Comprehensive News Analysis – 04 June 2016

Table of Contents:

A. GS1 Related:

1. Amritsar’s Town Hall is site of new Partition Museum

B. GS2 Related:

1. India seeks help of friends for Nuclear Suppliers Group entry

2. Illegal arrest a blow to individual dignity, says SC

3. Panel backs autonomous units for hill-country Tamils, Muslims

C.GS3 Related:

1. States have more share of Centre’s tax revenue: Arvind Subramanian

2. Mathura violence: Named after Netaji, splinter group of Jai Gurudev followers ‘eyeing government land’

D. GS4 Related
E. Important Editorials : A Quick Glance

The Hindu

1. It’s raining cheer

2. Drawing Kabul into a closer embrace

3. Taking the ordnance route

Indian Express

1. India, US, a new moment

Others:

1. PIB

a) Asia’s first Gyps Vulture Reintroduction Programme’ launched

2. The Financial Express: Banking solution at doorstep for millions

3. The Financial Express: Audacity of Prime Minister’s ambition striking, but where’s the money going to come from

4. The Business Line: Drowned in red

5. The Economic Times: Indian states should strive to attract innovation centres

6. The Economic Times: To Africa from India, with bumbling love

7. Quick Bits

a) Services PMI falls again, is weakest since Nov 2015

b) Green Bill loses teeth: Ministry suggests steep reduction in fines in new draft

F. Concepts-in-News: Related Concepts to Revise/Learn:
G. Fun with Practice Questions 🙂
H. Archives

.

+++++++++++++++++++++++++++++++++++++++++++++++

Useful News Articles

A. GS1 Related
  1. Amritsar’s Town Hall is site of new Partition Museum

Topic: History and culture

Category: Museum on Partition

Location: The Hindu

Key points:

  • The historic Town Hall in Amritsar, a late-19 century building that stood witness to the unrest in the Punjab after the JallianwallaBagh massacre and the Partition, will be the site of the new Partition Museum
  • This was announced in London today by Kishwar Desai, Chair of the Arts and Cultural Heritage Trust(a registered trust under the Indian Trusts Act, 1882), which has initiated the project and will manage the museum
  • The Punjab government has donated one wing of the Town Hall for the project. The museum’s collection of artefacts, art, documents and oral histories will be built through contributions and donations from private and public sources

 

B. GS2 Related
  1. India seeks help of friends for Nuclear Suppliers Group entry 

Topic: International Groupings

Category: NSG

Location: The Hindu

Key points:

 

  • the Ministry of External Affairs confirmed that a high-power campaign was under way aimed at “engaging all members of the Nuclear Suppliers Group” in the run-up to the extraordinary plenary that NSG will host in Vienna on June 9. The plenary is likely to consider India’s application to become a member of the group
  • India’s quest of NSG membership is likely to feature prominently during the visit of Prime Minister Narendra Modi to Switzerland, the U.S. and Mexico which are part of his five-nation trip beginning on Saturday
  • South Korea, the chair of NSG meetings this year said it is high time that India gets invited to NSG as it has an impeccable track record

 

  1. Illegal arrest a blow to individual dignity, says SC

Topic: Polity

Category: Checks and Balances(Check of judiciary on executive)

Location: The Hindu

Key points:

  • Illegal use of state power to rob a person of her liberty is an assault on the citizen’s identity and constitutional right to dignity, the Supreme Court held in a judgment delivered on Friday
  • In a scathing verdict against police excesses, the apex court details the conduct of a Madhya Pradesh police team which went from Bhopal to Pune to arrest a woman lawyer in her seventies and her doctor daughter
  • Quashing the criminal case against the women, the court ordered Madhya Pradesh to pay Rs. 5 lakh each as compensation to the mother and daughter
  • “We are inclined to think that the dignity of the petitioners, a doctor and a practising advocate has been seriously jeopardised. Dignity is the quintessential quality of a personality for, it is a highly cherished value. It is also clear that liberty of the petitioner was curtailed in violation of law,” the judgment observed
  • The court explained how an illegal curtailment of an individual’s liberty leads to disillusionment, and how her faith in the rule of law is shaken. “It is an assault on his/her identity. The said identity is sacrosanct under the Constitution,” said the court

