Comprehensive News Analysis – 30 May 2016

Table of Contents:

A. GS1 Related:
B. GS2 Related:

1. Africans reject MEA response; plan protest

2. Panel moots 1 lakh scholarships for poor

3. High-speed Spanish Talgo train begins trial run in U.P.

4. Digital vans all set to takee-governance to rural areas

5. Sirisena defends return of land to Sri Lankan Tamils

C.GS3 Related:

1. The Financial Express: Your power bill set to cut; here’s how

2. China to launch 1st quantum communication satellite

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

The Hindu

1. Awash in red ink

2. Enter the superbug?

3. Adrift in the Valley

4. Private insurance can’t heal all

Indian Express

Others:

1. PIB

a) PM greets the people of Goa on Statehood Day

b) The President of India, Shri Pranab Mukherjee Presented the Malti Gyan Peeth Puraskar 2016

2. The Financial Express:Why e-governance services in rural India are getting popular

3. The Financial Express: LPG, petro subsidies; targeting without price reform won’t do the trick

4. Business Standard: Ins and outs of labour exit policy

5. Business Standard:Prioritise banking reforms

6. The Business Line: Getting manufacturing muscle

7. The Economic Times: Keep Central Vigilance Commission out of loan restructuring

8. The Economic Times: Limit ownership of content by carriers to protect freedom of speech

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

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Useful News Articles

A. GS1 Related

Nothing here today folks! J

B. GS2 Related
  1. Africans reject MEA response; plan protest

Topic: International Relations

Category: Indo-African Relations

Location: The Hindu

Key points:

 

  • Though the Delhi police arrested five men for the series of attacks on African nationals, the African Students Association in India announced  that it would take out a ‘March for Justice’ rally in the national capital protesting against the attacks and demanding justice
  • Terming the recent attacks as “racist”, South African envoy Malose William Mogale said he believed the Indian government would deal with such incidents

 

2. Panel moots 1 lakh scholarships for poorTopic: Governance

Category: Education

Location: The Hindu

Key points:

  • The high-level government-appointed T.S.R. Subramanian committee that submitted its report on the evolution of a new education policy has recommended one-lakh scholarships for meritorious students from poorfamilies and socially and educationally backward communities to pursue higher education
  • Seeing both quality and inclusion as important, the panel has also recommended linking the autonomy of higher education institutions with their rating/performance, with those making it to the highest bracket having the freedom to choose their fee structure, curriculum and even the scales paid to their faculty members

 

3. High-speed Spanish Talgo train begins trial run in U.P.Topic: Governance

Category: Railways

Location: The Hindu

Moradabad: The Spanish train Talgo arrives at Moradabad Railway Station during its first trial run between Bareilly and Moradabd on Sunday. PTI Photo (Eds pls refer story DEL 27) (PTI5_29_2016_000068B)

Key points:

  • The trial of Spanish train Talgo, the lighter and faster vehicle whose speed goes up to 115 kms per hour, was conducted between Bareilly and Moradabad in Uttar Pradesh as part of the Railways’ strategy to increase the speed of trains
  • The Talgo train coaches are lightweight and designed in a way that it can run on curves without decelerating the speed. Besides reducing travel time, Talgo’s lighter trains consume 30 per cent less energy
  • The Railways has set up a Mobility Directorate to work on strategies to increase speed of trains

 

  1. Digital vans all set to takee-governance to rural areas

Topic: Governance

Category: e-governance

Location: The Hindu

Key points:

  • The government is set to roll out a new campaign under which 66 digital vans, equipped with Internet and audio-visual facilities, will go to 657 districts by March 2017 to increase awareness about various e-governance services in rural and semi-urban areas.
  • The aim is to reach out to more than 10 lakh citizens and register over 1.5 lakh rural citizens for MyGov, digital locker, Aadhaar and other digital services

 

  1. Sirisena defends return of land to Sri Lankan Tamils

Topic: India’s Neighbourhood

Category: Sri Lanka

Location: The Hindu

Key points:

