9 PM Daily NEWS Brief

9 PM Daily Brief – 16 February 2016

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

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[1]. How India retires

The Livemint

Much is made of India’s demographic dividend of an overwhelming proportion of youth in its population, but rarely do people talk about its senior citizens. Although the percentage share of people aged above 60 years is only 8.6%, in absolute terms, they constitute more than 10.4 crore persons. That’s almost three times the total population of Canada.

retire 1
For many of them, crossing 60 years doesn’t automatically guarantee retirement from work.

Census 2011 data shows that for every five persons aged above 60 years, more than two are still working.

What is surprising, and perhaps worrying as well, is the fact that more than one in five persons aged above 80 years is still working to make ends meet. Among men, the ratio is more than one in three.

According to the definition used in the census,

  • main workers are those who have worked for majority of the year (more than six months),
  • while marginal workers are those who worked for less than six months in a given year.
retire 2
The difference is not just on account of willingness to work, it is also suggestive of the fact that those in the marginal category might not be able to find enough work to qualify as main workers.

The share of those seeking work among total marginal workers in the country was more than 46%. For persons aged 60 years and above, this figure was more than 27%


While a lot more data is required to ascertain how economically secure our senior citizens are, it can be safely said that very few among them have access to a remunerative retired life.

Also, increasing incidence of informal employment, which carries little in terms of social security or retirement benefits, would not contribute towards a future where retirement would be something to look forward to.


[1]. Plan B for free speech

The Indian Express 

The Supreme Court has persistently held that for the offence of sedition to be satisfied, there has to be a causal relationship between speech and acts of violence, and mere speech, regardless of how subversive it is, does not amount to sedition.

Strategies used to impinge free speech:-

Violent attacks are generally preceded by or followed by the use of criminal law as a strategy of harassment.

In addition to the well-known strategy of Slapp suits (strategic legal action against public participation), a new acronym, Kicks (kriminal intimidatory coercive knockout strategies), to describe a mode of using the law for the most illegal purposes by the most lawless groups.

Recall the way that M.F. Husain was literally “Kicked” out of the country by the many criminal cases filed against him.

Controversial laws have been upheld constitutionally:-

People concerned with the misuse of these laws often ask for them to be repealed or struck down on the grounds that they violate Article 19(1)(a).

But Most of these laws have, in fact, been challenged and their constitutional validity has already been upheld.

  • Section 295A (“deliberate and malicious acts, intended to outrage religious feelings of any class by insulting its religion or religious beliefs”) was found to be constitutional in the Ramjilal Modi case (1957)
  • Section 124A (sedition) was held to be constitutional in the Kedarnath case (1962).

Avoiding misuse of Section 124A:-

It is suggested that one way of protecting free speech is by focusing on procedural reforms and safeguards that at least render the malicious use of these laws more difficult.

There are at least five that immediately come to mind.


all speech-related offences should be made bailable offences; this would lessen the harmful impact of using arrest and custody as a way of harassing anyone exercising their rights under Article 19(1)(a).

Non cognisable:-

the offences should be made non-cognisable so that there is at least a judicial check on the police acting on the basis of politically motivated complaints.

Prior government sanction:-

For some laws it is mandatory under Section 196(1) of the Code of Criminal Procedure to obtain prior sanction of the government before taking cognisance of the offences. This needs to be extended to the offence of sedition under Section 124A.

Generation of class feelings  could well be avoided by the government by refusing to accord sanction.

Burden of Proof:-

In the case of hate speech, it is important to raise the burden of proof on those who claim that their sentiments are hurt rather than accept them at face value.

Deterring action:-

And finally, it is crucial that courts begin to take action against those who bring malicious complaints against speech acts.


The true test of a democracy lies in how much it can tolerate disagreement and even speech that we strongly disagree with.

But despite the Supreme Court affirming our right to disagree and dissent in substantive law, the ease of filing complaints and the ever-looming threat of police action undoes procedurally what we have substantively.