Note: All power is a trust-Benjamin Disraeli(What does the quote imply)

 

3. Panel backs autonomous units for hill-country Tamils, MuslimsTopic: India’s Neighbourhood

Category: Sri lanka

Location: The Hindu

Key points:

  • The expert panel on constitutional reforms in Sri Lanka has supported the idea of forming “internal autonomous units” for Muslims in the East and hill-country Tamils in the Central Province
  • The panel, which gave an account of the plight of the hill-country (Malayaha) Tamils, felt the proposed unit needed to be empowered to address economic, social, cultural and religious issues concerning the community and it should enjoy legislative and executive powers over defined matters, having an impact on the lives of the community

 

C. GS3 Related

1. States have more share of Centre’s tax revenue: Arvind Subramanian

 

Topic: Economy

Category: Financial Devolution

Key points

  • Speaking about the changes brought by the 14th finance commission,the Chief Economic Adviser to the Government of Indiasaid “until recently, the Centre was much more profligate than the states; average fiscal deficit of states was half of that of the Centre. All of the states had implemented their own fiscal responsibility legislation; the Centre was playing loose with its FRBM (fiscal responsibility and budget management). States were responsible if you analyse their budget. It seems that trend is going to continue.”
  • “The devolution of funds from states to urban bodies is very important. States have to improve the delivery of essential services,” he said
  • According to the FRBM Act, the states have a fiscal deficit target of three per cent of their respective gross domestic product

 

2. Mathura violence: Named after Netaji, splinter group of Jai Gurudev followers ‘eyeing government land’Topic: Security

Category: internal conflicts

Location: The Indian Express

Key points

  • Members of Swadheen Bharat Vidhik Satyagrahi, also known as Swadheen Bharat SubhashSena clashed with the police on Thursday leadingto the death of 24 people, including two police officers
  • Mathura residents and members of Jai Gurudev Ashram claim the perpetrators of the violence are a splinter group of supporters of a late spiritual leaderand that they wanted to build an ashram on the government land they were eyeing to encroach

 

D. GS4 Related
E. Important Editorials: A Quick Glance

 

The Hindu

 

  1. It’s raining cheer

Topic: Geography/Economy

Category: Monsoon and its Impact on Indian Economy

Key points

  • For the first time in three years, the India Meteorological Department has projected that the monsoon rains will be above normal. Rainfall during the June to September southwest monsoon season is forecast to be 106 per cent of the long period average, with a margin of error of 4 per cent
  • The prospect of abundant rains is obviously cause for cheer. With the lives of more than two-thirds of India’s 1.3 billion people directly linked to the fortunes of the rural economy, and almost 80 per cent of India’s annual rainfall a product of the southwest monsoon, the import of the IMD’s prediction cannot be overstated
  • Significantly, the Met department also expects the above-normal rains to be well distributed across the key crop farming areas in the north-west, central and southern peninsular regions, with the likelihood of a shortfall seen only for the north-east
  • In its April policy statement, the Reserve Bank of India had highlighted the significance of the rains to monetary policy when it said a normal monsoon in 2016 could provide a “favourable supply shock” by strengthening rural demand and augmenting the availability of farm produce that would help moderate inflation
  • While agriculture and allied economic activities contribute just a little over 15 per cent to overall Gross Value Added, they have a disproportionate impact on rural consumption, as they provide livelihood for almost half of the country’s workforce
  • So for manufacturers of goods ranging from personal care products to tractors, a bountiful monsoon can potentially deliver a substantial boost to sales. Adequate rainfall, especially in upstream catchment areas, would also help improve electricity supply in States more dependent on hydel-power, such as Karnataka and Kerala
  • However, the capricious nature of weather phenomena and the fact that the IMD has a success rate of about 30 per cent in correctly predicting the ‘rainfall range’ over the last 10 years demand that expectations remain well anchored till the actual onset and subsequent advance of the monsoon has been established
  • The government needs to use this opportunity to strengthen the water retention and storage infrastructure. In his Budget speech, the Finance Minister had said work on least five lakh farm ponds and dug wells would be taken up as part of MGNREGA, and it is hoped a fair portion of that has been executed or is set to begin
  • Given the alarming levels to which groundwater has declined countrywide, the Centre and States need to be more focused on enabling recharge of aquifers and existing water bodies