  • Amid continuing criticism of Sri Lanka’s approach to the implementation of the 2015 Geneva resolution, President Maithirpala Sirisena has defended his government’s policy of returning land in the Northern Province to Tamils
  • According to Centre for Policy Alternatives, a Colombo-based NGO, about 12,750 acres of land in the Northern Province are still with the security forces
  • the government is bracing itself for the 32nd session of the UN Human Rights Council’s 32nd session (June 13-July 1) in Geneva where an oral update on Sri Lanka will be presented, Prime Minister RanilWickremesinghe told the top brass of the security forces recently that the proposed judicial mechanism would have only domestic judges and the involvement of foreign jurists would only be for technical assistance

 

C. GS3 Related

1. The Financial Express: Your power bill set to cut; here’s howTopic: India’s Neighbourhood

Category: China

Key points:

  • In what could reduce mineral rich states’ revenue from coal royalty temporarily and bring down power cost to consumers by up to 5 paise/unit, an inter-ministerial committee has recommendedrevising the ad valorem royalty on the fuel by 3 percentage points to 11% for the next three years. The recommendation will be brought before the Cabinet for approval soon
  • Royalty rates are usually revised every three years. The last revision took place in 2012 when the rate for thermal coal was set at 14% of the fuel’s notified price and that for lignite coal at 6%
  • The proposed reduction in rates is primarily aimed at offsetting the impact of miners’ outgo on district mineral fund (DMF) on the mineral’s prices. The DMF is levied at 30% of the applicable royalty for specified minerals including coal ( The Mines and Minerals (Development and Regulation) Amendment Act, 2015, which enforced the auction route for issuance of mining leases, mandated the setting up of DMFs in all districts in the country affected by mining activities. The proceeds from this fund would go towards minimising the adverse impact of mining in the affected area)
  • Additionally, reduction in royalty rate is also expected to enable the industry to step up coal purchases. Currently, Coal India is finding it hard to quickly dispose of the fuel as the off-take has reduced in a tepid market
  • According to the sources, the states’ losses from a royalty reduction could be temporary and these could be more than offset by the higher volume of coal being produced by the state-run miner as demand picks up. Additionally, the coal block auction completed last year would fetch coal-bearing states more than Rs 3 lakh crore in revenue over the next 30 years

 

2. China to launch 1st quantum communication satelliteTopic: S&T

Category: Space

Key points

  • China will launch its first quantum communication satellite in July to improve the security of data transmission and thwart hackers
  • Quantum communication boasts ultra-high security as a quantum photon can neither be separated nor duplicated.
  • Hence, it is impossible to wiretap, intercept or crack the information transmitted through it

 

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

 

The Hindu

1. Awash in red inkTopic: Economy

Category: Banking

Key points

  • A year since the Reserve Bank of India ended regulatory forbearance — the norm that allowed banks to avoid treating restructured loans as sub-standard — the pile of stressed assets at lenders has grown manifold, lengthening the shadow over balance sheets
  • Forced by the central bank’s time-bound Asset Quality Review to classify troubled loans correctly and make appropriate provisions for them, lender after lender has reported sizeable losses or dramatic declines in profit in recent quarters
  • The biggest lender, the State Bank of India, last week posted a 66 per cent plunge in fourth-quarter earnings as provisioning for non-performing assets — banking parlance for loans where borrowers have defaulted on repayments — more than doubled to Rs.12,139 crore
  • That the clean-up is inflicting short-term pain on banks and investors is evident. The bigger question is how much more red will be inked and what cost this is likely to impose on the economy
  • The SBI, for instance, has said that while gross NPAs (as a percentage of the entire Rs.15 lakh crore it has advanced to borrowers) jumped to 6.5 per cent, or Rs.98,173 crore, at the end of March, it was placing loans amounting to another Rs.31,000 crore on a watch list for ‘exposure under stress’
  • Coming as it does from a lender whose total loans amount to more than one-tenth of India’s GDP, the disclosures of bad and stressed loans reflect the extent of distress its borrowers representing various sectors of the real economy are experiencing. Iron and steel, engineering, power and construction are some of these key industries that undergird the economy
  • The Centre is cognisant of the magnitude of the problem and has in large measure moved in lock-step with the central bank in addressing the systemic and regulatory issues that need fixing. An autonomous Banks Board Bureau is now in place, tasked with the specific brief of ensuring that state-owned lenders will hereafter be ring-fenced from political interference in the selection of top management and on business strategy
  • Separately, a Bankruptcy Code intended to improve the legal framework for assisting creditors in taking defaulters’ assets through liquidation and recovery process has won parliamentary backing and could soon be in operation.
  • At the same time, there is the risk that a clutch of lenders will need greater levels of capital infusion than previously estimated; this will test the fiscal deficit as well as the taxpayer’s willingness to underwrite the excesses of the past

