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Insights Daily Current Events, 03 March 2015

Insights Daily Current Events, 03 March 2015

‘Go India’ Smart Card for Train Tickets

‘Go-India’ smart card scheme has been launched on pilot basis on two sectors i.e. New Delhi-Mumbai and New Delhi-Howrah.

Aim of the Scheme: To reduce the transaction time at the booking counters for the convenience of passengers as it facilitates cashless transaction.

About the Smart Card:

  • The Go-India smart card enables passengers to pay for reserved and unreserved tickets.
  • The smart card can be used at nominated Unreserved Ticketing System (UTS)/Passenger Reservation System (PRS) counters and at Automatic Ticket Vending Machines (ATVMs) on these two sectors for issuing tickets.
  • Initially, the card can be get issued by paying minimum Rs.70/- where passenger will get Rs.20/- balance. After that, card can be recharged for Rs.20/- or in multiple of Rs.50/- upto Rs. 5000/-.
  • Maximum limit on Go-India smart card is Rs.10,000/-.
  • Go-India smart card has life time validity. In case of no usage in six months from the date of last transaction, smart card will be temporarily deactivated, which can be activated again by paying Rs.50/- as activation fee.

Sources: PIB.

 

Mothers’ low weight linked to shorter height of Indian children

A study published in the journal Proceedings of the National Academy of Sciences says that the reason a greater proportion of Indian children, even those from economically better families, are shorter and smaller than children in sub-Saharan Africa is the lower body mass of mothers before conception and less weight gain during pregnancy.

Other important observations made by the study:

  • The study says over 42% of pre-pregnant Indian women were found to be underweight compared with 16.5% in sub-Saharan Africa.
  • The most important reason why pre-pregnant women are more likely to be underweight than the average women is age. In India, women have children very soon after marriage, in a narrow age range between 18 and 25. This is also the time in their lives that they are most likely to be underweight.
  • Besides lower pre-pregnancy weight, weight gain during pregnancy is low at about 7 kg for a full-term pregnancy both in India and in sub-Saharan Africa. Since weight gain during pregnancy is nearly the same in the two regions, Indian women end up weighing less than their counterparts at the end of pregnancy.
  • Higher prevalence of low birth-weight babies in India is also linked to mother’s low pre-pregnancy weight and less weight gain during pregnancy.

What should be done?

It is difficult to compensate for poor nutrition during pregnancy by providing nutritious food to children after birth. First, babies have to be exclusively breastfed for the first six months. Second, stunting is thought to take place in the first 1,000 days between conception and two years of age. For half of this first 1,000 days, a child relies totally on the mother for nutrition.

Sources: The Hindu.

 

400% rise in parties’ spend on LS polls

The recently released data by Association for Democratic Reforms says that over the last 10 years, the declared expenditure by political parties for the Lok Sabha elections grew over 400%.

Important observations made:

  • Spending on publicity is driving most of the increased expenditure.
  • Spending grew faster than the rate of increase in the collection of funds, as parties can spend on the Lok Sabha elections from funds collected before the announcement of the election as well.

What the law says?

By law, the six Indian national political parties must submit a statement of election expenditures to the Election Commission within 90 days of the completion of the election. This is supposed to include all funds collected and spent by them in cash, cheque or through other means between the date of the announcement of the election and the date of completion of the election, which ranges from 30 to 90 days.

But, most of the parties fail to submit these details in time.

 

Sources: The Hindu.

 

Core sector growth slows to 1.8 % in Jan

Growth in eight core industries slowed to 1.8% in January, the lowest in 13 months. Negative growth in crude oil and natural gas and low growth in steel, cement and electricity have led to the dip in the overall growth rate of core industries.

The eight core sector industries are— coal, crude oil, natural gas, refinery products, fertilizer, steel, cement and electricity.

Sources: The Hindu.

 

RBI panel widens scope for priority sector lending

The Reserve Bank of India (RBI) recently said that loans to sanitation, health care and drinking water facilities and renewable energy would come under the priority sector ambit.
The target for lending to the agriculture sector has been retained at 18% of adjusted net bank credit (ANBC), but the RBI has recommended a sub-target of 8% of ANBC for small and marginal farmers, which is to be achieved in a phased manner.

Panel observations regarding the Priority Sector Lending Target:

  • The panel has said that the target for lending to the redefined priority sector is retained uniformly at 40% of adjusted net bank credit (ANBC) or credit equivalent of off-balance sheet exposure (CEOBE), whichever is higher, for all scheduled commercial banks. It has also said that all foreign banks (irrespective of number of branches they have) may be brought on a par with domestic banks and the same target/sub-targets may be made applicable to them.
  • It suggested foreign banks with 20 and above branches may be given time up to March, 2018, in terms of extant guidelines and submit their revised action plans. Other foreign banks, that is, with less than 20 branches, may be given time up to March, 2020, to comply with the revised targets as per action plans submitted by them and approved by the RBI.

