Comprehensive News Analysis - 21 December 2016

Table of Contents:

A. GS1 Related:
B. GS2 Related:

1. Central forces rushed to Manipur

2. India, Kyrgyzstan seek a global pact against terror

C. GS3 Related:

1. Users must pay for rail services: Jaitley

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

The Hindu

1. Demonetisation — an unkind postscript

2. Time for a policy shift

The Economic Times

1. People can take inconvenience, but not bad planning

Business Line

1. A tale of two demonetisations

PIB

1. Next step towards ‘24×7 Power For All’: Shri Piyush Goyal launches GARV-II App to track Rural Household Electrification and Citizen Engagement Window ‘SAMVAD’

2. FM: India remains a bright point in global economy and BRICS in particular despite the slowdown in global economy in 2016

3. More than 1.22 crore new LPG connections released to BPL women under Pradhan Mantri Ujjwala Yojana

F. Concepts-in-News: Related Concepts to Revise/Learn:
G. BILLS/ACTS/SCHEMES/ORGS IN NEWS
H. Fun with Practice Questions 🙂
I. Archives

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Useful News Articles

A. GS1 Related


B. GS2 Related
  1. Central forces rushed to Manipur

Category: Polity and Governance    

Topic: Center-State Relations   

Key Points:

  • The Centre has rushed around 4,000 paramilitary personnel to Manipur.
  • This development takes place in the wake of violence following the economic blockade of the National Highways connecting the State.
  • Meanwhile, Nagaland Chief Minister T.R. Zeliang has sought the intervention of the Centre and the Manipur government in securing the lives and property of Nagas in the Imphal Valley of Manipur.

 

  1. India, Kyrgyzstan seek a global pact against terror

Category: International Relations  

Topic: Agreements involving India

Key Points:

  • India and Kyrgyzstan on 20th Dec 2016, finalised plans for joint military exercises in the New Year, and reiterated the need for a global convention against terrorism.
  • Visiting President Almazbek Atambaev highlighted the common historical heritage, and sought cooperation to deal with current global challenges like terrorism.
  • Atambaev mentioned that “Kyrgyzstan is home to the great Mughals of India and Emperor Babur came from the city Osh and even in his memoir, Baburnama, he refers to his place of origin in the mountains near Osh,”
  • The delegations finalised plans to hold the annual joint military exercises named “Khanjar-IV” in February-March.
  • The high-altitude Kyrgyz-Indian Mountain Training Centre being built in the city of Balykchi, will be used to train Indian military personnel.
  • The visiting delegation also welcomed India’s proposal for training Kyrgyz forces for U.N. peacekeeping assignments.

 

C. GS3 Related
  1. Users must pay for rail services: Jaitley

Category: Indian Economy  

Topic: Government Policy  

Key Points:

  • Outlining a vision for the Indian Railways, Finance Minister Arun Jaitley said rail passengers need to pay for services.
  • Significantly, the Minister signalled that the Centre will resist populist measures, focus on improving the railway station infrastructure, monetise railway assets for commercial activities, outsource train hospitality and most importantly, make consumers pay for the services they receive.

 

D. GS4 Related
E. Important Editorials: A Quick Glance
The Hindu
  1. Demonetisation — an unkind postscript

Category: Indian Economy

Topic: Government Policy  

Key Points:

  • In the wake of the recent  caveats, announced on 19th Dec 2016, restricting deposits over Rs.5,000 (roughly $70), critics have observed that this is not just difficult to fathom but also constitute an unfair change in the rules of the game.
  • While those opting to disclose unaccounted income under the new amnesty scheme, the Pradhan Mantri Garib Kalyan Yojana, face no restriction on depositing old notes- anyone depositing Rs.5,000 or more into a bank account will have to satisfactorily explain to two bank officials why this was not done earlier. 
  • It is also opined that implementation would likely be arbitrary as each bank branch may come up with its own ground rules, just as they are doing in the case of cash withdrawal limits.