 

  1. Enter the superbug?

Topic: Governance

Category: Health and Medicine

Key points:

  • Alarm bells have been sounded after a woman in the U.S. was detected with bacteria resistant to a last-resort antibiotic. The 49-year-old was carrying coli bearing a new gene, mcr-1, which is resistant to even colistin, the last available antibiotic that works against strains that have acquired protection against all other medication
  • This is the first reported case of the mcr-1 gene in an E. coli strain found in a person living in America, but it raises worries about how far it may have spread. The results of mcr-1 gene identification were published recently in the journal Antimicrobial Agents and Chemotherapy. Though resistance to colistin has been detected for about 10 years in several countries, the danger from this has been somewhat played down since such resistance was brought about by gene mutations that cannot spread easily between bacteria
  • But mcr-1 poses a threat of an entirely different order; in this case a small piece of DNA (plasmid) found outside the chromosome carries a gene responsible for antibiotic resistance. Since the gene is found outside the chromosome, it can spread easily among different types of bacteria, as well as among patients
  • In the case of E.coli, the colistin resistance is not insurmountable as it is still treatable by other known drugs. But were the gene to spread to bugs treatable by only last-resort antibiotics, we could be facing the dreaded — and indeed, long-anticipated — superbug
  • Thus, the discovery of mcr-1 in more countries and settings increases the chances of the emergence and spread of resistance against all available antibiotics. It could well lead to an era without effective drugs to treat bacterial infections — the post-antibiotic age, as it were
  • The mcr-1 gene was first identified in China in November 2015, following which there were similar reports from Europe and Canada. The unchecked use of antibiotics in livestock is a major reason for the development of drug resistance. Indeed, given the widespread use of colistin in animals, the connection to the drug-resistant mcr-1 gene appears quite clear
  • A November 2015 paper in The Lancet noted that a significantly higher proportion of mcr-1 positive samples were found in animals compared with humans, suggesting that the mcr-1 gene had emerged in animals before spreading to humans. Besides being administered for veterinary purposes, colistin is used in agriculture
  • The global community needs to urgently address the indiscriminate use of antibiotics in an actionable manner, and fast-track research on the next generation of drugs

 

3. Adrift in the ValleyTopic: Federal Relations

Category:  J&K

Key points:

  • News emanating out of Kashmir over the past few months should be a matter of utmost concern
  • Today, the main issue in Kashmir’s dialectics is not so much accession to India, as the erosion of Jammu and Kashmir’s “special status” as well as the centrality of Article 370
  • Kashmir is bracing itself for a long hot summer of incursions of Pakistan-based militants from across the border. As it is, infiltration of Pakistan-based terrorists has gone up substantially since the beginning of this year
  • Unfortunately, diversions such as the Pakistan-directed attacks inGurdaspurand Pathankot are causing Delhi to take its “eye off the ball”, for the main battle is in Kashmir and not elsewhere
  • There is growing confrontation in the valley: NIT Srinagar incident, the Handwara incident
  • Dissatisfaction is writ large across the State. The degree of resentment against the Indian state is probably at one of its highest points ever. A feeling has been deliberately generated that Delhi currently shows even less understanding of the concerns of locals than many of its predecessors. The Hizbul Mujahideen has, meanwhile, re-emerged as the most important underground militant outfit, though both the Lashkar-e-Taiba and the Jaish-e-Mohammed are simultaneously very active
  • The Valley today confronts a grave situation at a time when neither Delhi nor Srinagar has adequate political resource or enough comprehension to effectively deal with it. Yet the problem needs to be attended to without further delay as it could well spin out of control unless effective steps are taken

