Answers: Mains Marathon – UPSC Mains Current Affairs Questions – January 26, 2018

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Q.1) In the light of ongoing India-ASEAN Commemorative Summit in New Delhi ,Discuss the relevance of India-ASEAN relations.  What are the major challenges that India- ASEAN are  facing today?  Suggest some measures to further strengthen their ties.(GS-2)

About ASEAN:

The Association of Southeast Asian Nations, or ASEAN, was established on 8 August 1967 in Bangkok, Thailand.It was established with the signing of an ASEAN Declaration (Bangkok Declaration) by the ministers of the founding countries.

The theme of the present ASEAN-India Commemorative Summit is “Shared Values, Common Destiny”—highlighting the commonalities between Asia’s third largest economy and the economically vibrant bloc that groups together Indonesia, Singapore, the Philippines, Malaysia, Brunei, Thailand, Cambodia, Lao PDR, Myanmar and Vietnam.

Relevance of India-ASEAN relations:

• ASEAN is our fourth largest trading partner and India is their seventh largest trading partner.
• The South-East Asian region is economically very vibrant; this is a vibrant economic commercial space for India.
• India’s investment in the last two decades has been $70 billion. So there is a lot of potential in engaging them further.
• Many countries in the region have people of Indian origin among their citizens—most notably Malaysia and Singapore.
• The epic of the Ramayana—which is well-known in India—is something it shares in common with Southeast Asia.
• India is also looking at Asean as its development partner—especially with regard to improving the economic conditions in its insurgency wracked northeast.
• Singapore, for example, has set up a skill development centre in Assam—one of the seven northeastern states of India.
• India is also encouraging Singapore to investment in the region and has in the past urged the city-state to start direct flights to India’s northeast.

Major challenges India and ASEAN nations are facing:

• Increasing infrastructure and connectivity is the major challenge facing India and ASEAN member countries.
• Problems in the implementation of India-Myanmar-Thailand (IMT) Trilateral Highway and Kaladan Multimodal Transit and Transport Project.
• China’s territorial claims in the oil and gas-rich South China Sea, which is also a major international maritime trade route.
• Following the uncertain behaviour of China, Indian Ocean has become unpredictable and it might become the next battle ground.

Measures:

• Transforming “corridors of connectivity” to “corridors of trade” needs to be fast-tracked to realise their full business potential.
• Enhancing utilisation of the Free Trade Agreement ASEAN nations want India to take and play leadership role in improving commerce, connectivity and security in the region.
• Enhancing people-to-people connectivity and nourishing the civilizational linkages within the region.
• Cultivate intra regional tourism, educational cooperation, and the potential of Indian diaspora in Southeast Asia.
• India needs to evolve into a robust security provider in the region.
•  Culturally, India needs to build on the shared cultural linkages.

Q.2) The government of India has been infusing “need-based” capital in public sector banks (PSBs) to enable them to maintain capital adequacy. In this context critically analysis the decision of bank’s recapitalization with taxpayer’s money..(GS-3)

The government will infuse more that Rs88,000cr into public sector banks in FY18 itself, as a part of its Rs2.11lakh crore recapitalization plan to boost the capital of state owned banks.

The ‘recapitalisation’ for banks is recapitalising or putting new capital to improve the balance sheet of the bank. Those banks which are undergoing the problem of bad loans / credit crunch are helped by the government (being the stakeholder in the bank) by infusion of capital through different instruments. When the liabilities of the banks exceed their assets, the credit ratio increases which leaves the banks with less capital and more loans. Hence, the government invest money to decrease the gap between money lent and capital of the bank. This leads to better capital credit ratios for which banks can now raise more capital.

