9 PM Daily Brief -20 July 2016

20-july (2)

Brief of newspaper articles for the day bearing
relevance to Civil Services preparation

What is 9 PM brief?


GS PAPER 2


 [1]Govt. moves Bill to change names of High Courts

The Hindu

Context

Government has moved a bill in Lok Sabha to seek a change in the name of Bombay, Madras and Calcutta High courts.

News

  • The bill has been tabled so that the High Courts reflect the change in the names of cities they are located in.
  • The High Court (Alternation of Names) Bill seeks to change the name of these High Courts to Mumbai, Chennai and Kolkata High courts.
  • The move is also aimed to fulfill the aspirations of the people of these concerned states.

[2]Life term means imprisonment till death, says Constitution Bench

The Hindu

Context

A constitutional bench of Supreme Court ruled against awarding multiple life terms for convicts who are guilty of heinous crimes.

Analysis

  • The case was filed by by convicts who were accused of multiple murders in Tamil Nadu. The trial court awarded the life sentences for each murder, to be served one after the other.
  • However, SC, interpreting Section 31 of Criminal Procedure Code clarified that in case of more than on life sentence, they have to run parallely and not consecutively.
  • SC also made it clear that if a convict is granted a commutation or remission in first murder case, it does not automatically applies to the second case. Second life imprisonment term would kick in and he would remain in jail.
  • If a person commits a crime while on parole and is awarded a life sentence, that sentence would also be superimposed on the first life sentence.

[3]Carnage in nice leaves the French in a state of vulnerability  

Indian Express

Issue

  • Analysis of the terrorist attack in Nice, France

Anyone can be a terrorist

  • Each such act of carnage — this is France’s third major attack in 18 months — leaves citizens feeling more vulnerable.
  • After the Paris attacks, the first time suicide bombers acted on French soil, it was clear that anyone and everyone was a potential target.
  • The Nice attack, demonstrates that anyone and almost everyone could be a potential terrorist. There is no need for extensive training, guns, bombs or weapons of mass destruction.
  • A simple vehicle suffices. Ownership is not even an issue; a 19-tonne truck can be rented with the specific purpose of mowing down happy families with children.

Can such attacks be prevented?

  • The ground reality is the government and ruling class are powerless in France, as they are the world over, to prevent such attacks.
  • The Nice attacker, a depressive, violent loner was radicalised very quickly and appears to have acted independently, though the IS has claimed the attack.
  • The numbing possibility that this kind of attack can be carried out anywhere, any time without the intelligence agencies having a clue has left the public with a heightened sense of vulnerability.

How to curb this sort of terrorism?

  • The tide against terror will only begin to turn when France reaches out to her alienated, disaffected Muslim citizens, gives them the requisite space to express their identity and culture. Integration cannot take place solely at the state’s behest.
  • As a country in the forefront of the fight against radical Islamist groups, France is a prime target for terrorist attacks. The greatest threat is now from its home-grown crop of jihadists and would-be jihadists.
  • Given the current state of affairs in France, the identity politics, the fear mongering and the lack of political will, it is going to be a long haul.

 


GS PAPER 3


[1]Centre injects Rs.22,915 cr into 13 public sector banks

The Hindu

Context

Centre has infused Rs. 22,915 crores for recapitalisation of 13 Public Sector Banks (PSBs)

Analysis

  • Out of 13 PSBs, State Bank has received the largest share of Rs 7,575 crores.
  • This infusion will increase the lending capability of the banks which at present are marred by insufficient capital and piling stressed assets. It will also help banks raise funds from the market.
  • 75% of the funds decided for each bank is being released now. Remaining would be released later based on performance.

Conclusion

This move by the government is a welcome move and comes at the right time. To enable growth, investment is a must and investment can not happen when banks have weak lending capacities. Such recapitalisation is, thus, a right step not only for the banks but also towards overall economic growth.

[2]Rural areas pose hurdle for small finance banks 

The Hindu

Context

Small finance banks which are supposed to boost financial inclusion are facing big problems with the norm that requires them to open 25% branches in rural areas.

Analysis

  • RBI has made it mandatory for the small finance banks to open 25% of their total branches in unbanked rural areas.
  • This has become very difficult for small finance banks as many of those who have got the license have been Micro Finance Institutions (MFIs).
  • MFIs branches are much simpler as compared to banks and to convert them into banks has lot of costs involved. Thus, to convert all MFI branches in banks cannot be done in 1 year
  • This is the reason why representatives of Small Finance Banks have requested RBI to give them 3 years time to meet the norm.

