TABLE OF CONTENTS
A.GS1 Related B.GS2 Related INTERNATIONAL RELATIONS 1. Modi meets Rouhani, discusses Chabahar 2. UNSC allows Hafiz Saeed banking access C.GS3 Related ECONOMY 1. Call money rates should be close to policy rate, says liquidity panel D. GS4 Related E. Editorials ECONOMY 1. Punjab and Maharashtra Cooperative Bank Ltd (PMC Bank) 2. Can the Indian economy ride out the storm? POLITY AND GOVERNANCE 1. Childhoods lost in a troubled paradise F. Tidbits 1. ECI cell to monitor fake news, poll code violations on social media 2. 4,300 quit tobacco a year after calling helpline G. Prelims Facts 1. Boiga thackerayi 2. Organisation of Islamic cooperation (OIC) 3. Médecins Sans Frontières/Doctors Without Borders (MSF) 4. Nandankanan zoo to follow sanitation disinfection protocol H. UPSC Prelims Practice Questions I. UPSC Mains Practice Questions
A. GS1 Related
Nothing here for today!!!
B. GS2 Related
- Prime Minister Narendra Modi and Iranian President Hassan Rouhani met along the sidelines of the UN General Assembly’s 74th session in New York.
- The leaders especially mentioned operationalisation of Chabahar Port and noted its importance as gateway to and for the landlocked Afghanistan and the Central Asian region.
- India, the world’s third-biggest oil consumer, meets more than 80 per cent of its oil needs through imports. Iran was its third-largest supplier after Iraq and Saudi Arabia till recently.
- India has stopped orders for Iranian oil since May 2, 2019 following U.S. sanctions that kicked after the U.S.A pulled out of the Joint Comprehensive Plan of Action (JCPOA), an international deal to limit Iran’s nuclear program in November 2018.
- India was one of the countries that was given an exemption from these sanctions until May, 2019. Iran is also accused by the US and its allies of attacking two key oil facilities in Saudi Arabia, triggering a new round of tensions in the region.
- Recently Iran’s envoy to India had expressed concerns that despite a sanction carve out for India’s participation in the construction and development of Iran’s Chabahar port work on the project was “very slow”. It was also asserted that India should not have cooperated with U.S. sanctions.
The issue has been covered in 11th September Comprehensive News Analysis under GS Paper 2 International Relations. Click here to read.
- Chabahar Port is located on the Indian Ocean in the Sistan and Baluchistan province of Iran.
- It is located on the Gulf of Oman and is the only oceanic port of the country. The port gives access to the energy-rich Persian Gulf nations’ southern coast.
- India’s construction of the Shahid Beheshti terminal at Chabahar port since 2016 is a key component of its trade and connectivity routes to Afghanistan and Central Asia, circumventing Pakistan.
- It is a strategic project that would connect India, Afghanistan and Iran to Central Asia.
- Chabahar port will boost India’s access to Iran, the key gateway to the International North-South Transport Corridor that has sea, rail and road routes between India, Russia, Iran, Europe and Central Asia.
- It is easily accessible from India’s western coast and is increasingly seen as a counter to Pakistan’s Gwadar port located at distance of around 80 km from Chabahar.
- Establishment of a politically sustainable connectivity between India and Afghanistan will be ensured by this project.
- With Chabahar port becoming functional, there will be a significant boost in the import of iron ore, sugar, and rice to India.
- The Prime Minister reiterated India’s support for giving priority to diplomacy, dialogue and confidence building in the interest of maintaining peace, security and stability in the Gulf region, which is of vital importance for India.
- Noting that India and Iran shared old and civilisational ties, the two leaders positively assessed the progress in bilateral relations since their first meeting at UFA in 2015.
- Both agreed to mark the 70th Anniversary of the establishment of diplomatic relations in 2020.
The UN Security Council (UNSC) has allowed Jamaat-ud-Dawa (JuD) chief and the 2008 Mumbai attack mastermind Hafiz Saeed access to his bank account, which had been frozen because of the sanctions, after Pakistan made a plea on his behalf.
