Insights Daily Current Events, 06 July 2016
Paper 3 Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
RBI’s steps on FCNR get FSDC nod
The Financial Stability and Development Council (FSDC) recently said that the Reserve Bank of India has taken the right steps to address the issue of concessional swaps against Foreign Currency Non-Resident (FCNR) deposits.
Banks had raised about $34 billion through FCNR (B) deposits in 2013, most of which are due this year. In 2013 the rupee was at an all-time low of 68.85 against the dollar and the central bank had asked commercial banks to raise the foreign currency deposits to shore up reserves. Banks, then, had swapped those dollars with the RBI. The central bank thereafter readied itself by buying forwards dollar. Now, the RBI estimates that the immediate effect of the maturity of these deposits would be an outflow of about $20 billion.
- FCNR (B) deposits mature mostly in three years. RBI had said that the swaps and the forwards will take care of the dollar requirement and should be neutral for the reserves. However, banks should witness deposit base depletion and some rupee liquidity will be strained.
- RBI had also said that it would take “all necessary measures to even out the resultant rupee liquidity gaps through use of appropriate instruments”.
- Assuring the market that the swaps are adequately covered by RBI’s forward purchases, the central bank, however, had also cautioned that the foreign exchange reserve could see some dip in the interim as the swaps and forwards are not timed perfectly.
An FCNR account is a term deposit account that can be maintained by NRIs and PIOs in foreign currency. Thus, FCNRs are not savings accounts but fixed deposit accounts. The account can be opened in the name of NRI individuals (single/ joint) or with resident Indians on ‘former or survivor’ basis.
What foreign currencies can one maintain in FCNR accounts?
Prior to 2011, FCNR deposits were allowed to be maintained in six currencies: US dollar, Pound Sterling (GBP), Euro, Japanese Yen, Australian dollar and Canadian dollar. However, in October 2011, the RBI decided that authorised dealer banks in India may be permitted to accept FCNR deposits in any permitted currency. ‘Permitted currency’ for this purpose would mean a foreign currency which is freely convertible and popularly include Danish Krone, Swiss Frank and Swedish Krona among others.
Exemption from IT:
It should also be noted here that interest income from FCNR (B) accounts is exempt from Income Tax. And deposit held under FCNR (B) a/cs is not taxable under Wealth Tax.
Sources: the hindu.
Paper 3 Topic: Issues related to direct and indirect farm subsidies and minimum support prices; Public Distribution System objectives, functioning, limitations, revamping; issues of buffer stocks and food security; Technology missions; economics of animal-rearing.
The Union Cabinet has approved the Interest Subvention Scheme for farmers for the year 2016-17. The Government has earmarked a sum of Rs. 18,276 Crore for this purpose.
- This will help farmers getting short term crop loan payable within one year up to Rs. 3 lakhs at only 4% per annum.
The salient features of the scheme are as follows:
- The Central Government will provide interest subvention of 5% per annum to all farmers for short term crop loan upto one year for loan upto Rs. 3 lakhs borrowed by them during the year 2016-17. Farmers will thus have to effectively pay only 4% as interest. In case farmers do not repay the short term crop loan in time they would be eligible for interest subvention of 2% as against 5% available above.
- In order to give relief to small and marginal farmers who would have to borrow at 9% for the post harvest storage of their produce, the Central Government has approved an interest subvention of 2% i.e an effective interest rate of 7% for loans upto 6 months.
- To provide relief to the farmers affected by Natural Calamities, the interest subvention of 2% will be provided to Banks for the first year on the restructured amount.
- In case farmers do not repay the short term crop loan in time they would be eligible for interest subvention of 2% as against 5% available above.
Paper 2 Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
MoU between India and Mauritius in the field of Rural Development and Poverty Alleviation
The Union Cabinet has approved signing of a Memorandum of Understanding (MoU) between India and Mauritius.
- The MoU will help to establish a framework for cooperation between the National Development Unit, Prime Minister’s Office of the Republic of Mauritius and the Ministry of Rural Development of the Republic of India in the sphere of rural development.
- The MoU will encourage cooperation in the field of rural development and capacity building on the basis of equality and mutual benefit between both countries.
- Under the MoU, a Joint Committee on Cooperation on Rural Development will be established which will meet alternatively in both countries on mutually agreed dates.
- Both countries have agreed to coordinate and facilitate appropriate technical cooperation, including the access to Indian expertise institutions that can assist in fulfilling the objectives of this MoU, exchange of relevant information and documents in the sphere of rural development.
- The MoU also facilitates transfer of latest technology, state of the art equipment and materials, and share best practices.
Both India and Mauritius have a large segment of their population living in rural areas and are pre-dominantly dependent on agriculture and its allied activities for their livelihoods. The Ministry of Rural Development plays a pivotal role in the overall development strategy of rural areas of the country.