 

4. Private insurance can’t heal allTopic: Economy

Category:  Health Insurance

Key points:

  • Indians mostly pay for their healthcare out of pocket. More than 75 per cent on average of all health expenditure is out of pocket, whilst investment in public healthcare is even lower than some countries of Sub-Saharan Africa over the same period (less than 2 per cent on average), despite economic growth rates, averaging 8-10 per cent per annum, and despite the National Rural Health Mission (NRHM)
  • The private insurance markets offer what looks like a way out. The idea is tempting: let people choose between insurance companies that offer different packages of treatments, integrate care, and insure people against risks without all the inefficiencies of the government
  • Private, competitive insurance companies add instability, bureaucracy, inequality and regulatory trickery without contributing any value to the healthcare system. Private insurance works if you are unconcerned with inequality and efficiency, or work for an insurance company
  • Unstable? Yes. Insurance is fundamentally a form of risk-pooling. We all pay in, we all get the peace of mind of knowing we have insurance, and the person who gets cancer gets a lot of the benefit. Naturally, if there are only a few of us, our insurance payments will go up if somebody gets cancer. But if there are many of us, our insurance payments won’t go up much at all
  • Private, competitive insurance companies fragment risk pools. Each company competes for the most lucrative risk pool, which means the richest and healthiest people
  • The result is a natural state of instability in private insurance markets. Each company tries to avoid what Americans call the “death spiral” of high premiums and sick clients. Insurers solve this with some obvious tools
  • One is to just discourage sick or prospectively sick people such as smokers from joining. Another is “actuarial” rate-setting in which they try to match insurance premiums with likely expenditures. Actuarial rate setting is a good deal for healthy people who have an unexpected event, but a very bad deal for people in ill health, who might find insurance entirely unaffordable
  • If you have diabetes and your insurance premiums reflect the costs of insulin and perhaps other related procedures such as kidney failure, and the risks of related ailments such as heart disease, then it’s not an insurance policy. It’s a very expensive prepaid health plan
  • Either way, insurance companies achieve stability by making healthcare less accessible to the people who need it most. And even the healthy people who benefit will not continue to benefit, since insurance rates would spike after a diagnosis of cancer or diabetes, or just go up with age
  • Private insurance advocates say we can regulate these problems away. We can require insurers to take all comers, regardless of their state of health. We can regulate in detail their profit margins, lists of treatments, payments by patients, and procedures. We can encourage cooperation and subsidise from lucky insurance companies with healthy people to unlucky companies with sick people. But why create a big regulatory framework that will tie everybody up in games and court cases when we can just avoid the whole problem and have a big, simple risk pool
  • The risk is that a simple solution at one time becomes a problem later. It is tempting to use private insurance to increase access to healthcare among the middle classes in a country like India. But the lesson of history is that one generation’s clever solution to a problem is the next generation’s policy problem
  • The U.S. tried to rely on private insurance, and the result was a politically empowered industry dedicated to preserving its business at the expense of better risk pooling, equality, more efficiency, and simpler administration. American political elites see the costs to the country of this entrenched industry as tolerable. That doesn’t mean India’s should agree to follow the same path

 

Indian Express

 

Others:

 

1. PIB

 

a) PM greets the people of Goa on Statehood Day

  • Goa was a Portuguese territory till 1961
  • On 19 December 1961, the Indian Army began military operations with Operation Vijay resulting in the annexation of Goa,Daman, and Diu into the Indian union. Goa, along with Daman and Diu, was organized as a centrally administered union territory of India
  • On 30 May 1987, the union territory was split, and Goa was made India’s twenty-fifth state, with Daman and Diu remaining a union territory.