If we are to regain our fundamental rights, then it might well begin with procedural reforms that support rather than negate free speech.

[2]. Sedition and the government

The Hindu


According to the author the slapping of sedition charges on the JNU student is the latest deplorable attack on free speech by the Indian state.

The move is seen as an effort to curb every form of dissent.

The invocation of Section 124-A of the Indian Penal Code (IPC), 1860, is a stark reminder of moral corruptness  of some of our antiquated, colonial-era laws.

Section 124-A:-

In the case of Section 124-A of the IPC, sedition is defined vaguely  and punishes the act with imprisonment for life.

Section 124-A is intrinsically draconian.

The problems in the clause are visible in its wordings, and the purpose it seeks to achieve: a suppression of all kinds of opposition.

The provision, as it reads today after some amendments, defines sedition

As any action whether by words, signs or visible representation which “brings or attempts to bring into hatred or contempt, or excites or attempts to excite disaffection towards the Government established by law in India.

Here the word “disaffection” includes disloyalty and all feelings of enmity.

Colonial law:-

Although sedition was originally a part of the IPC, as drafted by Thomas Macaulay, it was dropped from the law when it was enacted in 1860.

A decade later, the offence was introduced into the IPC as Section 124-A.

Its vagueness certainly did wonders for the colonialists.

During the course of the British rule what this really meant was that the government had to be “loved, not hated”.

They famously used the clause in

  • Three separate successful trials of Bal Gangadhar Tilak
  • Later, in prosecuting Mahatma Gandhi in 1922.

Gandhi’s view:-

“Section 124-A under is perhaps the prince among the political sections of the IPC designed to suppress the liberty of the citizen.

Upholding free speech:-

After the Constitution was adopted in 1950, it appeared Section 124-A would soon be denounced.

All efforts made by some members of the Constituent Assembly to include sedition as an express ground for limiting speech in Article 19(2) had been successfully resisted.

Moreover, the reasoning adopted in the two earliest free speech cases decided by the Supreme Court — Brij Bhushan v. State of Delhi and Romesh Thapar v. Union of India — also pointed to the incompatibility of laws of sedition with the Constitution.

In both these cases, efforts to ban publications on the purported threats that they posed to public safety were ruled unconstitutional, since the exception in Article 19(2), as it read then, was restricted to dangers to the security of the state.

When the first amendment to the Constitution was introduced, to include public order as a specific limitation to free speech, Prime Minister Nehru was still categorical in his belief that the offence of sedition was fundamentally unconstitutional.

“The sooner we get rid of it the better.”

Kedar Nath singh case

Yet, more than 65 years later, sedition continues to not only remain in the IPC  because in 1962, the Supreme Court upheld Section 124-A, in Kedar Nath Singh v. State of Bihar .

Here, the court adopted a flawed premise that the law was enacted in the interest of public order, which was by then one of the specifically recognised limitations to free speech.

Even when the first amendment specifically included the interest of public order as a recognised limitation to free speech under the Constitution, seditious speech was still considered as being outside the contours of such constraints.

But the court in Kedar Nath Singh ignored all the apparent contradictions in allowing sedition to remain on the IPC.

While grounding the legality of the provision on supposed public order considerations, the court also failed to establish any rational test on how to determine when speech in disaffection of the government could be construed as causing a disruption of public order.

Narrowing scope of sedition:-

In the decades since Kedar Nath Singh , Indian free speech jurisprudence has gone through substantial change.

  • The court has proceeded towards expounding something resembling a practical theory that distinguishes advocacy and incitement.
  • In 1995, the court acquitted some men who had raised a number of seemingly incendiary slogans in the wake of Indira Gandhi’s assassination, on the grounds that there existed no link between the slogans and actual threats to public order.
  • Last year, in Shreya Singhal v. Union of India, in declaring unconstitutional the notorious Section 66A of the Information Technology Act, the court ruled that speech howsoever offensive, annoying or inconvenient cannot be prosecuted unless its utterance has, at the least, a proximate connection with any incitement to disrupt public order.