- Saeed’s assets had been frozen after the UNSC sanctioned him under Resolution 1267 for links with the Al Qaeda and Islamic State (IS) in 2008.
- In September 2019, Hafiz Saeed was designated as a terrorist for under the Unlawful Activities (Prevention) Act.
- He was designated a terrorist for his involvement in four cases — Red Fort attack (2000), Rampur attack (2008), 26/11 Mumbai attack (2008) and attack on a BSF convoy at Udhampur in Jammu & Kashmir (2015).
- The amended Unlawful Activities (Prevention) Act allows the government to designate individuals as terrorists.
- Previously only an organisation could be designated as a terrorist organisation.
- Recent amendment empowers the NIA to seize properties, which previously required permission from the Director General of Police.
- It allows NIA officers, of rank of Inspector or above, to investigate cases. Previously, only Deputy Superintendent or Assistant Commissioner of Police or above could do so.
- Saeed also carries a bounty of $10 million announced by the US.
- In a decision taken on August 15, 2019 the UN Sanctions Committee said it had received a letter from Pakistan seeking permission to allow Saeed “certain expenditure” from his frozen bank account.
- The Chair said “no objection” had been received from any member on that day and hence Pakistan’s request was approved.
- Pakistan’s decision to apply for funds for Hafiz Saeed follows questions raised by the Financial Action Task Force (FATF) earlier this year.
- The APG (Asia Pacific Group) sub-group meeting in Beijing in May 2019 had asked Pakistan for details of how more than 100 UN-sanctioned entities, including Saeed, were sustaining themselves.
- Providing any of these entities access to funds without UNSC approval is a violation of Pakistan’s commitments and part of the 27-point action plan that it is expected to be approved on ahead of the FATF meet in November, 2019 that will decided on its “greylist” status.
C. GS3 Related
An internal working group, formed by the Reserve Bank of India (RBI) to review the current liquidity management framework has sought more flexibility on liquidity.
- The formation of the Internal Working Group was announced on 6 June 2019, to review the current liquidity management framework.
- This recommendation comes against the backdrop of the liquidity squeeze seen in the aftermath of the Infrastructure Leasing and Financial Services Ltd (IL&FS) crisis last year and the continuing liquidity mismatches faced by non-banking financial companies (NBFCs), leading many of them to default on their loan repayment schedules.
- According to RBI data compiled by Bloomberg, system liquidity remained largely in deficit mode between October 2018 and May 2019.
To know more about the IL&FS crisis, watch IL&FS Crisis Explained.
- The panel has recommended that RBI’s liquidity framework be made flexible enough to adapt to conditions when the system requires liquidity to be in surplus mode.
- It has suggested that the framework should be guided by the objective of maintaining the target rate — that is, the rate in the inter-bank market for reserves — close to the policy rate.
- The report said that the target rate is usually the rate at which reserves are borrowed or lent among banks, that is, the call money market rate in India.
- The framework should enable RBI to be equipped with the required tools to inject and absorb liquidity at either fixed or variable rates, on an overnight basis as well as for longer tenors.
- Under the current setup, system liquidity is required to be in a small deficit, which could be an impediment when surplus liquidity is essential.
- The report has recommended that the current liquidity management framework must largely continue in its present form with a corridor system, with the overnight call money rate as the target rate.
- Suggesting that the liquidity framework should be flexible, the report said while the corridor system would normally require the system liquidity to be in a small deficit, if financial conditions warrant a situation of liquidity surplus, the framework should be adaptable.
- It said the design of the corridor system, with the repo rate as the policy rate, would generally require system liquidity to be in a small deficit of about 0.25-0.5% of net demand and time liabilities (NDTL) or total deposits.
- Owing to this flexibility, RBI’s current provision of assured liquidity of up to 1% of NDTL is no longer necessary.
- The group has suggested minimizing RBI’s role in daily liquidity management while the new liquidity framework would incentivise banks to trade among themselves rather than with the central bank to make monetary transmission of policy rates more effective.