 

b) The President of India, ShriPranab Mukherjee Presented the Malti Gyan Peeth Puraskar 2016 

  • The Malti Gyan Peeth Puraskar was instituted by Mohinder Singh Syngle Education and Research Society in honour of its founder Mrs MaltiMohinder Singh Syngle, eminent educationist and social worker.
  • Every year Government school teachers from Punjab Government’s High and Higher Secondary Schools receive this award for their contributions in the field of education

 

 

3. The Financial Express: LPG, petro subsidies; targeting without price reform won’t do the trickTopic: Economy

Category: Subsidy

Key Points

  • The government has done well on not just weeding out over 3 crore duplicate customers from the list of those getting LPG subsidies but in getting over 1.5 crore persons to give up their subsidies voluntarily—over a crore did it in response to the prime minister’s #GiveItUp campaign and another 50 lakh simply refused to provide their bank details when the government moved to cash subsidies for gas cylinders
  • But now, as crude oil prices start their upward climb and as the government plans to increase the number who will get LPG subsidies—another 5 crore persons are to be added in the next 5 years—it will need a combination of better targeting along with price reforms if it wishes to curtail the subsidy bill
  • According to petroleum minister, while the government has already said it will not give any subsidy to those earning over Rs 10 lakh per annum, it may even look at other ways to curtail subsidies to the better off—all told, he wants to remove another 2-2.5 crore people from the list
  • In the case of kerosene, with over 40% of PDS kerosene being sold in the black market to adulterate petrol and diesel, he has explained to state governments, they too lose out on valuable VAT revenues. Taking an average VAT rate of 20%, that works out to an annual loss of around Rs 3,500 crore for the states. As a result, the minister says, states are going to give the Centre a list of persons who deserve the subsidy, as a result of which he will be able to eliminate the 40% annual theft
  • That’s a laudable objective, but will take a lot of time, something the government may not have if oil prices rise suddenly. In the case of LPG, if 2 crore persons are removed as per the government’s formula, at the current subsidy of Rs200 per cylinder, that’s a saving of Rs 4,000 crore
  • If, however, prices are raised by Rs 5 per cylinder per month—akin to the UPA’s diesel hikes of 50 paise—that’s an average saving of Rs 4,500 crore. In the case of kerosene, similarly, removing 40% of users will, at current levels of subsidy, reduce annual outflows by Rs 3,500 crore. A 50 paise monthly hike, however, will also yield savings of Rs 2,000 crore which are quite significant
  • In short, the government will better reach its goal of better-targeted subsidies while retaining a control over the outgo if it brings in an element of rationalising subsidies as well

 

4. Business Standard: Ins and outs of labour exit policyTopic: Economy

Category: labour

Key points:

  • More than two decades ago, during the early years of economic reforms of the 1990s, the idea of an exit policy for labour was mooted and then buried quite unceremoniously
  • Those keen that the government should speed up reforms had pressed hard on giving industry the freedom to hire and fire employees
  • But the government at that time, argued against the introduction of an exit policy on the ground that the country was not yet ready for such a policy. In a country where most people consider themselves lucky to get even one job in their lifetime, it was premature to think of an exit policy
  • Indeed, no successive government thought of reviving the idea of an exit policy
  • The installation of the present government in 2014 revived hopes of an exit policy through changes in the Industrial Disputes Act so that industry up to a certain size could sack employees without obtaining any approval from the government and other state-owned or local authorities
  • Rajasthan moved ahead to bring in labour policy reforms and Madhya Pradesh, too, planned similar changes in the law.
  • Why is the governmentshy of an exit policy for labour after more than two decades of reforms? Surely, two and a half decades is a long time for an economy to grow strong and mature enough to recognise the importance of an exit policy for labour and absorb the adverse political impact such a move would obviously trigger
  • Basic structure that is necessary if an exit policy were to be introduced
  • That structure should have three elements: One, make the separation package for employees to be dismissed attractive. The option for an exit by employers will thus not be easy because of the stiff compensation costs. Two, create a proper social safety net and a well-endowed retrenchment fund that can take care of the employees that lose their jobs. And finally, make sure that growth of jobs becomes as important a policy priority as growth itself. Merely protecting jobs does not ensure growth in jobs
  • No government in this country can ever bring in an exit policy unless the government first fulfils these three conditions