However, in spite of the Supreme Court narrowing the scope of sedition, and in spite of the more recently evolved tests to determine when mere speech or expression can be prosecuted, governments have routinely invoked Section 124-A with a view to restricting even benign forms of dissent.


To argue against sedition is not equivalent to arguing in favour of absolute free speech.

That words which directly provoke violence or which directly threaten the maintenance of public order deserve censure is unquestionable, especially given India’s constitutional structure.

But that’s not what the offence of sedition seeks to achieve. At its core, it is a devastating provision that is meant to assist in crushing all opposition to the ruling dispensation.

Its use continues to have the effect of chilling free speech and expression in India. Section 124-A of the IPC negates the right to dissent, which is an essential condition of any reasonable government

[3]. What is university?

The Hindu

Right to dissent:-

Freedom of speech, freedom of association and freedom to organise are guaranteed as fundamental rights under the Constitution. The right of dissent and agitation are ingrained in the fundamental rights. The Constitution sets out a plural framework and refuses any scope to define the country in religious terms.

The national interest in this scheme is constitutional rule. To recall B.R. Ambedkar, it is only constitutional morality that must guide the government, not any whimsical invocation of narrow-minded, parochial figureheads and mythical characters.

Overcoming narrow ideologies:-

It is time to remind the holders of public office that once they have formed government, whatever their personal politics might be, they are constrained to rule in strict accordance with the constitutional framework.

Mere assumption of political power does not confer the power to propagate narrow party and supra party ideologies in derogation of constitutional principles.

Tolerance of intolerance

It is our right as citizens of this free country to question the government, to question arbitrary and capricious rule, and to organise against injustice and demand the supremacy of the Constitution above all else.

For us to allow the untrammelled use of the charge of sedition to quell dissent and freedom of expression amounts, to reiterate Amartya Sen’s words, to being too tolerant of intolerance.

It is time to recall Mahatma Gandhi’s historic defence of seditious speech: “I hold it to be a virtue to be disaffected towards a Government which, in its totality, has done more harm to India than any previous system” (Mahatma Gandhi before Judge Broomfield, March 10, 1921).

Larger debate:-

The debate against the death penalties awarded to Yakub Memon and Afzal Guru includes two issues that have already been subjected to public debate:

  • whether the death penalty constitutes judicial murder;
  • whether Memon and Guru were given a fair trial.

The debate has involved a close study of jurisprudence, international human rights standards and the fair conduct of the trials.

A sizeable section of intellectuals and human rights defenders from across the country expressed the view that the death penalty without exception violates the constitutional guarantee of the right to life. Others held the firm belief that both Guru and Memon were executed without a fair trial.

This is a debate that must be carried out, not only in this case but in every case where the death penalty is ordered. There was even a debate on this very question following the December 16, 2012, gang rape in Delhi and before the Justice J.S. Verma Committee.

Asking questions:-

An important part of education, particularly higher education, is to learn to ask questions and to develop the capacity for disobedience and reasoned arguments.

Vice chancellors (VC) hold charge of the university in trust — not of political powers but of the university community in which students are the core.

To call in the police or act on their advice and abdicate responsibility, or to give the police a free hand militates against the very spirit of the university as a space for critical engagement and free-flowing debate.

The reduction of the position of VC to being a watchdog of the government is a danger of unimaginable magnitude and destructive of the fabric of higher education — the structure will determine form, content, possibilities and importantly, futures.

[4]. Djibouti, Myanmar, Sri Lanka anchor silk road

The Hindu


A military base in Djibouti along with major port development projects in Myanmar and Sri Lanka are defining the contours of China’s Maritime Silk Road—an oceanic connectivity project, of which, the Indian Ocean is the core.

