07 Jun 2018: UPSC Exam Comprehensive News Analysis

A. GS1 Related
B. GS2 Related
GOVERNANCE
1. India’s rank marginally improves in peace index
C. GS3 Related
HEALTH
1. Maternal mortality ratio in the country drops to 130 from 167
ECONOMY
1. World Bank nod for Rs. 6,000 cr. groundwater recharge plan
2. Co-op banks can become small finance banks, says RBI
D. GS4 Related
E. Editorials
POLITY AND GOVERNANCE
1. Limits to dialogue: The way to resolve the Cauvery dispute
ECONOMY
1. Pre-emptive strike: As inflationary trends harden, the RBI’s rate hike will quell uncertainty in the markets
F. Tidbits
1. President gives nod for IBC amendment
2. Cabinet clears norms for sick PSUs
3. No change in H-1B visa policy so far: U.S. diplomat
4. RBI raises rates as crude price surges
5. RBI tweaks norms to boost affordable housing lending
G. UPSC Prelims Practice Questions
H. UPSC Mains Practice Questions 

A. GS1 Related

B. GS2 Related

• India’s rank has marginally improved in global peacefulness, at a time when there is an overall decline of global peace owing to escalation of violence in West Asia and North Africa.

The Global Peace Index (GPI)

• The Global Peace Index (GPI) is released by Australia-based Institute for Economics and Peace (IEP).
• The IEP, world’s leading think tank that develops metrics to analyse peace and quantify its economic value, released the 12th edition of the GPI, or measure of global peacefulness.
• The Index was first launched in May 2007, with subsequent reports being released annually.
• The GPI gauges global peace using three broad themes:

1. the level of societal safety and security
2. the extent of ongoing domestic and international conflict
3. the degree of militarization

• Factors are both internal such as levels of violence and crime within the country and external such as military expenditure and wars.

Facts

• India’s GPI rank was 137 out of 163 countries in 2017, when the year 2016 was assessed.
• India’s rank moved up to 136 for 2017. This is in line with the performance of some of the South Asian countries.
• Nepal’s rank moved up from 93 to 84, while Sri Lanka’s position moved up too, from position 80 to 67.
• Pakistan’s rank moved from 152 to 151.
• South Asia experienced the largest regional improvement in peacefulness, the report noted.
• However, the best performer of South Asia, Bhutan, slipped from 13th to 19th position, while Bangladesh’ peace index deteriorated sharply. Bangladesh moved from 84th to 93rd position.
• Peace continues to record a gradual, sustained fall across the world, the report noted.
• The results of the 2018 GPI find that the global level of peace has deteriorated by 0.27% last year, marking the fourth successive year of deteriorations.
• Syria remained the least peaceful country in the world, a position that it had held for the past five years.
• Iceland continues to remain the most peaceful country in the world, a position it has held since 2008.

C. GS3 Related

 

• The latest Sample Registration System (SRS) data indicating the Maternal Mortality Ratio (MMR) has brought glad tidings.
• As per the data, the MMR (number of maternal deaths per 1,00,000 live births) has dropped from 167 (in 2011-2013, the last SRS period) to 130 for the country.
• This 28% drop is an achievement arising from painstakingly reducing the MMR in each of the States.
• The SRS segments States into three groups:

1. Empowered Action Group (EAG) — Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh, Odisha, Rajasthan, Uttar Pradesh/Uttarakhand and Assam
2. Southern States — Andhra Pradesh, Telangana, Karnataka, Kerala and Tamil Nadu
3. Others — the remaining States and union territories.