Positive aspect of recapitalization:

• This capital infusion is a step in the positive direction, as it will fund their growth plans and would cushion these banks to provide for NPA provision.
• The capital infusion plan for 2017-18 includes Rs80,000cr through Recap Bonds and Rs8,139cr as budgetary support.
• This plan addresses regulatory capital requirement of all PSBs and provides a significant amount towards growth capital for increasing lending to the economy.
• This will increase lending to MSMEs and make it easier for MSMEs and retail customers to transact.
• The reform agenda is aimed at EASE – (Enhanced Access and Service Excellence), focusing on six themes of customer responsiveness, responsible banking, credit off take, PSBs as Udyami Mitra, deepening financial inclusion & digitalization and developing personnel for brand PSB.
• The approach to the recapitalization of PSU banks has been aligned with reforms.
• This is with the intent to create an institutional mechanism so that the NPA problem does not occur in future.
• The government wants to ensure maximum governance of PSU banks.
• It will help in responsive banking.
• Deepening financial inclusion and digitilisation.

Criticism of Recapitalization:

The recapitalisation has a negative side to it as well:

• It may set a bad precedent as it send out a wrong message to both the lenders and the borrowers that the government will come to the rescue of the PSBs even if they lend indiscriminately without exercising due diligence and PSBs are not likely to mend their errant ways.
• This measure is not going to result in the recovery of bad loans
• It is a very temporary solution and only treats symptoms and not what causes these symptoms
• The IBC (Insolvency and Bankruptcy Code) is only a ploy to extend favours to big corporates to escape from their liability at the cost of the public exchequer
• It is labelled as inefficient and incompetent. If banks would have recovered these loans, their interest revenue would have been more; and they would have generated capital internally out of the profit.
• The proposed recapitalisation bonds are likely to add to the fiscal deficit.

Conclusion:

Bank recapitalisation plan is a necessary but not sufficient condition for reviving growth. It must be accompanied by structural changes to deal with the problems banks are facing today.

Q.3) Write a short note on any two of the following:

a) Rotavac vaccine(GS-3)

b) Olive turtle(GS-3)

c) Ease of doing business index.(GS 3)

Rotavac vaccine

The Rotavac vaccine, developed by the Hyderabad-based Bharat Biotech Limited last year, was included in India’s national immunisation programme.  For the first time vaccine named Rotavac vaccine, conceived and developed from scratch in India has been “pre-qualified” by the World Health Organisation.To be “pre-qualified” means that the vaccine can be sold internationally to several countries in Africa and South America.

While several vaccines from India have been pre-qualified, this is the first that was entirely developed locally and, according to experts, is a sign that there is a credible industrial, scientific and regulatory process in place to develop vaccines in India.

The Rotavac vaccine protects against childhood diarrhoea caused by the rotavirus and was built on strain of the virus isolated at the the All India Institute of Medical Sciences here over 30 years ago.

Rotavirus is responsible for an estimated 36% of hospitalisations for childhood diarrhoea around the world and for an estimated 200,000 deaths in low- and middle-income countries.

Olive turtle:

The olive ridley sea turtle also known as the Pacific ridley sea turtle, is a medium-sized species of sea turtle found in warm and tropical waters, primarily in the Pacific and Indian Oceans. They can also be found in warm waters of Atlantic ocean.

In India, though sea turtles are protected under the Indian Wildlife Protection Act of 1972. Olive ridley turtles are best known for their behavior of synchronized nesting in mass numbers, termed arribadas. The coast of Odisha in India is the largest mass nesting site for the olive ridley, followed by the coasts of Mexico and Costa Rica.

Ease of doing business index:

• The ease of doing business index is an index created by Simeon Djankov at the World Bank Group.
•  A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm.
•  The World Bank included the “post-filing index” criteria for the first time in its 2017 Doing Business report under the “Paying Taxes” head.
•  This restricted India’s improvement in ranking to just one place—to 130 out of 190 countries—despite a slew of reforms undertaken by the government
• India came in at 100th place (out of 190) in the World Bank’s Ease of Doing Business Report 2018.

Recently, the World Bank announced that it would revise the methodology it uses to calculate the ease of doing business index. his move that is expected to affect the rankings of countries in the last four years.  The index ranks countries based on how welcoming they are to businesses, as measured by criteria like the number of days it takes to start a business or obtain a licence.