Significance of Djibouti:-

  • The Horn of Africa nation is strategically located on the junction of the Indian Ocean and he Red Sea—a gateway to the Suez Canal via the Strait of Bab Al-Mandab.
  • Djibouti would become an ideal location for securing sea lanes, in the vicinity, which radiate from this area towards Africa’s Indian Ocean coastline and the Arabian Sea.
  • China says it is establishing naval “support facilities” in Djibouti, which has the ambition of emerging as another Singapore, leveraging its position at the intersection of busy shipping lanes.

The Chinese facility will be established at Doraleh Multi-Purpose Port  that is being steered by China Merchants Holdings International in the south of the country. The Chinese Navy would use one of the berths.

Djibouti has also signed a deal with China to build a new free trade zone, whose first phase would open later this year.

China is also providing the bulk of the $12.4 billion that Djibouti intends to invest by 2020.

Raising stakes in Myanmar

China has also quietly signed a deal to develop an Industrial Park and a deep water port in Kyaukphyu in Myanmar.

The facility in the Bay of Bengal amplifies Beijing’s pitch to deepen its stakes in Myanmar in order to lower its dependence on the Straits of Malacca—a strategic commercial channel, dominated by the U.S. sixth fleet.

The deep sea enterprise includes development of 10 berths at the Maday Island Terminal and the Yanbye Island Terminal. It will be completed in four phases spanning a period of 20 years.

Maday Island has already emerged as a major pillar of China’s energy security. Last year, a pipeline from the island transited oil sourced mainly from West Asia and Africa to China’s Yunnan province, thus avoiding the “Malacca trap”.

The oil channel complemented the gas pipeline, which starts at Kyaukphyu, bringing methane purchased from

A proposed railway project from Kyaukphyu to Kunming, capital of Yunnan province has been shelved, but with the development of the port and the SEZ, connectivity would be required .

Colombo port city

Sri Lanka has added another dimension to China’s Maritime Silk Road (MSR). Chinese bloggers are pointing to improved prospects of the revival of the stalled Colombo port city project under new conditions, and the establishment of an SEZ in Humbantota—both projects feeding into the gradual unfolding of the ambitious MSR.

China is already steering the Gwadar to Kashgar economic corridor, adding another node to its growing Indian Ocean profile.

[5]. Mysuru retains cleanest city tag

The Hindu


Mysuru city in Karnataka retained the top position in Swachh Bharat Rankings for 2015 released by the Ministry of Urban Development.

Compared to the 2014 rankings, Chandigarh has replaced Tiruchirapalli of Tamil Nadu in the second rank while Dhanbad of Jharkhand is reeling at the 73rd slot, the lowest rank.

Key points:-

Cities from south and west continue to do well overall, those in other parts of the country, particularly in the north, are beginning to catch up with the traditional leaders.

About the Survey:-

The survey was “more participatory and evidence based” as all the featured cities were informed two months in advance about the methodology.

Cities were asked to put in place records of their efforts in support of infrastructure creation, deployment of men and machines, improvements made, expenditure, etc

It is a year-long survey where the researchers studied 476 first-tier cities with two parameters:

  • how ‘minimal’ open defecation was in the city;
  • how robust the municipalities were with the solid waste management system.

Mysuru was found impressive on both the counts.

The purpose of the rankings  is to encourage cities to fix their sanitation and sewerage infrastructure by showing them the performance of other cities.

“Competition makes one strive better”

Swachh Bharat Mission:-

The Swachh Bharat Mission is the flagship sanitation programme of the government, which aims to bridge the gap between sewerage and solid waste management and construct several million toilets in the urban centres.

[6]. Judicial hierarchy comes under strain as HC judge stays his transfer

The Hindu


Justice C. S. Karnan of the Madras High Court ‘stayed’ the Chief Justice of India’s proposal to transfer him to the Calcutta High Court, forcing the Supreme Court to authorise a freeze on his functions as a judge.


Threatening the Judicial Hieracrhy:-

This development has threatened institutional esteem.

The judge has passed a “ suo motu judicial order” ‘staying’ the Chief Justice of India’s recommendation to transfer him.