PRIORITY SECTOR LENDING:

Priority Sector Lending is an important role given by the Reserve Bank of India (RBI) to the banks for providing a specified portion of the bank lending to few specific sectors like agriculture or small scale industries. This is essentially meant for an all round development of the economy as opposed to focusing only on the financial sector. Typically, these are small value loans to farmers for agriculture and allied activities, micro and small enterprises, poor people for housing, students for education and other low income groups and weaker sections.

What is meant by Priority Sector?

Priority sector refers to those sectors of the economy which may not get timely and adequate credit in the absence of this special dispensation.

CATEGORIES OF PRIORITY SECTOR:

  • Agriculture
  • Micro and Small Enterprises
  • Education (educational loans granted to individuals by banks)
  • Housing
  • Export Credit
  • State sponsored organizations for Scheduled Castes/Scheduled Tribes
  • Consumption loans (under the consumption credit scheme for weaker sections)
  • Loans to the software industry (having credit limit not exceeding Rs 1 crore from the banking system)

Minimum Limits:

  • The limits are prescribed according to the ownership pattern of banks. While for local banks, both the public and private sectors have to lend 40 % of their net bank credit, or NBC, to the priority sector as defined by RBI, foreign banks have to lend 32% of their NBC to the priority sector.

Specific targets within the priority sector:

  • Domestic banks have to lend 18 % of NBC to agriculture and 10 % of the NBC has to be to the weaker section. However, foreign banks have to lend 10 % of NBC to the small-scale industries and 12 % of their NBC as export credit.

The rate of interest on various priority sector loans will be as per RBI’s directives issued from time to time, which is linked to Base Rate of banks at present. Priority sector guidelines do not lay down any preferential rate of interest for priority sector loans.

Sources: The Hindu, RBI, Wiki, ET.

 

 

 

Pact binds RBI to inflation target

The Centre and the Reserve Bank of India have signed an agreement under which the central bank will prioritise controlling price rise above the other objectives of the monetary policy — interest rates and the foreign exchange rate.
The agreement targets inflation and gives the central bank a free hand in determining the policy rate — which according to the agreement is the repo rate.

Objectives of the Agreement:

  • To maintain the price stability with a focus on growth.
  • To subdue India’s chronic finance volatility.

 

About the Agreement:

  • Under the agreement the Reserve Bank is committed to bringing inflation below 6% by January 2016. The consumer inflation target has been set at 4%, with a band of plus or minus 2% points, for the financial year 2016-17.
  • Under the agreement, the central bank will be deemed to have missed its target if consumer inflation remains above the 6% level for three consecutive quarters during 2015-16.
  • The bank will have to explain to the government the causes, and what steps it intends to take to steer inflation back within a given time if it misses the target.
  • The RBI is also required to make public every six months a document explaining the sources of inflation and the inflation forecast for the period between six and eight months.
  • In case of any dispute arising out of interpretation of the agreement, it would be resolved through a meeting between the RBI governor and the government

With this agreement, RBI has joined the group of central banks like the US Federal Reserve and European Central Bank which have inflation targeting as their main objective.

The government will now need to amend the RBI Act to reflect a new mandate for the central bank, ushering in the biggest overhaul of monetary policy since the big bang reforms of 1991 that saw India open up its economy to foreign investors.

About the RBI:

The Reserve Bank of India is India’s Central Banking Institution, which controls the Monetary Policy of the Indian Rupee.

  • It commenced its operations in April 1935 during the British Rule in accordance with the provisions of the Reserve Bank of India Act, 1934. Following India’s independence the RBI was nationalised in the year of 1 January 1949.
  • It is a member bank of the Asian Clearing Union.
    The bank is also active in promoting financial inclusion policy and is a leading member of the Alliance for Financial Inclusion (AFI). It represents the Government of India as the member of the IMF and the World Bank.

Important functions of the RBI:

  • Regulator and supervisor of the financial system.
  • Manager of foreign exchange.
  • Issuer of currency.
  • Banker’s bank.
  • Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker.
  • Formulates, implements and monitors the monetary policy.
  • Prescribes broad parameters of banking operations within which the country’s banking and financial system functions.
  • Custodian of Cash Reserves of Commercial Banks.

Sources: The Hindu, BS, Wiki, RBI.