 

5. Business Standard: Prioritise banking reformsTopic: Economy

Category: Banking

Key points:

  • Our banking system requires stability, efficient service, inclusion, monetary policy transmission
  • In all four areas, there has been cause for concern. These problems have been known for a long time; the expert committee process has figured out what’s to be done. While a few small steps have taken place, the bulk of the work in banking reform is the unfinished agenda for reforms
  • The size of the hole in today’s banking crisis appears to be roughly 10 per cent of GDP. That is roughly the cost of building a comprehensive metro system in 10 cities. We should be unhappy when taxpayers are asked to foot this bill. We should ask deeper questions about the failures of banking regulation and supervision
  • Banks should be effective in an array of services they render the economy. On one hand, these are mundane transactional services such as transferring money
  • But the most important service that banks render the economy is to look at a firm, form a view about its future prospects, and deliver capital to firms with good future prospects. Banks should hold back capital from firms with dubious prospects
  • However, in India, too much bank lending is based on bureaucratic procedure, and too little is based on a forward-looking assessment about the prospects of a firm.
  • Mundane services are being performed badly owing to the lack of competition. Most public-sector banks other than State Bank of India have difficulties in management and are in a solvency crisis. Most private banks other than HDFC Bank and Kotak Mahindra Bank are also facing difficulties. Foreign banks have been blocked off. New private banks are coming in at roughly two banks a decade, which is inadequate
  • The entry of “payments banks” or “small finance banks” will not move the needle, and the limitations of these licenses are highlighted by decisions by three payments banks to idle their licenses. There is no other industry in India where competition is so stifled. This gives banks little incentive to improve services
  • Banks should reach out to individuals and small firms all over in India. In mature financial systems, big companies go to the bond market, and bank credit is largely geared towards smaller firms who do not have bond market access. In India, the bond market has been blocked and big firms use up a lot of bank credit
  • Banks don’t reach most small firms. More individuals have mobile phones than bank accounts. We now have a campaign to open more accounts by channelling government subsidies through bank accounts. If subsidy money goes into a bank account and is instantly withdrawn, there is no financial inclusion. This is not the genuine financial inclusion that comes from banks obtaining genuine users; this is mechanically chasing a target
  • Why did mobile phone companies reach out to consumers in India in a way that banks do not? Because Indian telecom does not have the entry barriers that we see against private banks, foreign banks and technological innovation
  • When banks and the bond market work well, we will get monetary policy transmission. That is, changes by the Reserve Bank of India to the policy rate will reach out and influence a large swathe of the economy
  • As banks and the bond market work badly, at present the RBI is ineffectual. If the RBI changes the 91-day rate by 25 bps, little happens in the economy. To get the work done, the rate would then have to change by large numbers, which is a bigger disruption
  • It is ironic that the barriers to the monetary policy transmission lie in the hands of the RBI. The RBI has the powers to undertake significant (though not complete) reforms of the bond-currency-derivatives nexus and of banking. The reluctance to reform at the RBI is keeping it ineffectual. This is bad for the RBI and bad for India.
  • Successive leadership teams at the Ministry of Finance and the RBI have chipped away at this agenda in some respects. We have begun modernising the monetary policy framework with formal inflation targeting, and the true size of the banking crisis is gradually coming to light. But the bulk of these reforms remain the unfinished agenda for the future
  • The low prioritisation of banking reforms has given us a banking crisis that is hampering GDP growth, a banking system that does not deliver efficient services or financial inclusion, and a weak monetary policy transmission which makes it likely that inflation targeting will fail
  • In order to deliver improvements in the economy by 2019, it is important to switch gears on banking reforms. The financial system is the brain of the economy. The quality of this brain determines how much GDP growth we get per unit savings
  • The two weakest parts of Indian finance are banking and the bond-currency-derivatives nexus. This has to change