 

  1. Drawing Kabul into a closer embrace

Topic: International Relations

Category: India and Afghanistan

Key points:

  • India’s policy of deepening its engagement in the post-Taliban Afghanistan through economic reconstruction will mark a milestone when Prime Minister Narendra Modi inaugurates a dam built with Indian aid in Herat province. The 42 MW dam, with an investment of over $275 million, will boost the agricultural and industrial sectors of Herat, one of the few success stories in this war-torn country
  • The project underlines India’s resolve to sharpen its profile in the region. The Herat visit comes close on the heels of a regional corridor agreement Mr. Modi signed with Iranian and Afghan leaders in Tehran, under which India will finance the development of Iran’s Chabahar port, which will be linked to Afghan road networks
  • India’s interest in seeing Afghanistan move towards greater peace and prosperity cannot be overstated. India is one of the closest regional powers that have invested in institution and infrastructure building in Afghanistan. For India, Afghanistan has immense strategic potential. Besides the infrastructure work India has initiated and completed, it has also signed the TAPI pipeline project that aims to bring natural gas from Turkmenistan through Afghanistan and Pakistan to India
  • More important, a friendly, stable regime in Kabul is geopolitical insurance against Pakistan’s deep state. Both countries share concerns about Pakistan’s good-terrorist-bad-terrorist nuancing
  • Afghanistan is currently going through a particularly turbulent transition. The government in Kabul has been stretched in trying to stop Taliban advances over the past few months. President Ashraf Ghani seems to have realised that a complete military victory is improbable
  • In fact, Modi goes to Afghanistan at a time when Mr. Ghani is openly targeting Pakistan for supporting the Taliban. This raises the question of whether New Delhi’s engagement should be limited to infrastructure development or whether it should expand its relationship
  • Lately, India has signalled a small shift in its policy by delivering M-25 attack helicopters to Kabul. But it remains cautious about making larger overtures on security and is wary of being sucked into a never-ending war. Such caution is required. But it should not deter India from playing a bigger role in a country whose stability is vital for its regional ambitions and whose people traditionally count India as a well-meaning friend
  • As the Chabahar agreement brought together India, Afghanistan and Iran, New Delhi should work to bring together more regional powers invested in Afghanistan’s stability and economic development

 