Caste discrimination:-

Justice Karnan claimed he was being targeted because he was a Dalit.

He said that he will register cases against the two apex court judges under SC/ST (Prevention of Atrocities Act).


[1]. India to highlight nuclear best practices

The Hindu


India is likely to highlight the “best practices” in the international nuclear industry and its national nuclear safety record in the Nuclear Security Summit (NSS) to be held from March 31-April 1 this year.


India has been a part of the summit since it convened for the first time in 2010, but came into focus recently due to a critical campaign by the Centre for Public Integrity, a Washington DC-based non-governmental organisation.

A series of recent articles written by the NGO questioned India’s capability to secure nuclear material and safeguard workers engaged in the Indian nuclear industry.

India’s stand:-

Rejecting the charges, officials said they suspected that the reports were timed to put a spotlight on India just ahead of the summit and might be backed by the powerful western non-proliferation lobby.

India will highlight its safety and non-proliferation records in the summit.

“India’s attendance at the Nuclear Security Summits is based on the understanding that we have common concerns with other advanced nuclear-capable countries and for that we have to share the ‘best practices’ available to ensure complete security and safety in the nuclear industry.

India is expected to follow the same principle in NSS 2016 as well.

Nuclear scientists said the summit provided another opportunity for India to stay ahead in the field of security and safety in the nuclear industry.

Other significance:-

The event may also form the backdrop for a meeting between Mr. Modi and his Pakistani counterpart Nawaz Sharif that may thaw the freeze that crept into the India-Pakistan ties following the Pathankot terror attacks.

After the terror strike at Pathankot, India has to think in terms of creating specialist forces for various strategic addresses and also for the nuclear installations.

[2]. No bailout with taxpayer money

The Hindu


The Finance Ministry is now reportedly working towards the creation of a public-funded asset reconstruction company (ARC), which will buy off the bad debts and cleanse the banks’ balance sheets. The author questions whether such a bail out is justified.

Riskless capitalism:-

The banking sector in India is in a crisis, with the burden of bad loans

The Reserve Bank of India (RBI) Governor castigated “riskless capitalism” being enjoyed by Indian big businesses — while the profits of the boom period have accrued as lucrative returns on their equity, the losses during the downturn have accumulated as bad debt in the banking system, particularly the public sector banks.

The “stressed” banking sector

According to RBI statistics, annual growth of bank credit in India, which had crossed 30 per cent in the boom years of 2004-2007, has markedly declined to around 9.7 per cent in 2014-15 and further down to 9.4 per cent in the first half of 2015-16.

The decline in credit growth has followed a severe decline in the profitability of scheduled commercial banks, with public sector banks suffering the most in this profit squeeze.

The public sector banks are saddled with a disproportionate share of non-performing and bad loans within the banking system.

 Using corporate debt restructuring:-

Moreover, the banks have been simply rolling over a large volume of debt owed by the large borrowers, mainly through corporate debt restructuring, in order to downplay the growing incidence of NPAs and window-dress their balance sheets.

What is Corporate debt restructuring?

The reorganization of a company’s outstanding obligations, often achieved by reducing the burden of the debts on the company by decreasing the rates paid and increasing the time the company has to pay the obligation back.

This allows a company to increase its ability to meet the obligations. Also, some of the debt may be forgiven by creditors in exchange for an equity position in the company.

Using debt write offs:-

Huge amounts of stressed assets in the bank balance sheets persist despite substantial debt write-offs that have already been made by the banks.

As per RBI data, NPAs totalling over Rs. 60,000 crore were written off by the scheduled commercial banks in 2014-15.

What is debt write off?

For example, you made a sale on credit to a customer, but two weeks later the client’s business declared bankruptcy and became completely unable to pay off the credit account with you. This uncollectible debt would then be written-off by your company and recorded as an expense by accountants.

When a nonperforming loan is written off, the lender receives a tax deduction from the loan value.