 

  1. Time for a policy shift

Category: Indian Economy

Topic: Government Policy, Manufacturing  

Key Points:

  • In the context of the manufacturing and agriculture sectors, there has been a going on for several years- that of small versus large.
  • It is believed that small units are usually efficient in terms of resource use and management, and technically more efficient.
  • However, small units do not have access to several kinds of resources, particularly in relation to credit and marketing facilities, and are not able to reap the economies of scale.
  • Thus, large units may reveal better performance indicators and may have an edge in market competition.
  • It is important to note that the unorganised manufacturing sector, which includes both household and non-household units, accounts for a large majority of total manufacturing employment in India and the units in this sector are by definition small in size. 
  • One way that has been suggested to judge the economic viability of unorganised manufacturing units is to consider the performance index in terms of ‘technical efficiency’.

What is ‘technical efficiency’?

  • It is the ability of an industrial unit to transform inputs into output judged against the best practice units in the same industry — relative to the organised sector units. 

It is important to note that with a rise in income, the demand for products shift away from the unorganised to the organised sector. The government policy initiatives for promoting urbanisation in India, particularly the ‘Smart Cities’ programme, are expected to help make unorganised manufacturing more economically viable.

It is important to note that an important policy question is whether the unorganised manufacturing sector should be helped to restructure increasingly from household units to establishments. Such a transformation will provide efficiency gains to unorganised manufacturing, but may come at the cost of some loss in employment.

 

The Economic Times

1. People can take inconvenience, but not bad planning

Category: Indian Economy

Topic: Government Policy, Planning  

Key Points:

  • The Reserve Bank of India (RBI) and the finance ministry recently said that any deposits worth more than  Rs 5,000 in demonetised currency could henceforth be done only once.
  • But, this contradicts the earlier assurance that citizens were free to deposit any amount till December 30.
  • This decision by the Government is widely looked upon as an arbitrary decision.
  • It is important to note that banks do not have legislative or moral sanction to grill their customers about sources of cash and timing of deposits. They are commercial entities, a bridge between savers and borrowers.
  • The job of scrutinising suspect transactions domestically or globally falls on income tax, revenue department and the enforcement directorate.
  • This rule, if implemented, will spoil relationships between banks and their customers, erode faith in formal banking — and could, potentially, drive cash away from banks to informal credit markets.

 

Business Line

  1. A tale of two demonetisations

Category: Indian Economy

Topic: Government Policy, Planning 

Key Points:

  • PM Narendra Modi of India and Nicolas Maduro of Venezuela will both be remembered for embarking on audacious campaigns aimed at demonetisation of their large denomination currencies.
  • But unlike our case where the environment has been peaceful, the Venezuelan experience has been marked by a great deal of dissatisfaction resulting in violence.
  • Venezuela is one of the worst performing Latin American nations with hyperinflation.
  • In Venezuela, conditions have not been peaceful. Violence has erupted in less than a week’s time with the people rioting and attacking banks and ATMs and causing a lot of destruction.
  • In contrast, the Indian tale has been more organised.
  • The Government was absolutely keen on unearthing black money, and in the last two years, it started the exercise by addressing Swiss bank accounts while simultaneously starting Jan Dhan to equip all with bank accounts.
  • An income declaration scheme which ended in September has been followed up with demonetisation which has removed all old ₹500 and ₹1,000 notes which are to be replaced with new ₹500 and ₹2,000 notes.

 

PIB

 

  1. FM: India remains a bright point in global economy and BRICS in particular despite the slowdown in global economy in 2016

Category: Indian Economy 

Topic: International Trade 

Key Points:

  • The Union Finance Minister Shri Arun Jaitley said that the current Financial Year 2016-17 is not a conventional year as many major reformative decisions have been taken during the year.
  • He said that there is need for out of box thinking as series of steps are required about what the Government can do and what the banks can do. The Finance Minister Shri Jaitley was making his Opening Remarks at the Pre-Budget Consultative Meeting with the representatives of Banks and Financial Institutions. The Finance Minister further said that the banking sector is the backbone of our economy. He said that he doesn’t see any serious challenges as far as structural changes are concerned.
  • After that number of suggestions were given by the representatives of the Bankers and FIs for consideration by the Government. Some of the major suggestions are as follows-
  • It was suggested that there is need for recapitalization of banks in the Current Financial Year 2016-17 as well as in the next Financial Year 2017-18.
  • There is need for Full Tax Exemption for NPA provisioning by the banks keeping in view their profitability.
  • Post -demonetization, liquidity in banks have improved. This may impact saving deposit rates. This makes senior citizens more vulnerable as their income is adversely affected. So, some sort of exemption need to given to them under the Income Tax Act so that they have a decent income through their deposits.
  • In  case of GST,  there is need for Central Registry for GST compliance by the banks which have branches on pan India basis. In case of digitization, digital acceptance infrastructure is loss making at present. So digital acceptance infrastructure need to be incentivized. Another suggestion was that there is need for exempting Banking Correspondents transactions from service tax.
  • After demonitisation, the Budget should focus on boosting the consumption to create demand. Urban Local Bodies should be encouraged to collect Property Tax and Utility Tax through online means. Finance Bill should mandate that all wages should be paid by the employers through banking channel or digital mode.
  • Many shopkeepers don’t sell using digital means as they do not want to pay taxes. So there is need to give some tax rebate to these shopkeepers to use digital means and for better compliance. Same way, consumer may also be given a tax rebate at the year end if  his digital purchase is more than a certain amount.
  • Micro Finance Sector has seen a little increase in default as most of the people pay in cash. Also in SME sector, employers are waiting for the withdrawal limits to be raised to start paying their workers. Axis Bank representative specifically listed out the steps taken by bank management against some erring officials and assured the Finance Minister that as a bank, they are fully committed to highest level compliance of banking and Government prescribed norms and standards.
  • To kick start demand in the economy, low cost housing need to be encouraged. Ownership of a plot or land is required to avail finance for housing. Some customers do not own land in their own names, hence this norm may be relaxed.
  • In digital payments, issues of internet connectivity are there. Hence, each district may be allotted to a particular telecom company to improve internet connectivity.
  • Mutual Funds and Life Insurance Companies provide employment to a large number of youths through their distribution network. Some sort of incentive should be given to them. To fight unemployment, a provision should be made that if a firm, that employ a certain number of people, increases the number of jobs by a certain degree, then 2-3 per cent tax relaxation would be given to it. This directly links tax rates with job generation.
  • As far as the Government’s Financial Inclusion drive is concerned, a Venture Fund for members of Scheduled Caste was launched with Rs 200 crore. Under this, 71 proposals have been screened so far. So the Government should continue to provide Rs 200 crore more in next budget. And a similar fund for STs should also be created.
  • Skilling of the personal for ongoing digitization drive is an imperative. Also revenue model for business correspondence model to be revamped as many of these business correspondents are struggling and leaving the companies after some time.

 

  1. More than 1.22 crore new LPG connections released to BPL women under Pradhan Mantri Ujjwala Yojana

Category: Indian Economy 

Topic: Government Policy, Government Schemes

Key Points:

A large number of important policies, activities, decisions and initiatives were undertaken by the Ministry of Petroleum & Natural Gas in last one year. The achievements were in downstream, midstream as well as upstream sectors.

Pradhan Mantri Ujjwala Yojana (PMUY)

Under the scheme, the Government of India provides deposit free LPG connection of BPL families identified through the Socio-Economic Caste Census 2011 data, which includes security of one cylinder, pressure regulator, hose pipe, installation charges and DGCC Book. The consumer has to purchase ISI standard gas stove, which is optional. Further, Oil Marketing Companies are also financing purchase of LPG stove and 1st refill to BPL customers on instalment basis, if they so desire.