  1. Taking the ordnance route

Topic: Governance

Category: Defence

Key Points

  • Pulgaon CAD of the Indian Army is a 7,100-acre facility, located about 115 km from Nagpur, is in effect the ‘mother depot’, the central repository of India’s stockpile of munitions, from standard-issue bullets to artillery shells, mines, tank shells and even BrahMos missiles
  • The CAD also undertakes the task of disposing of ammunition which has completed its life cycle, or is defective. Besides the Pulgaon nerve centre, there are seven Central Ordnance Depots, 13 Regional Ordnance Depots and 12 Forward Ammunition Depots. Most of the depots were set up and have been in use since the days of the British Raj
  • The Army Ordnance Corps (AOC), which also traces its origin back to the colonial era when the ‘Board of Ordnance’ was established in April 1775, is responsible for providing logistics support to the Indian Army and thus constitutes the backbone that sustains the nation’s war-fighting capabilities
  • One of the functions of the AOC involves the mechanics of provisioning and procuring all items required to raise and maintain an efficient and effective fighting Army. It manages an inventory range covering every requirement of a soldier from “clothing to weapons, from a needle to a tank and also all munitions except fuel, fodder and medicines”. Under this also falls the task of ammunition management
  • Ammunition management basically covers the entire arc from repair and servicing of all munitions and missiles to disposal and demolition of unserviceable/dangerous ammunitions and explosives. Ammunition is stored in specifically designed sheds and segregated based on their explosive nature. For instance, mines and regular bombs are stored in covered sheds with requisite spacing between racks
  • More lethal and sensitive weapons such as missiles are stored in temperature-controlled sheds. Former Army chief General V.P. Malik says that since 2000-01 major modernisation plans had been undertaken vis-à-vis storage of ammunition. “Since then 75-80 per cent of ammunition has been kept in specialised huts. Before that most of it was lying in the open,” he says
  • A senior Army officer explains that various techniques are incorporated into the design of the sheds to minimise damage in case of an accident. For instance, to store high-explosive ammunition, reinforced walls are erected on three sides while one side is kept deliberately weak. “So in case of an explosion the impact will be directed to the wall which is weak, minimising damage,” he says
  • The cause of the Pulgaon explosion is still being ascertained, but of the three plausible reasons — accident, neglect or sabotage — the Army brass and theDefence Minister have virtually ruled out the last since the CAD is well-secured. It is believed that the shed in question housed ammunition that had completed its shelf life; such stockpile is considered to be relatively unstable. As Gen. Malik says, “As the shelf life of the ammunition increases, it is more prone to accidents.”
  • Incidentally, numerous Parliamentary Standing Committee and Comptroller and Auditor General reports over the years have pulled up the government and the Army for shortage of critical ammunition and unusually high quantities of defective ammunition in stockpiles which threaten to severely undermine fighting capabilities in the event of a prolonged war
  • Significantly, a 2015 CAG audit flagged serious concerns regarding fire safety, transportation and storage, pointing out that the Army continued to ferry explosives in ordinary vehicles, that the storage facilities weren’t satisfactory, and that expired explosives weren’t always disposed of in a timely manner
  • The Army has currently rolled out a modernisationprogramme on a trial basis at three ammunition depots to upgrade security and firefighting infrastructure. It entails a three-tier security and fire system. The first tier is perimeter security, with measures such as powerful lights, night vision devices and electrical fences. The second tier consists of an inner wall mounted with additional camera-lined fencing and access-controlled gates. The third tier is for high-security areas such as missile shelters with provisions such as sensors and Quick Reaction Teams on standby. The plan is to eventually extend this to all 13 Central Ordnance Depots
  • To ensure safety of people residing around the depots, a safety radius of one kilometre is anyway maintained where no construction is allowed, though with increasing pressure on land and availability of automation and better storage technology, these norms are under review
  • While all this sounds good on paper, the fact is that even after the turn-of-the-millennium modernisation revamp of ammunition depots referred to by Gen. Malik, mishaps recur

 

Indian Express:
  1. India, US, a new moment

Topic: International Relations

Category: Indo-US Relations

Key Points

  • During PM’s visit to Washington, the two leaders will try and tie together many loose ends on a range of issues including nuclear cooperation, defence partnership, counter terrorism and climate change
  • Beyond celebration and consolidation, the PM would also be looking ahead.Untilnow, Modi’s focus was on completing the unfinished agenda that he had inherited. He now has the opportunity to restructure the relationship with the United States
  • Modi’s visit signal that the first fruits of the historic nuclear initiative are at hand — in the form of a contract for the US company Westinghouse to construct six atomic reactors in Andhra Pradesh. On his part, Obama will welcome India into the Missile Technology Control Regime and is expected to strongly reaffirm support for India’s entry into the Nuclear Suppliers Group, the exclusive group that regulates international atomic commerce
  • The NSG members are meeting later this month and would need to see a vigorous American diplomatic push to convince China and a few other holdouts that America will not take “no” for an answer on India’s membership. India’s entry into the NSG will mark the full integration of India into the global nuclear order. It also marks an end to persistent nuclear disputes between India and the US since the nonproliferation regime came into being in 1970
  • If the 1950s and 1960s saw expansive nuclear and advanced technology cooperation between India and the US, the 1970s, 1980s, and 1990s saw its disintegration amidst ever advancing US sanctions against India. As Delhi and Washington put behind three decades of nuclear recrimination, Obama and Modi must begin to reimagine the possibilities for high technology cooperation between the two countries, ranging from outer space to artificial intelligence and the maritime domain to microbiology
  • Even more tantalizing is the prospect for greater understanding between India and the US on our troubled northwestern frontiers. For nearly six decades, differences over Pakistan have been the principal source of political mistrust between India and the US
  • Bush addressed the problem, in part by de-hyphenating US relations with India and Pakistan. The Great War on terror after 9/11, however, saw the US reliance on Pakistan rise rapidly. While Bush did not let Pakistan come in the way of expanding ties with India, he was also not willing to confront the fact that Pakistan was playing both sides of the street in the war against terror
  • Obama has begun to change certain aspects of this policy, for example, in attacking Osama bin Laden’s hideout in Pakistan in 2011 without informing Islamabad. More recently, last month, Obama droned the Taliban chief Mullah Mohammed Mansour to death. The frustration in dealing with Pakistan is deep and finally welling up in Washington
  • The new dynamic in Washington has created the space for Modi and Obama to have a fresh conversation on terrorism, Pakistan and Afghanistan. The two leaders can push their suspicious security establishments towards more productive intelligence sharing and on joint operations against international terrorism.
  • Even more important is the prospect that Delhi and Washington will finally find a way to coordinate their policies towards Pakistan. Delhi and Washington are painfully aware that neither has the power to unilaterally alter Pakistan’s behavior
  • But working together, they might have a better chance. All these decades, Delhi and Washington have talked past each other on Pakistan. But working together to nudge Pakistan towards moderation is an idea whose time may have finally come
  • For Modi and Obama, a new partnership to shape the future of Pakistan must necessarily be part of a new framework for geopolitical burden-sharing between India and America. Whoever the next president of the US may be, the US establishment is under considerable popular pressure to downsize Washington’s expansive international commitments
  • Modi, in turn, has begun to position Delhi as a leading power that is ready to take larger responsibilities in the region and beyond. Taken together, these two trends create the basis for reordering India’s relations with the US