Facts

• The highest reduction from the last SRS is with the EAG States at 23%, a drop from 246 (2011-2013) to 188, while the Other States have dropped by 19%, taking the MMR down from 115 in 2011-2013, to 93 now.
• Southern States, which are at a better average of 77, dropped 17%.
• Truly encouraging is the massive drop of 29% in Uttar Pradesh/Uttarakhand where the MMR has dropped from 285 to 201.
• Kerala remains at the top with an MMR of 46 (down from 61).
• Maharashtra retains its second position with 61, but the pace of fall has been much lower, dropping from 68 during 2011-13.
• Tamil Nadu with 66 (79) is in the third position.
• India has bettered the MDG target of 139 for 2014-2016 which is the outcome of systematic work undertaken by the Centre and States under the NHM.
• Three States (Kerala, Tamil Nadu and Maharashtra) have already achieved the UN’s Sustainable Development Goal of MMR 70 (By 2030, reduce the global maternal mortality ratio to less than 70 per 100,000 live births).
• The Union health ministry is attributing this improvement mainly to rise in institutional deliveries across the country.
• The facilities in public hospitals and health centers have also improved.
• Government is providing free drugs and diagnostics among other incentives to pregnant women that has led to increase in admissions for delivery over the years.

• To address concerns about depleting groundwater reserves in India, the government has joined hands with the World Bank to execute a Rs. 6,000-crore scheme called the Atal Bhujal Yojana (ABHY).

Atal Bhujal Yojana (ABHY)

• The scheme is to be implemented over a period of five years from 2018-19 to 2022-23.
• It is yet to be cleared by the Cabinet.
• The Atal Bhujal Yojana aims to improve ground water management in priority areas in the country through community participation.
• The priority areas identified under the scheme fall in Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh, which represent about 25% of the total number of over-exploited, critical and semi-critical blocks in terms of ground water in India.

Overexploitation

• India’s groundwater resources have been overexploited.
• According to a sample assessment in 2011, groundwater in 19 of India’s 71 districts — about 26% — were critical or exploited, meaning that nearly as much or more water was being pulled out than their reservoirs’ natural recharge ability.
• In another assessment in 2013, they included groundwater blocks in districts that had gone saline, and this percentage was up to 31%.

• The Reserve Bank of India has decided to allow urban co-operative banks (UCB) to convert into small finance banks (SFB), a move aimed at bringing these entities into mainstream banking.
• UCBs had been facing financial trouble till a few years ago, prompting the RBI to stop issuing fresh licences.
• But their performance has improved recently while their numbers have come down due to mergers and closures.
• UCBs currently face regulation by both the RBI and the respective State governments. By turning into SFBs, they will be regulated only by the RBI.
• The regulator has also allowed all banks to spread their mark-to-market losses (an asset’s value is adjusted on a daily basis to reflect its market price. In other words, an asset experiences a mark-to-market loss if its market price falls from one business day to the next) for the April-June quarter, equally over four quarters.
• Rising bond yields have resulted in MTM losses for banks. Bond yields and prices are inversely related.
• Yields have hardened in the last two quarters, impelling the RBI to allow similar relaxation earlier.
• Bond yields may harden further as the RBI raised inflation forecast for this year and cited rising crude prices as a source of uncertainty.

D. GS4 Related

E. Editorials

Why in news

• It is unwise to suggest people-to-people contact as the way to resolve the Cauvery dispute.
• “There have been at least a couple of civil society dialogue initiatives over the Cauvery dispute in the past.”
• Makkal Needhi Maiam founder Kamal Haasan’s joint press interaction on June 4 with Karnataka Chief Minister H.D. Kumaraswamy has triggered a huge controversy.
• He said that the court should be the last resort for dispute resolution and that people-to-people contact should be promoted to find the way forward.
• Various political leaders says it weaken Tamil Nadu’s case, particularly in a situation where there is a stiff resistance towards the formation of the Cauvery Water Management Authority (CWMA) from the Karnataka Chief Minister.

Cauvery River water dispute

• Water being released from the Cauvery for ‘Aadi Perukku’, the monsoon festival in the month of Aadi, at the Mettur reservoir in Tamil Nadu on August 3, 1991.
• The sharing of waters of the Cauvery River has been the source of a serious conflict between the two states of Tamil Nadu and Karnataka
• The 802 kilometres (498 mi) Cauvery river has 44,000 km2 basin area in Tamil Nadu and 32,000 km2 basin area in Karnataka.
• The inflow from Karnataka is 425 TMC ft whereas that from Tamil Nadu is 252 TMCft.