 

  Direct Benefit Transfer in PDS Kerosene Scheme (DBTK)

Jharkhand has become first State in the country to implement DBTK and others have been requested to join the Scheme. Under the Scheme, the Kerosene is being sold at non-subsidised price and subsidy, as admissible, is being transferred to consumers directly into his/her bank account. The States would be given cash incentive of 75% of subsidy savings during the first two years, 50% in the third year and 25% in the fourth year. In case the States voluntarily agree to undertake cuts in kerosene allocation, beyond the savings due to DBT, a similar incentive would be given to those States/UTs. The initiative of the Government is aimed at rationalizing subsidies based on approach to cut subsidy leakages, but not subsidies themselves. The scheme will also stop diversion of Kerosene.

 

  PAHAL: World’s largest Direct Benefit Transfer Scheme

PAHAL (Pratyaksh Hasthantarit Labh) is the world’s largest Direct Benefit Transfer Scheme. Through PAHAL, subsidy given to consumers is directly transferred to the registered account of the consumer without involving any intermediary.  More than 16.99 crore consumers are registered to avail subsidy as on 28.11.2016.  PAHAL Scheme has been acknowledged by the Guinness Book of World Records as the largest cash transfer programme (households). More than Rs. 38,276 crore of subsidy has been transferred to the LPG consumers through 204 crore transactions since inception of the Scheme.


F. Concepts-in-News: Related Concepts to Revise/Learn:
  • PAHAL (Pratyaksh Hasthantarit Labh)
  • Direct Benefit Transfer in PDS Kerosene Scheme (DBTK)
  • Pradhan Mantri Ujjwala Yojana (PMUY)


G. BILLS/ACTS/SCHEMES/ORGS IN NEWS

The Right of Persons with Disabilities Bill, 2014 


H. Fun with Practice Questions 🙂
Question 1: Recently, an agreement signed regarding annual joint military exercises named “Khanjar-IV” was between which two countries?
a) India- Kyrgyzstan

b) India- Tajikistan

c) India- Turkmenistan

d) India- Kazakhstan


Question 2: Consider the following statements, regarding “Pradhan Mantri Ujjwala Yojana (PMUY)”
  1. Under the scheme, the Government of India provides deposit free LPG connection of BPL families identified through the Socio-Economic Caste Census 2011 data, which includes security of one cylinder, pressure regulator, hose pipe, installation charges and DGCC Book.
  2. The consumer has to purchase ISI standard gas stove, which is optional. Further, Oil Marketing Companies are also financing purchase of LPG stove and 1st refill to BPL customers on instalment basis, if they so desire.

Which of the following statements is/are correct?

a) 1 Only

b) 2 Only

c) Both

d) None


Question 3: Consider the following statements, regarding “Direct Benefit Transfer in PDS Kerosene Scheme (DBTK)”
  1. Jharkhand has become first State in the country to implement DBTK
  2. Under the Scheme, the Kerosene is being sold at non-subsidised price and subsidy, as admissible, is being transferred to consumers directly into his/her bank account.

Which of the following statements is/are correct?

a) 1 Only

b) 2 Only

c) Both 1 and 2

d) Neither 1 nor 2


Question 4: Consider the following statements regarding  “PAHAL”,
  1. PAHAL (Pratyaksh Hasthantarit Labh) is the world’s largest Direct Benefit Transfer Scheme.
  2. Through PAHAL, subsidy given to consumers is directly transferred to the registered account of the consumer without involving any intermediary.
  3. PAHAL Scheme has been acknowledged by the Guinness Book of World Records as the largest cash transfer programme (households).

a) 1 and 2 Only

b) All, 1, 2 and 3

c) 2 and 3 Only

d) 1 and 3 Only


Question 5: Consider the following statements regarding ‘Hydrocarbon Vision 2030 for North East India’,
  1. The hydrocarbon vision 2030 aims at doubling Oil & Gas production by 2030, making clean fuels accessible, fast tracking projects, generating employment opportunities and promoting cooperation with neighbouring countries.
  2. The Vision rests on five pillars: People, Policy, Partnership, Projects and Production.

Which of the following statements is/are correct?

a) 1 Only

b) 2 Only

c) Both 1 and 2

d) Neither 1 nor 2

Check Your Answers

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