Insights Daily Current Events, 21 December 2015
Paper 1 Topic: communalism & secularism.
MHA sends back anti-conversion Bills
The Ministry of Home Affairs has sent the pending anti-conversion Bills of Rajasthan and Chhattisgarh back to these States. The Home Ministry has asked the two States for further clarifications.
- The Rajasthan Bill was passed by the Assembly in 2008. According to the bill, anyone who is abetting religious conversion can be put in jail for five years and can be fined up to Rs. 50000.
- The Chattisgarh Bill, known as the Dharma Swatantraya Sanshodhan Vidheyak, 2006, says the return of a person to his ancestors’ religion shall not be construed as “conversion.” It accords with the ghar vapsi campaign of the right wing groups. The Bill says any person who wants to convert will have to inform the district magistrate who will be the final authority. It was passed in 2006.
The Bills were forwarded to the Centre in 2013. The MHA had sent it for consultations among the Ministries of Culture, Tribal Affairs, Minority Affairs and Women and Child Development. After getting a response from all the Ministries concerned, the Bills have been sent back to Rajasthan and Chhattisgarh.
sources: the hindu.
Paper 3 Topic: Indian Economy and issues relating to mobilization of resources.
RBI links lending rates to loan tenor
The Reserve Bank of India (RBI) has issued fresh norms on how banks ought to calculate their lending rates — a move which is aimed at lowering borrowing costs at a time when lenders are reluctant to do so.
About the new method:
The new method — Marginal Cost of funds based Lending Rate (MCLR) — will replace the present base rate system. This new framework will come into effect from April 1, 2016.
- MCLR, as the name suggests, mandates banks to calculate the lending rate taking into account the marginal cost of funds. In the base rate system, it was left to the individual banks as to what cost it used, which typically was the average cost of funds.
- RBI has mandated that MCLR will be a tenor-linked benchmark (tenor- length of time until a loan is due), and banks should arrive at the MCLR of a particular maturity by adding the corresponding tenor premium to the sum of marginal cost of funds, cost of maintaining cash reserve ratio and operating costs.
- Like base rate, banks are not allowed to lend below MCLR, except for few categories like loans against deposits, loans to bank’s own employees. In addition, fixed rate loans, which are typically personal loans and auto loans, will not be linked to MCLR.
- RBI has also clarified that loans that charge fixed interest rate in initial years and floating rate in the later years should be priced according to the MCLR norms.
- Banks have been mandated to calculate MCLR for different maturities like 1 day, 1 month, three month, six month, and one year. Banks are free to include more maturities for MCLR.
Apart from helping to improve the transmission of policy rates into the lending rates of banks, these measures are expected to improve transparency in the methodology followed by banks for determining interest rates on advances. These guidelines are also expected to ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks.
sources: the hindu.
Paper 2 Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
US Senate passes IMF reform in favour of emerging markets
The US Senate recently ratified reforms to boost the representation of emerging economies at the International Monetary Fund as part of a budget bill. This will clear the way for new industrial powerhouses like China and India to have more clout at the international lender. The legislation will now go to President Barack Obama.
- These reforms put Brazil, China, India and Russia among the IMF’s top 10 shareholders and give emerging markets more influence at the global lender.
- Under the new regime, China’s vote at the IMF would increase to 6% from 3.8%. This makes China the third-largest shareholder.
- Under the reform, all 188 members’ quotas will increase as the Fund’s quota resources rise to about 477 billion special drawing rights, the IMF currency, ($659.67 billion) from about 238.5 billion.
- Under the new proposals, the International Monetary Fund board will be entirely elected.
- As China’s voting rights rise, the US will see its share drop from 16.7% to 16.5%. India’s voting rights will also rise to 2.6% from the current 2.3%.
These reforms will improve the representation and voice of emerging markets and developing countries in the International Monetary Fund and is conducive to protecting the IMF’s credibility, legitimacy and effectiveness. The reforms are the biggest change in the governance of the Fund since it was established after World War Two.
The IMF, along with the World Bank, was conceived in 1944 at a conference in Bretton Woods, in the US state of New Hampshire. The IMF aims to preserve economic stability and to tackle – or ideally prevent – financial crises. Over time, its focus has switched to the developing world.
- The IMF is funded by a charge – known as a “quota” – paid by member nations – based on a country’s wealth. It determines voting power within the organisation; those making higher contributions have greater voting rights.
- The IMF also acts as a lender of last resort, disbursing its foreign exchange reserves for short periods to any member in difficulties.
sources: the hindu.
Paper 3 Topic: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.
India ranks 97th on Forbes’ best countries for business list
India has been ranked a low 97th out of 144 nations, behind Kazakhstan and Ghana, on Forbes’ annual list of the best countries for doing business in 2015. The ranking is, however, one step up from last year’s 98th rank.
- Denmark has topped the list. The US has dropped four spots to number 22, continuing a six-year descent since 2009 when it had ranked second overall. The US has scored poorly on monetary freedom and bureaucracy or red tape.