- It has also suggested standalone primary dealers be allowed to participate directly in all overnight liquidity management operations.
- The group has suggested retaining the present minimum requirement of maintaining 90% of the Cash Reserve Ratio (CRR) on a daily basis as it has helped avoid bunching of reserve requirements of individual banks.
- The panel has also asked RBI to institutionalize some of the ad hoc liquidity infusion measures the central bank has adopted over the past few months.
- In addition to Open Market Operations and forex swaps, the group recommended longer term repo operations at market related rates.
- Central banks globally maintain a liquidity management framework as an integral part of monetary policy operations to not only ensure adequate liquidity for the economy’s credit demands, but also to ensure smooth transmission of changes in policy rates to credit and deposit markets.
- This is achieved by ensuring that the inter-bank call money rate is closer to the benchmark repo rate.
- Inter-bank call money market is where banks lend to each other, primarily to ensure compliance with reserve requirements and to smoothen temporary cash-flow mismatches.
D. GS4 Related
Nothing here for today!!!
- The Reserve Bank of India has placed Mumbai-based Punjab and Maharashtra Cooperative Bank (PMC Bank) a Leading Cooperative Bank headquartered in Mumbai under directions and has slapped restrictions on its operations
- RBI imposed curbs on the activities of PMC for a period of six months.
- Founded in 1984, PMC Bank was the youngest bank to get the status of a scheduled bank in 2000 and a licence of authorised dealer category 1 in the year 2011 for forex business by the RBI.
- The bank has several small businesses, housing societies and institutions as its customers.
Why was it placed under restrictions?
- The decision came after the central bank discovered certain irregularities in the bank, including the under-reporting of non-performing assets (NPAs).
- The bank had suppressed the sticky assets and under-reported them
- The bank was funding a clutch of companies, mainly in the troubled real estate sector, led by Housing Development & Infrastructure Ltd (HDIL). Commercial banks have already declared HDIL a defaulter.
- This episode, once again, raises questions on not only the governance structures at these cooperative banks, but also on their supervision.
- Cooperative banks are under joint supervision of the RBI and states.
- And while the RBI has signed MoUs with state governments, unless state governments cooperate in effecting regulations, supervision is likely to be ineffective.
- Clearly, there were no early warning signs of trouble in this case.
Steps taken by RBI
- The RBI has appointed J B Bhoria as administrator of PMC Bank; he is expected to take appropriate measures to bring the bank back on the rails.
Restrictions imposed by the regulator can do more harm than good?
- The constraints imposed by RBI, under section 35A of the banking Regulation Act, are aimed at safeguarding depositors interest, and preventing a run on the bank, such moves, which are seen as penalising depositors, can end up having the opposite effect, denting trust in cooperative banks and increasing the risk of a contagion.
- Instances such as these are likely to raise calls for reviewing this regulatory framework and giving more powers to the RBI to oversee these entities. These need to be attended to.
- The RBI should also examine the long-term feasibility of their business models in light of the rapid technological changes in the financial sector.
- The RBI could also explore the option of merging PMC with another healthy cooperative bank to avoid any instability
It is defined as small-sized units in the co-operative sector, operate both in urban and non-urban centres. These banks have mostly been centered on communities and localities lending to small borrowers and businesses. Traditionally, the co-operative structure is divided into two parts–rural and urban.
The Rural Cooperative Credit system in India is primarily mandated to ensure flow of credit to the agriculture sector. The short-term co-operative credit structure operates with a three-tier system –
- Primary Agricultural Credit Societies (PACS) at the village level,
- Central Cooperative Banks (CCBs) at the district level and
- State Cooperative Banks (StCBs) at the State level.
Primary Cooperative Banks (PCBs), also referred to as Urban Cooperative Banks (UCBs), cater to the financial needs of customers in urban and semi-urban areas.
How are they regulated?
- Cooperative Banks are registered under the Cooperative Societies Act.
- The banking laws were made applicable to cooperative societies in 1966 through an amendment to the Banking Regulation Act, 1949.