 

Others:

 

1. PIB

 

a)  Asia’s first ‘Gyps Vulture Reintroduction Programme’ launched

  • Asia’s first ‘Gyps Vulture Reintroduction Programme’  was launched by the UN Environment Minister
  • Captive Himalayan Griffons were released to the wild as part of the programme
  • The Union Minister described the breeding and conservation of vultures as a significant step in the direction of saving the species. It is a matter of concern that the species of vulture has become endangered. Most vultures have disappeared and the reason is Diclofenac, a pain killer drug given to cattle which can kill birds. When vultures feed on the carcasses of animals with Diclofenac, they also die. Later the drug was banned by the government. As vultures play a vital role in keeping the environment clean, their breeds should be increased and the government is constantly working to increase their numbers

 

2. The Financial Express: Banking solution at doorstep for millionsTopic: Economy

Category: Banking

Key Points

  • Even before the Union Cabinet approved the setting up of the India Post Payment Bank (IPPB), three of the 11 original payment bank licencees—Tech Mahindra, Cholamandalam Investment and the Dilip Shanghvi-IDFC Bank-Telenor combine—had pulled out
  • Setting up IPPB—an 800-pound gorilla in the payments bank arena—is a step in the right direction to provide banking solutions at the doorstep of millions of Indians who currently do not have access to these
  • IPPB’s big plus is that it starts off with an enviable infrastructure of 54 lakh post offices across the country. Of that 1.39 lakh—90%—are in rural areas, many of which are in areas where banking services have not percolated even now
  • IPPB, slated to start operations in 50 districts in March 2017, is expected to cover the entire country by 2018-19. That involves setting up 650 branches and installing 5,000-odd ATMs. Among the big gainers of the spread are e-commerce companies like Flipkart and Amazon that cater to the diverse needs of buyers in the hinterland
  • Though India Post, with revenues of Rs 11,640 crore (2014-15), has an inherent advantage, thanks to its infrastructure, it faces problems
  • First, unlike commercial banks, it cannot offer credit. Having a payments bank licence also does not help in that regard. Second, while India Post started core banking facilities in 2013, only 22,137 (14%) of the post offices have been covered so far. It is unlikely that many of the smaller post offices will be connected in the near future
  • As a result, the operations of India Post are not efficient enough for today’s consumers. An MIS started in one branch cannot be redeemed in another despite the spread of core banking. It will be a while before that becomes a reality
  • Now that the government has given the go-ahead for IPPB, it is time that India Post looks to leverage its potential via the payments bank, by providing financial inclusion apart from creating employment opportunities