Not only do banks get a deduction, but they are still allowed to pursue the debts and generate revenue from them. Another common option is for banks to sell off bad debts to third-party collection agencies.

Disclosing the miscreants:-

The Finance Ministry had divulged earlier that the top 30 NPAs of the public sector banks amounted to over Rs. 95,000 .

However, the Ministry also cited Section 45E of the RBI Act and other banking laws to withhold specific information regarding the defaulters.

Only a small list of “wilful defaulters” has been made available, with Vijay Mallya’s Kingfisher Airlines topping the list.

The Finance Ministry has recently revealed in Parliament that the public sector banks have identified 7,265 cases of “wilful defaulters” accounting for around 20 per cent of the GNPAs of the public sector banks.

Out of this, FIRs have been filed only in 1,624 cases. It is clear that not only are the laws and institutions related to recovery of debt and corporate bankruptcy in India lax and loophole-ridden, the banks are themselves reluctant to bring even the wilful defaulters to book.

Corrupt picture:-

The picture that emerges is one of a toxic nexus of unscrupulous businessmen, negligent and corrupt bankers, complicit auditors and an easy-going regulator ripping off the banking system, especially the public sector banks.

Need of the hour:-

What this calls for is a moratorium on corporate debt restructuring and non-transparent debt write-offs, through which this scam is being perpetuated, and a complete overhaul of the laws and regulations governing corporate defaults and debt recovery.

The penal provisions of the Insolvency and Bankruptcy Code introduced in Parliament last December need to be further strengthened in that direction.

The focus of legislative changes should be on dismantling the edifice of parasitic, crony capitalism rather than on enhancing the supposed ‘ease’ of doing business.

Reason for this NPA crisis:-

A key systemic cause behind such intense corporate debt distress and the accumulation of bad loans within the public sector banks is to be found in the premature euthanasia of the Development Financial Institutions (DFIs) in India.

Following the recommendations of the Narasimham Committee-II, DFIs like the ICICI and IDBI, which were created in the post-Independence period to provide long-term finance for industry, were converted into universal commercial banks.

The committee’s presumptions regarding the capacity and skills of the commercial banks and capital markets in India being sufficient in meeting the financing needs of the industrial sector have turned out to be gross overestimates. NPAs have not only made a comeback, but are threatening the very stability of the banking system.

Longterm loans:-

Industrialisation and infrastructure development in developing economies like ours is crucially dependent upon the availability of long-term development finance with transparent state support.

But while DFI loans as a proportion to GDP have increased significantly in countries like Germany, Japan, China and Brazil between 2000 and 2010, it fell in India from 7.4 per cent to 0.8 per cent.


Rather than bailing out the delinquent corporate borrowers and negligent bankers using taxpayers’ money, the government would do well to revive the DFIs, even create new ones through fiscal support, in order to bring transparency in industrial and infrastructure financing and restore the credibility of the banking system.

[3]. Policy for capital goods introduced

The Hindu


The government introduced a National Capital Goods Policy to spur capital goods sector and the Make in India initiative.


It was part of the government’s commitment to turn the country into a world class hub for capital goods.

The objective of the policy was to increase production of capital goods from Rs. 2.30 lakh crore in 2014-15 to Rs. 7.50 lakh crore in 2025 and raising direct and indirect employment from the current 8.4 million to 30 million.

The policy envisages making India a net exporter of capital goods and aims at facilitating improvement in technology across sub-sectors, increasing skill availability, ensuring mandatory standards and promoting growth and capacity building of MSMEs.

The aim is to create game-changing strategies for the capital goods sector.

Issues addressed:-

Some of the key issues addressed include availability of finance, raw material, innovation and technology, productivity, quality and environment-friendly manufacturing practices, promoting exports and creating domestic demand.


The key policy recommendations include strengthening the existing scheme of the DHI (Department of Heavy Industry) on enhancement of competitiveness of capital goods sector by increasing budgetary allocation and increasing its scope to further boost global competitiveness in various sub sectors and enhancing export of Indian made capital goods through a ‘Heavy Industry Export and Market Development Assistance Scheme (HIEMDA)’.