- Since then, banking related functions are regulated by the RBI and management related functions are regulated by respective State Governments/Central Government.
- Powers have also been delegated to National Bank for Agricultural and Rural Development (NABARD) to conduct inspection of State and Central Cooperative Banks.
- However, do note that Primary Agricultural Credit Societies fall outside the purview of the Banking Regulation Act, 1949 and hence are not regulated by the RBI.
Regulatory checks in place
Many of the regulatory norms applicable to a commercial bank also apply to cooperative banks, which is comforting.
- For instance, cooperative banks too have to set aside 4 per cent of their total deposits as CRR (cash reserve ratio) with the regulator.
- They also need to invest another 18.75 per cent of their total deposits in government securities, which are highly liquid and can be easily pledged (or sold) to raise money.
- Also RBI had put in place a Supervisory Action Framework (SAF) in 2012, much like the Prompt Corrective Action (PCA) on commercial banks.
- Here too, trigger points for initiating corrective action on banks is based on certain financial parameters such as capital adequacy, gross non-performing assets, concentration of deposits and profitability.
Why people save their money in cooperative banks over commercial banks?
- One of the biggest draw for people to park money in cooperative banks is the relatively higher rates these banks offer on deposits than commercial banks.
Non Compliance a major Problem
- Despite the regulatory check in place, weak corporate governance, lack of professionalism, reluctance in technology adoption are some of the concerns that continue to plague the sector.
To read about the topic: Click here
- India is currently witnessing slowdown. It is not because we are not able to produce enough or that we have run out of capacity to produce; it is because there is not enough demand.
Steps that can be taken up
- To give a boost to the export sector supply-side measures like trade facilitation, removing bottlenecks, reducing the GST refund period delay, or even managing the exchange rate, but fundamentally if the global slowdown is a reality, then export demand cannot pick up quickly.
- It should identify the cause of the structural slowdown and address it directly. Indirect instruments would not work in the case of structural constraints.
- To pull India out of the current economic slowdown, the government can loosen its purse strings, make pending payments, give GST refunds quickly, and revamp MGNREGA to put more money in the hands of rural consumers
- Make MGNREGA truly demand-driven, make the wage indexation meaningful and involve social audits which were successful in some States like Andhra and Rajasthan.
- Involve social audits to ensure effectiveness, and also focus on the dual objective of asset creation wherever possible.
- But primarily it should be about putting some income in the hands of rural consumers.
- The unorganised sector has been hit now for a long time and unless rural incomes are revived, and that is where 70% of our population is, consumer demand is not going to grow
- If the Government intends to fix that structural break, it needs to bring back rural income to some semblance of normalcy.
- This article speaks about incidents of Illegal detention, violence and torture in the valley region of Jammu and Kashmir and how this has led to mental trauma in the children and stress in Adults.
- Between 1990 and 2005, a total of 46 schools were occupied by the armed forces
- In 2018, the Jammu & Kashmir Coalition of Civil Society (JKCCS) found through Right to Information applications that hundreds of children had been detained under the PSA between 1990 and 2013.
A look at reports
- A report by economist Jean Dreze has chilling details of illegal detention and torture of boys.
- A recent report by the Indian Federation of Indian Women and other organisations gave a first-hand account of the haunting spectre of mothers standing at their doorsteps in the desperate hope of their children’s return, not knowing where they are.
These disappearances are in clear breach of the Supreme Court’s directions in the D.K. Basu case
- The court, in this case, said that the next of kin have to be informed of every such arrest and the reasons thereof.
- The police officer carrying out the arrest shall prepare a memo of arrest at the time of arrest and such memo shall be attested by at least one witness, who may be either a member of the family of the arrestee or a respectable person of the locality from where the arrest is made.
- It shall also be counter signed by the arrestee and shall contain the time and date of arrest.
Kashmir’s children have become Pawns in a political game
- A report by the UN High Commissioner for Human Rights found that children in Kashmir, many of whose ages were wrongly recorded, were being detained and mistreated for several days in police lock-up, without any charge, mostly under the Public Safety Act (PSA)
- In many of these cases, the police/magistrates had no procedure to verify the age of the detainees and minors were kept in custody along with adult criminals and released only after judicial intervention. About 80% of these detentions were held illegal by courts.