 

4. The Financial Express: Audacity of Prime Minister’s ambition striking, but where’s the money going to come fromTopic: Economy

Category: Financing the government’s initiatives

Key Points

  • One crore houses for the rural poor by 2019 and another two crore for the urban poor by 2022, five crore subsidised LPG connections for the rural poor over the next three years on top of 3.5 crore already given out last year, 100 km of rural roads built per day over the past two years as compared to 73.5 km in the last three years of the previous government, 12 km per day of highways in FY16 versus 8.5 in the last two years of the previous government, 139 lakh toilets in the last year, nearly 12.5 crore insurance policies with a cover of Rs 2 lakh already issued—the obvious question is where the money is going to come from
  • While there is no one place where you can get the answer from—possibly NITI Aayog will discuss this in its perspective plans—the picture gets more than a bit disconcerting when you try to put together the pieces based on what various news items report
  • It is easy to appreciate that a lot of money just gets wasted in the float and the BJP is trying to mop up that. There is no reason, for instance, why cash-rich PSUs should simply be sitting on cash and earning money on fixed deposits; if they can’t invest the money, it has to be returned to shareholders
  • Similarly, if the EPFO has Rs 30,000 crore in unclaimed deposits—because it made it so difficult to withdraw savings, poor people had no option but to abandon their hard-earned money—perhaps it makes sense to use this to fund insurance for the poor with the caveat that, if and when these people make a claim, the government will have to make it good
  • Yet, the answer isn’t quite that simple and there is a need to put together a reasonable explanation for the sources of finance
  • LIC, for instance, has a lot of money and so it can be argued that there is no harm if a portion of this is lent to the Railways to help finance rolling out its network—after all, the Rs 150,000 crore, over five years, is being lent at a rate higher than what LIC gets when it invests in government bonds. But what if the Railways is not able to pay back the money? After all, social returns from projects and hard cash from passenger/freight revenues are two different things. And, in any case, this is not restricted to funding the Railways. LIC is being regularly asked to buy shares of PSUs being divested when there are no other takers and has even been shoring up the equity of PSU banks while there is no certainty that they will revive in the future. Even electricity finance firms REC and PFC have invested Rs 3,300 crore in bonds of banks though there is no obvious reason for them to do so
  • LIC, it is true, has made a lot of money on its investments in PSUs in the past, but let’s keep in mind the funds with LIC are not ‘public’ monies, they are the hard-earned savings of millions of individuals whose lives depend upon LIC making money from the investments. Perhaps, the most frightening in this context are the reports that LIC has been asked to contribute to 10% of the Rs40,000 crore corpus of the National Investment and Infrastructure Fund (NIIF)
  • NIIF is meant for ‘patient’ money like that of pension funds such as LIC, and will invest in long-term infrastructure, possibly even in buying stressed assets, but if these assets don’t pan out, will the government be guaranteeing LIC’s private sector investors their money?
  • According to the plan, NIIF will buy existing infrastructure assets and, after nursing them to health, will sell them at a profit—but given how only a small fraction of the infrastructure assets put out by firms over the last few years have been sold, LIC’s wait may be quite long
  • Banks lending to the Punjab government for buying foodgrain also thought this was safe, but RBI has asked them to provision for this. While this was still a few thousand crore of rupees, banks who lent over Rs4 lakh crore to state government-owned electricity boards have taken an even bigger hit—a cut of 5-6 percentage points in their lending rates on three-fourths of the Rs 4 lakh crores—due to this same misconception of an implicit government guarantee
  • Asking government-owned banks to take a haircut to save government-owned SEBs seems okay since they are both owned by the larger ‘government’, but it gets complicated when LIC is buying into the same banks with funds that it holds in trust for millions of private individuals. Asking LIC to invest in NIIF may be within the prudential norms, but when you add the investment in PSUs and banks and loans to the Railways, it does get a bit worrying
  • Or take the proposal that EPFO is working to provide low-cost housing, probably an integral part of the government’s low-cost housing plan. Under what is being talked of, a member will be allowed to take a loan from her current balances—this is quite legitimate—and also use future EPFO payments to substitute for the EMI on the loan. Does this make sense since, apart from lowering the eventual retirement corpus, what happens if the individual doesn’t have a job for some time in the future? In any case, EPFO’s expertise is not in the lending business
  • To be certain, some of the schemes make sense. The government, for instance, plans to sell 104 existing toll-road projects for R60,000 crore or so, and use this money to fund new projects—but how far can this securitisation go(who will buy?) if, as is happening now, the bulk of the funding for road projects including for PPP ones has to come from the government?
  • Belaboring a point doesn’t necessarily make it more right, but it would be reassuring if the government explained its financing plans—especially those involving LIC and EPFO—and then had a discussion on whether these make sense
  • Using RBI balances to fund the recapitalisation of banks, for instance, sounded like a great idea when the Economic Survey presented it in February, but it made a lot less sense when RBI Governor explained this would rob the central bank of its ability to manage liquidity