It has made provision for

  • introducing a Technology Development Fund,
  • upgrading existing and setting up a new testing and certification facility,
  • making standards mandatory in order to reduce sub-standard machine imports
  • providing opportunity to local manufacturing units by utilising their installed capacity
  • unveiling scheme for skill development for capital goods sector.

[4]. Not desirable to use exchange rate to spur growth: Rajan

The Hindu

The Reserve Bank of India (RBI) and the government don’t favour undervaluation of the exchange rate as a means to spur economic growth.

The Indian rupee is one of Asia’s worst performing currencies against the U.S. dollar this year.

On February 12, the currency completed its biggest weekly decline since mid-January as overseas funds fled the nation’s stocks amid a global equity rout.

Not the right way:-

It is believed that in countries such as China, Japan and Korea business enterprises grew via an undervalued exchange rate.

But there are a lot of problems with undervaluing the exchange rate and some of these problems are reflected in the economic condition that these countries find themselves in today.


Sustained undervaluation over a long period of time is not a feasible or desirable strategy. RBI has the philosophy of not focusing on the level of exchange rate and trying to manipulate it up or manipulate it down but trying instead to minimise situations of extreme volatility and intervening in situations when the exchange rate becomes extremely volatile in either direction is the right one

The RBI wants the exchange rate to be reasonably predictable and reasonably stable.


  • The advantage to Micro Small and Medium Enterprises (MSMEs) should come from their capabilities, cost-effectiveness and innovative ideas rather than from undervaluation.
  • MSMEs can act as a means of social empowerment where disadvantageous sections of society can be empowered with money and wealth.
  • There is a need to figure out a regulatory environment that facilitates the growth and expansion of MSMEs.
  • There needs to be a level playing field and an easy framework of regulations for the entry and growth of small industries.
  • Lack of infrastructure and logistics, lack of access to marketing, difficulty and the expense in acquiring land and financing are some of the impediments faced by MSMEs.
  • It is necessary that large companies handhold MSMEs for the latter’s growth.
  • It is also necessary to have a safety net for the workers in small business firms..
  • Kerala, with its literacy rate and educational achievements, is quite capable of triggering a revolution on the MSME front.

[5]. Banking on less

The Indian Express


The move that government will soon reduce its stake in public-sector banks (PSBs) must be welcomed.


The ongoing bloodletting in the Indian banking system, in the form of increasing disclosures of non-performing assets (NPAs) and the associated fall in profits and market value, might have been the clinching factor in this decision.

Alternate views:-

The issues we are seeing today in banking sector have not much to do with the ownership of the banks. It is more a governance issue than an ownership issue.

Any attempt to delink the two — government ownership and below-par governance — would not only mislead the discourse but also militate against the reform process.

Public sector banks affected more:-

For one, while the NPA crisis affects almost all banks, it does not affect them equally; PSBs’ performance is far worse than that of private banks.

According to Crisil, “As much as 85 per cent of banking system weak assets are in the books of PSBs”.

These data suggests that ownership matters.

Political Interference:-

The P.J. Nayak Committee report (2014) on the governance of bank boards is illuminating in this regard.

After poring over “board notes and minutes of the meetings”, it found that, as against private banks, PSBs not only tabled far fewer issues but also deliberated on them in less detail.

Surprisingly, even on development concerns such as financial inclusion, not to mention profitability, PSBs focused less than their private counterparts.

Thanks to unabated political interference, PSB boards are “disempowered”, reduced to deliberating about taxi-fare reimbursements, college lectures and ministerial visits.


Recapitalising PSBs is just first-aid, and one that government cannot provide beyond a point due to fiscal constraints.

The sustainable way to improve the governance of PSBs requires a shift from the deeply politicised “government-as-sovereign” role to “government-as-investor”, as suggested by the Nayak Committee.

By: ForumIAS Editorial Team

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