Such unlawful detentions leaves a lifelong impact on children, perpetuating a cycle of trauma, fear and bitterness.
Such treatment of children is undoubtedly in violation of multiple laws and conventions.
- To begin with, all of them violate Article 14(4) of the International Convention on Civil & Political rights which states that “all proceedings against juveniles shall take into account their age and the desirability of promoting their rehabilitation.”
- The UN Convention on the Rights of the Child, ratified by India, provides that the arrest/detention of a child shall be in conformity with the law and used only as a last resort and for the shortest appropriate period.
- The guidelines of the National Commission for Protection of Child Rights clearly state that a blanket characterization of adolescent boys as security threats during civil unrest should be avoided and authorities should investigate and take action against personnel involved in arbitrary detentions, mistreatment or torture of children.
Various court rulings against detention of Juvenile’s
- In 2003, the Madras High Court in Prabhakaran v. State of Tamil Naduheld that the Juvenile Justice Act is a comprehensive law and overrides preventive detention laws enacted for national security.
- Earlier, in 1982, the Supreme Court had in the Jaya Mala case condemned the preventive detention of a student and observed that young people, even if their acts are misguided, cannot be punished with a sledgehammer.
However, none of these laws and directives seem to be followed in Kashmir.
How it harms Children?
- Parents are too scared to send their children to school, lest they be picked up by authorities or get caught in a crossfire. This leads to lack of Education.
- Children in Kashmir grow up caged and under the shadow of a gun. As the parents of many of them go missing, they are also forced to assume the responsibility of caregivers for their siblings.
- The strain on social structures due to the loss of family environment, safe spaces and education and health facilities severely traumatises many of them and snatches their childhood away.
- No curbs on democratic rights on the promise of development can justify inhumane treatment of children.
- The civil society needs to speak out for the children of Kashmir or we will also be complicit in the ‘aggravated crime’ by the state apparatus.
- The preventive arrests should be stopped lest the children of Kashmir go missing forever.
- The National Tobacco Cessation QuitLine is a dedicated toll-free number that helps tobacco users to receive free support and guidance to subdue their addiction.
- The Union government’s tobacco Quitline is monitored by National Institute of Mental Health and Neurosciences (NIMHANS).
- The helpline started by the Union Health Ministry in April 2018 is displayed on all tobacco products.
- Subsequently, the south Indian regional languages cell, NIMHANS Tobacco Quitline was started on September 11, 2018.
- Those who are unable to kick the habit only with the help of Quitline, are referred to the nearest Tobacco Cessation Clinic (TCC).
- Penetration in rural areas is the next plan.
- Ministry of Health & Family Welfare, in partnership with World Health Organisation and the International Telecommunications Union, had started an initiative for utilising mobile technology for tobacco cessation.
- WHO-ITU’s ‘Be Healthy Be Mobile’ initiative, aims to reach out to tobacco users of all categories who want to quit tobacco use.
- The Centre’s ‘mCessation’ Programme to quit tobacco is a text messaging programme for mobile phone users.
- A person looking to quit tobacco can give a missed call to the toll-free number after which, they will be sent a series of messages over several months.
- In a 2018 report published by the peer-reviewed online journal BMJ Innovations it was reported that the ‘mCessation’ programme in India had seen a 19% quit rate (estimated as not used any tobacco in the past 30 days).
G. Prelims Facts
- It is a new species of snake that has been discovered in the Western Ghats in Maharashtra.
- The species falls in the category commonly called cat snakes.
- It belongs to the genus Boiga and has Tiger like stripes on its body.
- This is the second species of Boiga after B. dightoni that is endemic to the Western Ghats and the first new species of Boiga described after 125 years from the Western Ghats.
- This is apparently the first known species of Boiga which feeds on frog eggs.