 

5. The Business Line: Drowned in redTopic: Economy

Category: Banking

Key points:

  • There is a sea of red in the banking sector. New records of the dubious kind have been set — Punjab National Bank, for instance, announced an overwhelming ₹5,367-crore loss in the fourth quarter of 2015-16
  • Gross non-performing assets have risen by ₹2.5 lakh crore in the last two quarters alone; they could go up further in the coming quarters as banks drain the venom of bad loans completely out of the system. The scale of losses that banks have disclosed warrants a closer look at what has gone wrong
  • Corporates bear some responsibility for over-assessing demand during the boom years and investing borrowed funds in capacities that proved to be excessive. The excess capacities created then are yet to be fully absorbed, which shows how much they had got carried away by the boom conditions
  • But banks have to equally take the blame for not being diligent enough. The quality of credit appraisal, subsequent monitoring and periodic assessment of emerging risks on their part has obviously left much to be desired
  • The practice of restructuring debts when borrowers fell on hard times only postponed the inevitable. And this sorry state of affairs would have continued were it not for the pressure from the Reserve Bank of India to begin the clean-up of this mess through its Asset Quality Review
  • The Centre has initiated a set of institutional reforms to provide greater autonomy to banks and improve corporate governance. The setting up of a banks board bureau is one example of that. This will hopefully help insulate banks from political pressures especially in the appointments to top posts in public sector banks. Such appointments in the past, based on political considerations, obviously had a role in building up the bad loans problem
  • Public sector banks should review and tighten their lending practices even while ensuring that they don’t err too much on the side of caution, which will end up smothering the incipient growth in the economy. For its part, the Centre should make good its recapitalisation promise, and if necessary, go beyond the ₹25,000 crore that has been set aside in the budget

 

6. The Economic Times: Indian states should strive to attract innovation centresTopic: Economy

Category: innovation

Key points:

  • Bengaluru has emerged as a major destination for innovation centres, finds a study by Capgemini. India’s Silicon Valley houses most India-located innovation centres, but other cities like Mumbai also have a few. Each state should try to make several of their cities/towns attractive destinations for large enterprises to locate their innovation centres
  • The fear of obsolescence haunts the world’s companies. Since 2000, 52% of Fortune 500 companies have merged, been acquired or gone bankrupt. Innovation is the key to survival. It is not easy to innovate, however, even if large amounts of money can be spent on in-house R&D. What you cannot do yourself, you outsource — naturally.
  • You set up an innovation centre in an innovation hub where startups, venture capital, skilled talent, energetic entrepreneurs, accelerators and academic institutions together produce innovative alchemy. Most innovation centres are company-owned, some are a bunch of startups tasked with disrupting the company’s existing business
  • Wal-Mart, for example, created an internal search engine that boosted online sale conversions 20% in this fashion. For Indian states, it makes sense to create the preconditions in their most promising cities to make them attractive for startups and their attendant ecosystem components
  • Bhubaneswar, Thiruvananthapuram, Kochi, Chennai, Pune and Kolkata are prime candidates to join the league of Bengaluru, Mumbai and the National Capital Region
  • Instead of wasting money on organising mega-rituals that generate investment MoUs worth billions, only a fraction of which translate into projects that take off, state governments should consider investing in their towns and the individual constituents of a startup ecosystem
  • Venture capitalists, skilled talent and academics have to be welcomed. The challenge is decidedly political, and not just to invest in roads and universities and other infrastructure

