UPSC 2017: Comprehensive News Analysis - June 20

In News:

• India has formally dismantled the administered price mechanism or APM for petrol and diesel
• In India, like in the US and Australia, domestic diesel and petrol prices have now been globalized

Effects on Indian Economy Structure:

• India is now a step closer to become a competitive market economy defined by rules as opposed to the existing exception-based regime

Drawbacks of earlier system:

• Prior to this decision, petroleum prices were administered (read subsidized)
• It lead to inefficient allocation of a scarce resource
• It also became a fiscal problem, as the subsidies were buried in what was known as the oil pool account, details of which were all but opaque

Challenges:

• At present, crude oil prices are hovering around the $50 mark.

But if price increases then it can create political problems for government

In News:

• Reserve Bank of India said its internal advisory committee (IAC) had identified 12 accounts, which account for 25% of non-performing assets of the Indian banking system for immediate resolution under the Insolvency and Bankruptcy Code (IBC)
• The gross bad debt in the banking system as on March was Rs. 7.11 lakh crore, which means the 12 accounts contribute to about Rs. 1.78 lakh crore

Meaning of bankruptcy

A company is bankrupt if it is unable to repay debts to its creditors (banks, suppliers etc).

Bankruptcy out come:

• The inability to repay debts by some of the Indian firms has resulted in a huge pile of non-performing assets for the banking system
• RBI had earlier hinted that stress was coming from sectors such as power, telecom, steel, textiles and aviation

RBI and IBC role:

• The government had recently amended the RBI Act
• It gave powers to the central bank to direct banks to take punitive action against individual accounts under IBC

IBC Process:

A mechanism to free up the money stuck as bad loans is one of the key for the banking system. IBC is seen as one such

• Step 1: Any creditor including banks can start bankruptcy proceedings against defaulters by filing a petition with the National Company Law Tribunal
• Step 2: After that, an insolvency professional with significant powers is appointed to take control of the defaulting company and assist the process
• Step 3: A creditors committee is formed to represent the interest of lenders and any other party that have been affected due to the default by the company

Committee task:

• The committee should come up with a resolution plan (which may include selling off defaulted loans or liquidate the company outright)
• The resolution would require a nod from 75% of the creditors on the committee

Timeline:

• The insolvency professional gets 180 days to come up with a feasible solution on the default issue. The timeline can be extended by another 90 days

After Deadline:

• If no solution is found within 270 days, a liquidator is appointed
• The company can also opt for voluntary liquidation by a special resolution in a general meeting

Basic Information:

The National Company Law Tribunal (NCLT):

• The National Company Law Tribunal (NCLT) is a quasi-judicial body in India that adjudicates issues relating to companies in India. The NCLT was established under the Companies Act 2013 and was constituted on 1 June 2016

1. The NCLT has the power under the Companies Act to adjudicate proceedings:
2. Initiated before the Company Law Board under the previous act (the Companies Act 1956);
3. Pending before the Board for Industrial and Financial Reconstruction (BIFR), including those pending under the Sick Industrial Companies (Special Provisions) Act, 1985;
4. Pending before the Appellate Authority for Industrial and Financial Reconstruction; and
5. Pertaining to claims of oppression and mismanagement of a company, winding up of companies and all other powers prescribed under the Companies Act.
6. Decisions of the NCLT may be appealed to the National Company Law Appellate Tribunal.

Context

• The last two Scorpene submarines to be rolled out of the manufacturing line without the Air Independent Propulsion (AIP) system
• Air Independent Propulsion (AIP) system: This system is meant to extend the reach of the conventional diesel-electric submarines

Manufacturers:  Two of the six Scorpene submarines are being manufactured by Mazgaon Docks Limited (MDL) in Mumbai

What is AIP module?

• The AIP module is being developed by Defence Research and Development Organisation (DRDO)
• The module enables conventional submarines to stay remain underwater for a longer duration
• It greatly increases the submarines stealth characteristics

Option available:

• The only option of installing the AIP system is during the refit of the submarine. This is six years after induction

Basic Information:

Scorpene submarine

• The Scorpène-class submarines are a class of diesel-electric attack submarines
• They are jointly developed by the French Direction des Constructions Navales (DCN) and the Spanish company Navantia, and now by DCNS
• It features diesel propulsion and additional air-independent propulsion (AIP).

Context

• The controversy over GM Mustard rages on
• Another row is over GM crop version of jowar – or sorghum
• Sorghum is said to be the poor man’s food in India

Parliamentary Committee to study GM:

• The Parliamentary Standing Committee on Science and Technology, Environment and Forests has decided to seek clarifications from Union Agriculture Ministry, and also ask the National Institute of Nutrition (NIN) to do a comparative analysis of the nutritional values of GM and non-GM sorghum
• The panel is examining the issue of GM crops and its impact on environment
• It has called for samples of the crop developed by the Hyderabad-based Indian Institute of Millets Research (IIMR)

Questions of this committee

• To know the need to develop a genetically modified version of sorghum, which is the poor man’s food
• Sorghum yield was already not fetching a good market price and was more than enough to meet the demand
• So why was GM Sorghum required?
• The committee wants to know whether there is a plan to introduce GM Sorghum in ration shops under the PDS

Finances for GM Sorghum

• The panel will look into issues such as expenditure incurred on research for GM Sorghum
• The money from the public exchequer was spent on GM Sorghum research even before any forward-backward linkage planning was done

Advantage of Bt Sorghum

• IIMR had begun research on transgenic jowar around four years ago
• It has now developed Bt Sorghum
• This is bigger in size
• It also has greater pest resistance

Activist opinion:

• Activists contend that the Central government should not allow consumption of genetically modified jowar by either humans or animals
• They argue that since jowar is largely consumed by the poor, any ill-effect of the GM variety will impact more people
• It will affect those without much access to preventive medicare

Basic Information:

• Clearance giving Committee: Genetic Engineering Appraisal Committee (GEAC)

History of Bt crops in India

• The only genetically modified crop that is under cultivation in India is Bt Cotton
• There was a proposal to allow cultivation of Bt Brinjal, a transgenic variety of brinjal, which did not receive approval

D. GS4 Related

Nothing here for Today!!!

PIB Articles                           

E. Concepts-in-News: Related Concepts to Revise/Learn

F. Bills/Acts/Schemes/Orgs in News

Question 1: Zero defect zero effect scheme is associated with which sector

Question 2: President of India is elected by

Question 3: Consider the following statements with reference to The National Company 
Law Tribunal:

Question 4: Often we see “Air Independent Propulsion” term in news, it is associated with