However, since this norm of rural branches was known to the banks before applying, it is unlikely that any relaxation would be given to them

[3]CAG audit nails Centre’s claim on LPG subsidy saving

The Hindu

Issue

  • CAG report will expose the tall claims made by the government on LPG subsidy saving.

What the Government has said?

  • The Centre claims it would end up saving almost Rs. 22,000 crore in the financial years of 2014-15 and 2015-16 since launching its two-pronged approach on cooking gas subsidy — introducing direct bank transfers of the subsidy and asking better off consumers to voluntarily give up theirs.
  • The government has been carrying out a high decibel campaign ‘GiveItUp’, calling upon consumers to give up their LPG subsidies.

CAG report

  • A CAG report to be tabled in Parliament during the ongoing session could seriously puncture the claim, according to reliable sources.
  • The audit has found that the saving from people voluntarily giving up LPG subsidy and direct bank transfers adds up to less than Rs. 2,000 crore.
  • The remaining saving is actually thanks to the dramatic fall in the prices of LPG that India annually imports.
  • The audit has also found substantial systemic problems with the Direct Benefit Transfer in LPG scheme which is called Pahal by the government.
  • Among them are diversion of domestic subsidy for commercial use and commercial consumption LPG being diverted to domestic use.

[4]Will data do us apart?

The Hindu

Issue

  • Debate over the  accuracy of official measures of the country’s growth.

Skepticism over the data

  • For the past two years, every quarter’s GDP report based on the new methodology has been met with the same scepticism — that is, that there is little corroborating evidence from other data sources that the growth rate is anywhere near the official statistics.
  • There are 2 sources of data.
  • One which is  described by the traditional indicators of activity, such as industrial production, imports, auto sales, order books, freight, corporate earnings, and bank credit all compiled by various Ministries and regulators.
  • And the other described by the national account statistics compiled by the Central Statistical Office (CSO).

A tale of two series

  • The new GDP series begins in FY 2013 and for FY 2014 records a growth rate of 6.7 per cent, two percentage points higher than in the old series.
  • Subsequently, growth continued to rise to reach 7.6 per cent in FY 2016, hitting nearly 8 per cent in the quarter that ended this March.
  • We have all seen what economic growth of 8 per cent feels like in the past and whatever is happening now isn’t anything like it.
  • Feelings aside, none of the other official data — industrial production, imports, auto sales, order books, freight, corporate earnings, or bank credit — show any resemblance to an economy surging at 8 per cent.

Basis of new methodology

  • The new methodology is based on the annual survey of companies registered with the Ministry of Corporate Affairs (MCA).
  • This survey covers half a million firms, much larger than the world of listed companies and that of the big firms used in estimating, for example, industrial production.
  • Consequently, many of the firms are small and medium-scale enterprises (SMEs), which previously were not directly surveyed.
  • Therefore, the new estimate of manufacturing growth is more comprehensive and provides a truer picture of the economy.
  • Based on this notion, the argument continues that much of the near double-digit manufacturing growth is now being delivered by SMEs and not by the big listed firms.
  • So it is perfectly consistent to see listed corporates’ earnings and sales languishing while industrial growth is surging.
  • In the same vein, as banks have traditionally not financed SMEs, it is also consistent for manufacturing growth to rise while credit to industries declines.
  • To the extent that credit attributed to “consumers” is often diverted to SMEs, banks are financing industrial growth unknowingly through rising household loans.

Problem with this narrative

  • First, if SME manufacturing is doing so well, why are people worried about employment growth?
  • Second, it is nearly impossible to verify this story as the MCA database still seems to be a state secret! Instead, the data that are publicly available just don’t appear to corroborate the parallel growth narrative.

Road ahead

  • Policies based on the wrong reading of reality almost always end in tears.
  • In a world flush with liquidity and global interest rates near zero, it is unlikely that the awakening will be caused by financial markets, as was the case in 2013.
  • But every society has a tolerance floor for growth and tolerance ceiling for macroeconomic instability.
  • Whenever this floor or ceiling is breached, the political economy reacts badly.

[5] Panama agrees to sign tax treaty 

The Hindu

Context

Panama has decided sign Multilateral Convention on Mutual Administrative Assistance in Tax Matters – a multilateral tax treaty. This treaty will help India who is already a part of the treaty,  to hasten the investigation into the Panama Papers.

What is Mutual Administrative Assistance in Tax Matters

  • A treaty which was jointly developed by the OECD and Council of Europe in 1988 and amended in 2010 to align it international standard of exchange of information and opening it to all countries.
  • This convention includes all BRICS, OECD and G20 countries.

Conclusion

From India’s point of view, this move by Panama would would help swift exchange of information on tax matters between India and Panama.


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