 

7. The Economic Times: To Africa from India, with bumbling loveTopic: International Relations

Category: Indo-African Relations

Key points:

  • That Vice-President Hamid Ansari is the first Indian vice-president to visit the African nations of Tunisia and Morocco in 50 years is testament to how India and the African continent have failed to build on their historic ties. The two-nation tour is an effort by New Delhi to build on diplomatic gains from the India-Africa Summit
  • India and the African continent share historical ties, including a shared experience of a colonial past. Together, they are home to a third of the global population, the majority young
  • For Africa, rich in minerals, land and raw manpower, India can be a reliable development partner: in developing infrastructure, education, healthcare, financial depth, farming and bridging the digital divide. Greater partnership will benefit both Africa and India
  • Africa is home to seven of the fastestgrowing economies. The India-Africa partnership is not limited to trade and investment. The presence of large numbers of people of Indian origin across the continent adds to the sense of comfort and familiarity. An enhanced line of credit to Africa of $10 billion is a testament to India’s recognition of the potential
  • Despite the ties, and India’s significant foreign direct investment in the continent, New Delhi has not been able to build on the relationship. The process for accessing these concessional loans is slow, and other countries like China that move faster are able to corner a larger share of the opportunities
  • More attention needs to be focused on simplification of bilateral processes and tax regimes, if India and Africa are to achieve the full potential of their partnership. India and the countries of the African continent recognise the potential of a partnership. The focus must shift to operationalising it, instead of merely harping on the reality of a huge potential

 

8. Quick Bits

 

a) Services PMI falls again, is weakest since Nov 2015Services sector activity in the country dipped for the second straight month in May and was the weakest since November 2015. The Nikkei Services Business Activity Index fell to 51 in May from 53.7 in April.

“New business inflows expanded at the slowest rate since July 2015,” said a release on Friday.

A reading above 50 represents expansion while one below this level means contraction

Meanwhile, the Nikkei India Composite PMI Output Index, which maps both manufacturing and services sectors, fell to a six-month low of 50.9 in May, from 52.8 in April.

 

b) Green Bill loses teeth: Ministry suggests steep reduction in fines in new draftGreen Bill loses teeth

The new version of the Environmental Laws (Amendment) Bill is set to go to Cabinet for its approval soon

 

F. Concepts-in-News: Related Concepts to Revise/Learn:
G. Fun with Practice Questions 🙂
Question 1: Which of the following statements is/are correct?
  1. The South East trade winds bring the moisture that pours down as monsoon rains
  2. The monsoonal wind blows from land to sea

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

 

Question 2: Which of the following statements is/are correct?
  1. The MTCR was created in order to curb the spread of unmanned delivery systems for nuclear weapons
  2. China and India are members of MTCR

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

 

Question 3: Which of the following statements is/are correct?
  1. The Radcliffe Line was published as a boundary demarcation line between India and Pakistan upon the partition of India
  2. The McMahon Line is a line agreed to by India and China as per the Shimla Accord

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

 

Question 4: : Which of the following statements is/are correct about Payments Bank?
  1. The bank cannot undertake lending activities
  2. 25% of its branches must be in the unbanked rural area.
  3. They cannot issue ATM cards or Debit cards
  4. They can transfer money directly to bank accounts

a) 1 and 2 only

b) 1,2 and 4

c) 2,3and 4

d) All the Above

 

Question 5: Which of the following statements is/are correct about the National Infrastructure Investment Fund?
  1. The fund is open to attract funding from overseas investors, PSUs, domestic pension, provident funds and NSSF
  2. The activities of NIIF will be overseen by the finance ministry

a) 1 only

b) 2 only

c) 2 and 3 only

d) All the Above

 

Check Your Answers

“Proper Current Affairs preparation is the key to success in the UPSC- Civil Services Examination. We have now launched a comprehensive ‘Online Current Affairs Crash Course’.
Limited seats available. Click here to Know More.”

 

Leave a Comment

Your email address will not be published. Required fields are marked *