- The outlook for India’s long-term growth is moderately positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy.
- According to the report, India has many challenges that it has yet to fully address, including poverty, corruption, violence and discrimination against women and girls, an inefficient power generation and distribution system.
- India performed moderately well on certain factors, ranking eighth on investor protection, 41st on innovation, 57th on personal freedom and 61st on property rights. It scored low on trade freedom, ranking 125th and on monetary freedom it ranked 139th. On technology it ranked 120th, 77th on corruption and 123rd on red tape.
- The report added that India faces other challenges like high spending and poorly-targeted subsidies, inadequate availability of quality basic and higher education, and accommodating rural-to-urban migration.
- The United Kingdom and Japan both moved up three spots to No 10 and No 23 respectively. Germany improved two places to No 18 and China rose from No 97 to No 94.
- South Africa is ranked 47th on the list followed by Mexico (53), Kazakhstan (57), Zambia (73), Ghana (79), Russia (81), Sri Lanka (91), Pakistan (103) and Bangladesh (121).
- The very bottom of the list features a number of emerging markets restrained by high levels of corruption and little freedom.
Topic: general awareness.
The President of India, Shri Pranab Mukherjee recently received Garwood Award for ‘Outstanding Global Leader in Open Innovation’ from UC Berkeley-Haas School of Business.
- The award was presented to the President, among others, for promoting open innovation, for taking initiative of hosting and gathering global innovators at the first-ever Global Roundtable on the Inclusive Innovations at Rashtrapati Bhavan, organizing first Festival of Innovation at the Rashtrapati Bhavan to link together global leaders from technological, financial and educational sectors for the promotion of increased scalability in national and international grassroots innovation.
The University of California, Berkeley, one of the most prestigious educational institutes in the world, has established the Garwood Award to acknowledge individuals who have embraced, supported and encouraged open innovation in a significant and impactful way.
Paper 2 Topic: Important aspects of governance, transparency and accountability.
Adoption of the New Delhi Declaration 2015
The two day Regional Conference on ‘The Use of Money in Politics and Its Effects on People’s Representation’ was recently concluded at New Delhi. The conference culminated in the New Delhi Declaration 2015 on Political Finance Regulation in South Asia.
- The Conference was jointly organized by the Election Commission of India, International IDEA and India International Institute of Democracy and Election Management (IIIDEM).
The New Delhi Declaration:
- The New Delhi Declaration on Political Finance Regulation in South Asia, 2015, is in response to the needs for strengthening the regulation of political finance across the South Asian region and elsewhere in the world which adequately ensures level playing among all political parties and ultimately serves the welfare of public rather than special interests.
- It contains nine overarching principles including adoption of a holistic approach to regulation, comprehensive coverage, closing of monitoring gaps, coordinates efforts with stakeholders and agencies along with facilitating participation of women in electoral democracy.
- The overarching principles look at a holistic and integrated approach to regulation of political finance by closing gaps and loopholes in the implementation of the existing procedures and regulations. It also underscores the need to create uniformity for all political parties and candidates by creating an improved architecture for monitoring of expenditures and contributions.
- The declaration also has nine regulations and implementing guidelines on maintaining reasonable levels of spending, regulation of private contributions, and provision of public funding for political parties, prevention of abuse of state resources public disclosure of political finance, the regulatory authority, compliance, and enforcement among others.
- The guidelines aim at limiting campaign spending of candidates, political parties and third parties. They also contain provisions relating to regulating contributions including public and private along with corporate funding and anonymous donations.
- These overarching principles and guidelines which are recommendation of the Declarations will be disseminated to Election Management Bodies (EMBs) in South Asian region and elsewhere for appropriate use as per local contexts in their jurisdictions.
Paper 3 Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Textiles Minister launches ERP system of NHDC
The Union Textiles Minister Shri Santosh Kumar Gangwar recently launched the Enterprise Resource Planning (ERP) system in Varanasi. This is in line with the Digital India initiative of Government of India. With this, National Handloom Development Corporation Ltd (NHDC) has become the first PSU under the Ministry of Textiles to have an ERP system.
- The ERP system will improve productivity, increase efficiencies, decrease costs and streamline supply of raw material processes in NHDC.
- The ERP system will significantly benefit the weavers, who are the primary beneficiaries of the yarn supply scheme of Government of India.
- Weavers will gain from quicker delivery of NHDC material. It will also result in higher transparency and accountability, making the corporation’s activities visible for all stakeholders.
Key Benefits for weavers:
- By making the procurement process transparent, yarn will be available at the best price to the weavers across the country.
- The weavers will be able to access information anytime through the mobile app.
- They can view the stock of the material in yarn depots.
- They can place their indents.
- They can check the status of their indents.
- They can get the details of the dispatched material via SMS.
- The weavers would not have to visit NHDC office or send indent by post, saving time and money.
The principles of Digital India such as scope enhancement, process reengineering, use of integrated and interoperable systems and deployment of emerging technologies like cloud and mobile have been considered in developing the ERP system.