Centre forms Cauvery Water Management Authority

• Acting on the Supreme Court’s direction, the Centre today constituted a Cauvery Water Management Authority (CMA) to address the dispute over sharing of river water among Tamil Nadu, Karnataka, Kerala and Puducherry.
• On February 16, the apex court had directed the government to form the CMA within six weeks in a verdict that marginally increased Karnataka’s share of Cauvery water, reduced the allocation for Tamil Nadu and sought to settle the protracted water dispute between the two southern states.
• The authority would comprise a chairman, eight members besides a secretary. Out of eight members, two each will be full-time and part-time members, while the rest four would be part-time members from states.
• The chairman of the authority should either be a “senior and eminent engineer” with an experience of water resource management and handling of inter-state water dispute or an IAS officer with an experience in water resources management and handling the inter-state dispute.

Since the judgment

• Ever since the Supreme Court delivered its final judgment on February 16, the situation in both States has been broiling.
• Although the final judgment brought some initial celebration in Karnataka, it was accompanied by apprehension that constituting the CWMA would be against Karnataka’s interest.
• At the moment, the CWMA is not fully constituted because three full-time members have not been appointed and there are no nominations from Kerala and Karnataka.
• The Water Resources Secretary, who is the temporary Chair of the Authority, has indicated that it might take some time before the CWMA becomes a comprehensive body.
• But the Authority should have been fully formal and functional, according to court’s final verdict, before the start of the irrigation year, which is June 1.
• If one goes resolutely by the law, the long-pending Cauvery dispute should come to a close after the final verdict and after the CWMA becomes fully and legally functional.
• But doubts still linger in people’s minds. Therefore, the question is, will Tamil Nadu farmers get water as per the schedule prescribed in the final award upheld by the apex court?
• It needs to be acknowledged that the Cauvery dispute is the longest and most bitter inter-State water dispute that has been fought post-Independence.
• It has been almost three decades since the Cauvery Water Disputes Tribunal was constituted. We have gone through a full legal cycle.
• yet, uncertainty and tension remain in both States. So, it this an appropriate time to initiate people-to-people contact.

Past initiatives

• If we recall, there have been at least a couple of civil society dialogue initiatives in the past (what is regarded as Track II diplomacy).
• The first such dialogue took place in 1992. It was initiated by S. Guhan, a distinguished civil servant and former Secretary, Finance and Planning, Tamil Nadu government.
• The meeting was held in Bengaluru and was attended by S. Ranganathan, S. Manavalan and N. Ram.
• From the Karnataka side, the meeting was attended by H.N. Nanje Gowda, M.D. Nanjundaswami and B.K. Chandrashekhar.
• It is important to remember that this unofficial dialogue was organised after the declaration of the interim award in 1991, which was followed by unprecedented violence in Karnataka.
• The total number of Tamilians killed in the 1991 violence was 18 and an estimated 2 lakh Tamilians left Karnataka in a month.
• Against this background, this dialogue opened up a new chapter in dispute resolution and was appreciated as a positive approach by people in both States.
• The second civil society dialogue, which I initiated in 2003, followed the eruption of violence in 2002.
• As an initial measure, two farmers’ dialogue workshops — one in Tamil Nadu (held on April 4 and 5) and the other in Karnataka (June 2 and 3) — were organised.
• Many prominent people and scholars, besides over 100 farmers and farmers’ leaders from both States, participated in the initial two meetings.
• After the initial meetings, a committee was formed with 15 members from each State. This committee later came to be known as the Cauvery Family.
• It had advisers such as Ramaswamy R. Iyer, B.S. Bhavani Shankar, and Gangappa. The Cauvery Family met 18 times in Tamil Nadu and Karnataka, alternatively, between 2003 and 2012 and finally evolved five water-sharing formulae.
• There continued to be differences of opinion, especially on sharing water during deficit years. The most significant feature of this dialogue initiative was that the members of the Cauvery Family developed a long-term perspective and affirmed their faith in caring, sharing and promoting a feeling of fraternity.
• What the Cauvery Family could contribute was best described by Ramaswamy Iyer: “The one positive element in this entire unedifying spectacle of State against State and people against people has been the Cauvery Family — a loose and informal group of Cauvery basin farmers from both Karnataka and Tamil Nadu — which is now known internationally.
• Unfortunately, while it has brought about remarkable mutual understanding and goodwill between the farmers of the two States, it has not so far been able — in spite of several meetings — to arrive at an agreed settlement, including a distress-sharing formula, which can be presented to the Tribunal and the Supreme Court.
• Even the understanding and goodwill achieved by it is under threat in the present situation of conflict and hostility between the two States, at both official and non-official levels.”