- Organisation of Islamic Cooperation is among the largest international organizations in the world. It was founded in 1969,
- It consists of 57 member states and declares that it is “the collective voice of the Muslim world” and works to “safeguard and protect the interests of the Muslim world in the spirit of promoting international peace and harmony“.
- Its Permanent Secretariat is in Jeddah, Saudi Arabia.
- It is the second largest inter-governmental organization after the United Nations.
- The OIC has permanent delegations to the United Nations and the European Union.
- It is an international, independent, medical humanitarian organisation that delivers emergency aid to people affected by armed conflict, epidemics, natural disasters and exclusion from healthcare.
- MSF offers assistance to people based on need, irrespective of race, religion, gender or political affiliation.
- Médecins Sans Frontières was founded in 1971, in the aftermath of the Biafra secession
- The Nigerian Civil War is also known as the Biafran War and the Nigerian-Biafran War, was during the period of 1967 to 1970.
- Nandankanan Zoological Park authorities are set to follow a strict sanitation and disinfection protocol after losing four elephants to prevent further deaths.
- The zoo has lost four elephants to the fatal elephant endotheliotropic herpesvirus (EEHV) in a month.
- Elephant endotheliotropic herpesviruses(EEHV) is a type of herpesvirus, which can cause a highly fatal hemorrhagic disease when transmitted to young Asian elephants.
- The NZP case is the first instance of the infection being noticed in the country among elephants in captivity.
- Although the U.S. has made significant progress in tackling EEHV, no therapeutic course is available for this.
- Strict measures assume significance as no drug has been developed to deal with EEHV.
Nandankanan Zoological Park:
- Nandankanan, is located near Bhubaneswar, Odisha.
- It is the first zoo in the World to breed White tiger and Melanistic tiger.
- Nandankanan is the only conservation breeding centre of Indian Pangolins in the world.
- It is the only zoological park in India to become an institutional member of World Association of Zoos and Aquarium (WAZA).
- It is the first zoo in India where endangered Ratel was born in captivity.
- It is the second largest heronry for Open Billed Storks in Odisha.
H. Practice Questions for UPSC Prelims Exam
Q1. Consider the following statements:
- Anaemia is a condition in which a person has a lower-than-normal number of platelets and white blood cells.
- Worm infestation and deficiency of vitamin b12 are among the causes of Anaemia.
- The reduction of anemia is one of the important objectives of the POSHAN Abhiyaan.
Which of the given statement/s is/are correct?
a. 1 and 3 only
b. 2 and 3 only
c. 1 only
d. 2 only
Q2. Consider the following statements:
- Economic Advisory Council is an independent body constituted to advice the government on economic and related issue.
- It is a non-constitutional and non-statutory body.
- It can provide policy advice only on the reference from the Prime Minister.
Which of the given statement/s is/are correct?
a. 1 and 2 only
b. 1 and 3 only
c. 2 and 3 only
d. 3 only
Q3. Consider the following statement with respect to Inter Governmental Panel on Climate Change:
- IPCC functions under the United Nations Framework Convention on Climate Change
- It was formed by the World Meteorological Organisation andUnited Nations Environment Programme
- IPCC has received the Nobel Prize for Peace.
Which of the given statement/s is/are correct?
a. 1 only
b. 1 and 2 only
c. 2 only
d. 1, 2 and 3
Q4. Consider the following statements with respect to Ajanta Caves:
- The themes of paintings in Ajanta caves include life of Buddha, Jatakas and Avadanas.
- Ajanta caves are recognised as World Heritage Site by UNESCO.
- In the Ajanta cave complex, there are more number of “Vihara” than “Chaitya”.
Which of the given statement/s is/are correct?
a. 1 and 2 only
b. 2 only
c. 3 only
d. 1, 2 and 3
I. UPSC Mains Practice Questions
- Chabahar port is considered the golden gateway to opportunities for India. Elucidate. (10 Marks, 150 Words)
- The increase in global temperatures and the concomitant natural disasters will make millions of people climate refugees. Analyse the statement and suggest the way forward. (15 Marks, 250 Words)
Read previous CNA.