Paper 2 Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
SC sets deadline for blocking online sex selection ads
Rapping online search engines like Google, Yahoo and Microsoft for patently violating Indian law, the Supreme Court recently asked the Centre to hold a meeting with their technical experts so as to find a solution to check advertisements and information on pre-natal sex determination being hosted by them.
- The court has asked the Centre to convene a meeting of technical experts and the search engines within 10 days to explore ways to block such advertisements.
The apex court had in January last year directed the search engines to strictly comply with Indian laws and lock advertisements on sex determination of a foetus.
The Pre-conception & Pre-natal Diagnostics Techniques (PC & PNDT) Act, 1994 was enacted in response to the decline in Sex ratio in India, which deteriorated from 972 in 1901 to 927 in 1991.
- The main purpose of enacting the act is to ban the use of sex selection techniques before or after conception and prevent the misuse of prenatal diagnostic technique for sex selective abortion.
- Offences under this act include conducting or helping in the conduct of prenatal diagnostic technique in the unregistered units, sex selection on a man or woman, conducting PND test for any purpose other than the one mentioned in the act, sale, distribution, supply, renting etc. of any ultra sound machine or any other equipment capable of detecting sex of the foetus.
Main provisions in the act are:
- The Act provides for the prohibition of sex selection, before or after conception.
- It regulates the use of pre-natal diagnostic techniques, like ultrasound and amniocentesis by allowing them their use only to detect few cases.
- No laboratory or centre or clinic will conduct any test including ultrasonography for the purpose of determining the sex of the foetus.
- No person, including the one who is conducting the procedure as per the law, will communicate the sex of the foetus to the pregnant woman or her relatives by words, signs or any other method.
- Any person who puts an advertisement for pre-natal and pre-conception sex determination facilities in the form of a notice, circular, label, wrapper or any document, or advertises through interior or other media in electronic or print form or engages in any visible representation made by means of hoarding, wall painting, signal, light, sound, smoke or gas, can be imprisoned for up to three years and fined Rs. 10,000.
- The Act mandates compulsory registration of all diagnostic laboratories, all genetic counselling centres, genetic laboratories, genetic clinics and ultrasound clinics.
Pre-Natal Diagnostic Techniques (Regulation and Prevention of Misuse) Act, 1994 (PNDT), was amended in 2003 to The Pre-Conception and Pre-Natal Diagnostic Techniques (Prohibition Of Sex Selection) Act (PCPNDT Act) to improve the regulation of the technology used in sex selection. The Act was amended to bring the technique of pre conception sex selection and ultrasound technique within the ambit of the act. The amendment also empowered the central supervisory board and state level supervisory board was constituted. In 1988, the State of Maharashtra became the first in the country to ban pre-natal sex determination through enacting the Maharashtra Regulation of Pre-natal Diagnostic Techniques Act.
Sources: the hindu.
Facts for Prelims:
- The Centre has given its ‘in-principle’ approval to set up the country’s 13th major port at Enayam, near Colachel in Tamil Nadu. A special purpose vehicle (SPV) will be formed for the development of port that will act as a major gateway container port for cargo and become a trans-shipment hub for East-West trade route. The initial investment for the SPV will come from three major ports in Tamil Nadu — V. O. Chidambaranar Port Trust, Chennai Port Trust and Kamarajar Port Limited. The new port at Enayam will also reduce the logistics cost for exporters and importers in south India who currently depend on trans-shipment in Colombo or other ports leading to additional port handling charges.
- The Centre has approved an outlay of Rs.10,000 crore towards a scheme to provide apprenticeship training to 50 lakh youth by 2020. The approved National Apprenticeship Promotion Scheme will provide financial incentives to employers to engage apprentices. Under the scheme, the Ministry of Skill Development and Entrepreneurship will share 25% of the total stipend payable to an apprentice with employers. The government will also fund 50% of the total expenditure incurred by the employer in providing basis training to apprentices.
- The Union Cabinet has given its approval for signing of a Memorandum of Understanding (MoU) between India and Mozambique on Drug demand reduction and prevention of illicit trafficking in narcotic drugs, psychotropic substances and precursor chemicals and related matters. The MoU is aimed to enhance mutual cooperation between the two countries in combating illicit trafficking in Narcotic drugs, Psychotropic substances and their precursors through exchange of information, expertise and capacity building.
- The Union Cabinet has approved signing of a Memorandum of Understanding (MoU) between India and Tanzania in the field of Traditional Systems of Medicine and Homeopathy. The MoU will provide structured frame work for the cooperation between the two countries for the promotion and propagation of Indian Traditional Systems of Medicine & Homeopathy in Tanzania.