The legal recourse:

• The Cauvery Family last met in 2012. It did not meet after that due to lack of recognition and patronage from political parties and other official institutions. Curiously, after the 2016 violence and after the declaration of the Supreme Court’s final verdict this year, several people from Karnataka and a few in Tamil Nadu approached me for reviving the Cauvery Family.
• I took a strong negative position because the legal recourse has taken a full cycle (and it took nearly 40 years) and the stage is set to see the value of the legal route in resolving the dispute.
• Haasan’s press statement with Mr. Kumaraswamy, advocating people-to-people contact, needs to be seen in this context. He could have waited for at least a year to see how effectively the CWMA functions before making such a statement.
• Under the present conditions, seeking people-to-people contact for a social dialogue is unwise, untimely and uncalled for.
• The nation is waiting to see the dispute coming to an end, though not to everyone’s pleasure.

Why in news

• At the end of an unusually long three-day meeting, the Monetary Policy Committee of the Reserve Bank of India opted for a hike in key interest rates by 25 basis points — the first such increase in four and a half years.
• This hike, the first during this NDA government’s tenure, was approved unanimously by the six-member committee, citing worries about hardening inflation trends and a firming up of growth recovery at home.

Context:

• Global uncertainties affecting emerging markets in particular have played a role as well — be it rising tensions over trade wars initiated by the Donald Trump administration or the strengthening dollar or further rate hikes by the Federal Reserve that could strengthen the exodus of global capital from emerging markets such as India.
• Already, between January and May, outflows from foreign portfolio investors have reached their highest level in 10 years, and by June 4, $6.7 billion was pulled out on a net basis from the domestic capital market.

The monetary policy committee

• The Monetary Policy Committee of India is a committee of the Reserve Bank of India that is responsible for fixing the benchmark interest rate in India. The meetings of the Monetary Policy Committee are held at least 4 times a year and it publishes its decisions after each such meeting.
• The committee comprises six members – three officials of the Reserve Bank of India and three external members nominated by the Government of India. The Governor of Reserve Bank of India is the chairperson ex officio of the committee. Decisions are taken by majority with the Governor having the casting vote in case of a tie.
• The current mandate of the committee is to maintain 4% annual inflation until March 31, 2021 with an upper tolerance of 6% and a lower tolerance of 2%.
• The committee was created in 2016 to bring transparency and accountability in fixing India’s Monetary Policy. The committee is answerable to the Government of India if the inflation exceeds the range prescribed for three consecutive months.