Note:the bond-currency-derivatives (BCD) nexus required an open capital account, particularly for financial institutions and transactions. The ideal or the objective here is that a foreign investor should be able to buy Indian government or corporate bonds in rupees using any international currency and be able to hedge(A hedge is an investment to reduce the risk of adverse price movements in an asset) the currency, interest rate, credit and duration risks, either onshore or offshore. India needs to mobilize capital for growth and hence the need for the seamless BCD nexus to be in place is a prerequisite

 

4. The Business Line: Getting manufacturing muscleTopic: Economy

Category: capital goods

Key points:

  • The Centre’s move to come up with a National Capital Goods Policy is well-intentioned. The goal is to increase production of plant, machinery and tools within the country as well as to reduce imports and turn India into a net exporter of these goods
  • The policy targets to raise exports to at least 40 per cent of total production, from ₹61,000 crore to about ₹3 lakh crore, and thereby increase its share in global exports of capital goods to about 2.5 per cent from about 0.8 per cent currently. It aims to increase share of domestic production in the country’s capital goods market to 80 per cent by 2025. In the process, domestic capacity utilisation is hoped to be increased to 80-90 per cent
  • India is currently a net importer of capital goods — about 45 per cent of its demand is met by imports. Juxtapose that with the capacity utilisation of the capital goods industry which is at 60-70 per cent, and it suggests that Indian manufacturers are currently not meeting market expectations
  • To achieve all these targets as well as increase its market-share, the capital goods industry needs to become more competitive — both in technology and costs
  • Higher costs of machinery will push cost-conscious project developers to cheaper products from markets such as China. Special provisions envisaged in the policy such as a domestic value-addition clause and regulation of second-hand imports can at best be short-term measures
  • The market-share of indigenously produced goods cannot be increased in the long term by erecting non-trade barriers or with local sourcing of capital goods as a condition for new projects
  • Domestic production needs to be demand-driven, with strict adherence to delivery schedules.
  • The National Capital Goods Policy has correctly identified that a long-term, stable and rationalised tax and duty structure is essential for the growth of the domestic industry. Among other measures, it has called for correction of the existing inverted duty structure anomalies whereby finished goods attract lower duties than parts and components
  • there’s a need for uniform customs duty on imports of all capital goods-related products, and a uniform goods and services tax regime across all capital goods sub-sectors
  • The rollout of GST requires political consensus, and though the Government is confident of getting the legislation through Parliament in the monsoon session, one cannot be sure till the Bill actually makes it to the statute books.

 

5. The Economic Times: Keep Central Vigilance Commission out of loan restructuringTopic: Economy

Category: Banking

Key points:

  • The government reportedly wants the Central Vigilance Commission (CVC) and the Reserve Bank of India (RBI) to be part of a forum to swiftly resolve bad loans. The central bank’s involvement makes sense. However, roping in the anti-corruption watchdog is a bad idea, and structurally flawed.
  • The CVC’s job is to probe offences committed by public servants — that includes officials in state-owned banks — under the Prevention of Corruption Act. Its role would be compromised if the CVC is involved in the decision-making process.
  • The CVC has no expertise in the domain of banking. Whereas involving the RBI, the banking supervisor, would give the process greater credibility. The joint lenders’ forum is supposed to tackle stressed assets, and come up with a time-bound corrective action plan
  • The system does not work, essentially because no one wants to take responsibility for a haircut that could invite a future charge of having caused a loss to the exchequer
  • The present government could consider a body comprising minister, senior civil servant and Banks Board Bureau chairman, besides bankers and the RBI to decide on bad loans
  • The government has done well to enact the new bankruptcy code.
  • Banks also need full autonomy to operate on commercial lines, and start lending again to revive the economy. Even as these kick in, a body to decide on bad loans is needed, on the lines described above

