their branches into WOS.
  • If the latest policy is to succeed and attract new foreign banks in the WOS route, the type of incentives naturally matter. Great significance is attached to the clause that a locally incorporated WOS will be given near-national treatment, which, for all purposes, will place them on a par with Indian banks.
  • For instance, they can open branches anywhere in the country (except in sensitive areas where RBI prior approval will be required). It is expected that foreign banks already operating branches in India will also see in the national treatment a big advantage and convert themselves into WOS and participate in all financial sector activities.

Guidelines for foreign banks:

  • The WOS will have a minimum paid-up capital of Rs.500 crore, which is what has been stipulated for the new private banks.
  • Corporate guidelines for the WOS include a clause that not less than 50% of the directors should be Indian nationals/NRIs/PIOs.
  • Further, not less than two-thirds of the directors should be non-executive directors and a minimum of one-third of the directors should be independent of the subsidiary.
  • The fear of foreign banks taking over the Indian financial sector has been there ever since the FDI rules were liberalised.
  • To lessen such apprehensions, restrictions would be placed on further entry of new WOS of foreign banks/capital infusion, when the capital and reserves of foreign banks and their wholly-owned subsidiaries exceed 20% of the capital and reserves of the banking system. This stipulation is unlikely to satisfy either the foreign banks or those who want the RBI to spell out a more workable system of restraining them.
  • The guidelines are considerate, on foreign banks taking over small private banks. The RBI would regulate mergers and acquisitions (M & A).
  • Yet, in terms of volume of business and balance sheet expansion, even the world’s largest banks have been sluggish. While in the past they could blame restrictive policies, they probably have a more conducive environment now.

ULIPs was mentioned in today’s newspaper, but nothing significant so only information related to ULIPs has been put

ULIPs (unit-linked insurance plan)

  • A Unit Linked Insurance Plan (ULIP) is a product offered by insurance companies that unlike a pure insurance policy gives investors the benefits of both insurance and investment under a single integrated plan.
  • A ULIP is basically a combination of insurance as well as investment. A part of the premium paid is utilized to provide insurance cover to the policy holder while the remaining portion is invested in various equity and debt schemes.
  • The money collected by the insurance provider is utilized to form a pool of fund that is used to invest in various markets instruments (debt and equity) in varying proportions just the way it is done for mutual funds.
  • Policy holders have the option of selecting the type of funds (debt or equity) or a mix of both based on their investment need and appetite.


Commonwealth games: Is India a soft-power?

  • The Commonwealth Charter contains an unequivocal recommitment to human rights, democracy, good governance, rule of law and freedom of expression among others as ‘the core values and principles’ that the member nations must abide.
  • It is thus not strange that CHOGM 2013 in Sri Lanka (SL) should have been upstaged almost entirely by allegations of grave human rights violations committed by the Sri Lankan military against Tamil civilians in 2009 during the last battles against the LTTE.
  • Though the final communiqué of the meet contained no adverse mention of Sri Lanka, as it focused on fostering sustainable, inclusive and equitable development in Commonwealth nations, the summit did not help in restoring SL’s international credibility. Infact, there was harsher spotlight on the country’s rights record; new allegations were levelled even while older ones remained.
  • Some heads of the government, including India’s PM  Manmohan Singh could not attend due to their domestic compulsions.
  • This decision has once shown India’s inadequacies in dealing with an important neighbour, hostage as Sri Lanka policy has become to the short-sighted vision of Tamil Nadu’s political parties. It has brought no political or diplomatic advantage.
  • By comparison, British Prime Minister David Cameron showed far more wisdom. Not only did he silence political opposition to his participation by using the occasion to publicly criticise Sri Lanka’s rights record, but also demanded President Rajapaksa to institute by March a credible inquiry into allegations of rights violations.
  • The usefulness of such ‘demands/conditions’ as a diplomatic strategy is questionable going by the Sri Lankan leader’s defiant stance, but the British PM has achieved his stated aim of “focusing the eyes of the world on Sri Lanka”. The British PM also visited Jaffna, connecting with the Tamil people and their problems first-hand.
  • India has faulted on these lines; India will face its next Sri Lanka test in March 2014 at the U.N. Human Rights Council, but its timing right before the elections means it may blunder through again.