 Concerns

• The rupee, along with other emerging market currencies, is hurting too, but RBI Governor Urjit Patel dismissed suggestions that the rate hike was a bid to stem outflows.
• The MPC, he asserted, is driven purely by its inflation management mandate, and there is no contradiction between the rate hike and the committee sticking to its neutral policy stance.
• To be sure, while retaining its growth projections for 2018-19 at 7.4%, the MPC has revised upwards its inflation projections for the year since its April meeting — from 4.7-5.1% in the first half and 4.4% in the second half to 4.8-4.9% and a significantly higher 4.7%, respectively.
• This should worry a government gearing for parliamentary elections next year. Though seasonal food inflation spikes are delayed, input cost pressures have hardened owing to a spurt in global commodity prices, led by fuel.
• Moreover, inflationary expectations among producers as well as consumers have gathered steam. Crude oil prices have been the biggest factor at play, rising 12% from $66 a barrel when the MPC met in April to $74 a barrel.
• The committee said this rise is “sharper, earlier than expected and seems to be durable”, and termed it a major upside risk to its earlier inflation projections.
• Industry has expressed concern, but effective borrowing rates and bond yields had been firming up even before this rate hike.

Conclusion

• The government has, surprisingly, welcomed the RBI’s stance as one that could help steady the markets and dampen uncertainties.
• The RBI’s neutral stance, as Mr. Patel pointed out, allows it to keep all options open.
• But a reversal in rates is unlikely till global headwinds clear up and the mandarins in New Delhi work out a viable strategy to minimise the inflation transmission from global oil prices that is exacerbated by their taxation policy for fuels.

F. Tidbits

• The President gave his assent to promulgate the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018.
• The ordinance provides significant relief to homebuyers by recognising their status as financial creditors.
• It will also enable homebuyers to invoke Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016 against errant developers.
• Another major beneficiary would be micro, small and medium sector enterprises (MSME), which form the backbone of the Indian economy as the biggest employer, next only to the agriculture sector. The ordinance empowers the government to provide them with a special dispensation under the code.

• The Cabinet approved the revised guidelines of the Department of Public Enterprises on time-bound closure of sick or loss-making central public-sector enterprises (CPSEs) and the disposal of movable and immovable assets.
• As per the new guidelines, surplus land obtained from the closure of such firms would be prioritised to provide affordable housing.

• There is no change in the policy of visas for Indian professionals working in the IT sector of the U.S.

• The six-member monetary policy committee (MPC) of the Reserve Bank of India (RBI) increased the repo rate by 25 basis points to 6.25%.
• The MPC arrived at the unanimous decision as the outlook for inflation had become uncertain following a surge in international crude oil prices.
• While banks that have already raised rates may not increase them immediately, those yet to act are likely to announce revisions.
• The central bank also observed that inflation expectations were on the rise, evident from its survey of households.
• While the central bank has increased the inflation projection, it has maintained the neutral stance for monetary policy, meaning interest rates can move either way.
• The outlook for GDP growth for 2018-19 has been retained at 7.4% as projected in the April policy.

• The Reserve Bank of India (RBI) has increased the eligibility limit for a loan to classify as priority sector lending in a bid to boost affordable housing
• For metropolitan areas, loan limits have been raised from Rs. 28 lakh to Rs. 35 lakh and for other areas, it has been increased from Rs. 20 lakh to Rs. 25 lakh, provided the overall cost of the home does not exceed Rs. 45 lakh and Rs. 30 lakh respectively.
• The move was aimed at giving a fillip to low-cost housing for the economically weaker sections and lower income groups.
• The central bank also cautioned about an increase in bad loans for loans of up to Rs. 2 lakh and said banks needed to strengthen screening and follow-up measures.
• The banking regulator said it may also tighten loan to value ratio (amount of loan to the total cost of a house) or increase the risk weight if there is a need.

G. Practice Questions for UPSC Prelims Exam

Question 1. Consider the following statements:

Question 2. Which of the following statements with respect to the International Atomic Energy 
Agency is incorrect?

Question 3. Which of the following led to the resurgence of revolutionary tendencies in second
and third decades of 20th century?

Question 4. Which of the following pairs are correctly matched?

Question 5. Consider the following statements about Government’s steps taken for generating 
employment in the country:

H. UPSC Mains Practice Questions

1. Indian society, government and economy underwent significant changes in the decades following the Revolt of 1857. Discuss.
2. Economic development around the world is intertwined with a global phenomenon called climate change. Analyze.

 

Also, check previous Daily News Analysis