 

  1. The Economic Times: Limit ownership of content by carriers to protect freedom of speech

Topic: Governance

Category: internet

Key points:

  • As telecom regulator Trai pushes for letting content providers pay consumers to access their sites, regardless of the access provider they use for the purpose, it is evident that the debate on a free internet is not complete without discussing vertical integration between carriers and content providers and its potential to harm freedom of information and opinion
  • Along with measures to reduce the cost of access, by reducing the cost of spectrum and encouraging wide deployment of public Wi-Fi, Trai and the government must restrict access providers’ ownership of content services, to a maximum of 20%
  • More than 60% of adult Americans reportedly access news via social media. What if a social media platform was to systematically weed out conservative/liberal views? The platform where the public accesses news would determine what the public gets to read and hear. This, clearly, would hobble free speech and harm democracy
  • Now, consider a situation in which an internet access provider influences the public’s choice as to which platform to use to get their news and views. This would create the possibility of double censorship, first by the access provider and then by the social media platform. Democracy is best served by eliminating such a contingency
  • Mandating net neutrality — no blocking, no throttling, no prioritisation of any site by the access provider — is one layer of security against an access provider acting as a gatekeeper to the net. Another one we need is to bar or limit any access provider’s ownership of a content service
  • As technologies change rapidly, it makes sense to keep regulation technology-neutral. In the broadcast space, ownership of content companies by distributors is already limited to 20%. Policymakers have to distinguish between convergence and integration
  • Different media are converging, making cross-media ownership restrictions redundant. The same logic applies to different technologies of content distribution. But the vertical integration of carrier services with content providers brings not efficiency but distortion of democracy

 

G. Fun with Practice Questions 🙂
Question 1: Which of the following statements is/are correct ?
  1. The members of the the Economic and Social Council (ECOSOC) elect the members of UNHRC
  2. The UNHRC addresses the Israeli-Palestinian conflict mostly and other rights-related issues are taken up less frequently

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

 

Question 2: Which of the following can be categorised as a function Of Bank Board Bureau?
  1. It would recommend for selection the heads of public sector banks and financial institutions
  2. It would help decide the lending rates of banks
  3. It would aid banks in formulating strategies to raise additional capital
  4. It will select and appoint non-executive chairmen and non-official directors of the banks

a) 1 and 2

b) 2 ,3 and 4

c) 1,3 and 4

d) All the above

 

Question 3: Which of the following statement(s) is/are correct?
  1. Goa attained statehood in 1961
  2. Goa was a Portuguese territory up to 1961

Which of the above statement(s) is/are correct?

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

 

Question 4: Who among the following can be (a) member(s) of the proposed Monetary Policy Committee
  1. The finance minister
  2. The RBI governor
  3. RBI deputy governor
  4. Cabinet Secretary

a) 1 and 2

b) 1,2 and 3

c) 2 and 3 only

d) 1,2 and 4

 

Question 5: Which of the following statements is/are correct about the Central Vigilance Commission(CVC)?
  1. CVC is a statutory authority
  2. The Central Vigilance Commissioner is appointed by the President after obtaining the recommendation of a Committee consisting of the Prime Minister of India, the Minister of Home Affairs and the Leader of the second largest party in the Lok Sabha
  3. Corruption investigations against government officials initiated by the CVC can proceed only after the government permits them

a) 1 only

b) 2 only

c) 2 and 3 only

d) All the Above

 

Check Your Answers

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