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9 PM Daily NEWS Brief

9 PM Daily Brief – 18 April 2016

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

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GS PAPER 2


[1]Chew on this: the risks of smokeless tobacco

The Hindu

Context

An extension on the ban of on all forms of tobacco by a year in Delhi state

Why the extension

Last notification expired

What is the Ban?

  • On sale, purchase and storage of all forms of chewable tobacco which is scented, flavoured and mixed and sold as gutka, pan masala, khaini and zarda
  • Total ban does not include areca nut and so pan masala is not banned

What has happened earlier

  • Regulations of Food and Safety Standards in 2011 issued a notification that tobacco and nicotine will not be used as ingredients in any food products
  • In 2012 MP, Kerala,Bihar, Maharashtra and Rajasthan banned gutka and by year end 14 states banned it
  • In 2013, in Supreme Court’s directions , gutka was banned nationally
  • Flavored chewing tobacco was banned by 11 states including Delhi
  • Areca nut was banned by Bihar, maharashtra and Himachal Pradesh

What is areca nut

  • The areca nut is the seed of the areca palm (Areca catechu), which grows in much of the tropical Pacific, Asia, and parts of east Africa. It is commonly referred to as betel nut
  • According to WHO it is “Carcinogen” to humans (Group I)
  • Carcinogen -A carcinogen is any substance, radionuclide, or radiation that is an agent directly involved in causing cancer.

AGENTS CLASSIFIED BY THE IARC(International Agency for research on cancer) MONOGRAPHS

Group 1 Carcinogenic to humans                    118 agents
Group 2A Probably carcinogenic to humans         79
Group 2B         Possibly carcinogenic to humans        290
Group 3 Not classifiable as to its carcinogenicity to humans             501
Group 4 Probably not carcinogenic to humans    1

How manufactures of these products have flouted the rules

  • Pan masala is being sold differently than tobacco and is being advertised unrestrained
  • Going against the Indian food and safety standards rules which banned any commercial related to tobacco the manufacturers used rules related to Cable Television Networks Amendment Rules 2009, which allowed to use brand image for non tobacco products

[2] Country without a pause

The Hindu

Issue:-

Simultaneous elections for Parliament, State legislature and local bodies.

Already discussed, refer the following articles:

  1. https://forumias.com/portal/9-pm-daily-brief-2-april-2016/#Coterminous-LS,-State-polls-not-feasible
  2. https://forumias.com/portal/9-pm-daily-brief-11-april-2016/#Their-separate-ways

[3] A ‘much-needed message’ to India’s neighbours

The Hindu 

Issue

Logistical Exchange Memorandum of Understanding (LEMOA)

Already discussed, refer the following articles:

  1. https://forumias.com/portal/9-pm-daily-brief-13-april-2016-2/#Militaries-of-US-India-to-share-their-facilities
  2. https://forumias.com/portal/9-pm-daily-brief-14-april-2016/#A-firm-handshake,-not-an-embrace

Additional points:

Views of some analysts regarding India agreeing “in-principle” with the U.S. over LEMOA

Indian Commentators U.S. Commentators
  • It was a long-delayed step and a much-needed message India had to send to China.
  • India needs more support as it cannot stand against China on its own either militarily or economically. Some kind of message had to be sent.
  • It doesn’t mean we are allying with the U.S.
  • U.S. was not asking India to take specific actions.
  • Such agreements which deepen U.S.-India defence cooperation, are signposts of progress in actualising our shared security interests.
  • A stronger India, acting in its own security interests, is a very good thing for American interests.

 

[4] Government revives talks to revamp Factories Act

The Hindu

Factories Act of 1948

  • The Factories Act is a legislation that deals with safety, health and welfare of workers.
  • The present Factories Act is applicable on factories (with electricity connection) with 20 workers and factories, without electricity, with 10 workers.

Proposed amendments in the Act

  • The proposed law will apply to all factories that employ at least 40 workers.
  • All factories that manufactures or deals with hazardous substance and processes and dangerous operations (sectors like coal, gas, iron and steel, petroleum, cement and leather) will be covered under this Act even if they employ a single worker.
  • Registration of factories will also be made online and entrepreneurs will only have to submit a self-certified declaration on the safety, health and welfare standards of the factory to get approvals for setting up a factory.

Why these amendments are proposed?

  • The proposed amendments seek to address various archaic provisions of the Factories Act. For instance, a factory manager will no longer have to send a notice to an inspector’s office for calling a worker on duty on a holiday as a notice could be served online.
  • To speed up registration and compliance processes in a bid to promote start-ups
  • To do away with the ‘inspector raj.’
  • To increase the level of competency of the inspectors.

Response from the trade unions

  • According to them, these moves  would allow more factories to stay out of the ambit of the Factories Act as factories with less than 40 workers wii be out of purview of this Act.
  • And it will encourage factories to divide their department into separate factories.

[5] Failures of a report card

Indian Express

Context

The Ministry of Human Resource Development (MHRD) has released India Rankings 2016

What is India Rankings

It’s a list of higher education institutions(HEI) ranked by different parameter

What are those parameters

  • Teaching Learning & Resources- These parameters are related to the core activities of any place of learning
  • Research Professional Practice & Collaborative Performance- Excellence in teaching and learning is closely associated with the scholarship
  • Graduation Outcome- This parameter forms the ultimate test of the effectiveness of the core teaching/learning
  • Outreach & Inclusivity-  The Ranking framework lays special emphasis on representation of women
  • Perception-  The ranking methodology gives a significant importance to the perception of the institution

National Institutional Ranking Framework (NIRF)

  • This framework outlines a methodology to rank institutions across the country. The methodology draws from the overall recommendations broad understanding arrived at by a Core Committee set up by MHRD, to identify the broad parameters for ranking various universities and institutions.
  • Although the Ranking Frameworks are similar, the exact methodologies are domain specific. Ranking methods have been worked out for 6 categories of institutions i.e., Engineering, Management, Pharmacy, Architecture, Universities and Colleges

Questions that have been raised

  • Inclusion of some not-so-good business schools among the top 50 institutions in the “management” category and the exclusion of others, which deserve to be there
  • Concern that the rankings will (mis)lead prospective students to those business schools whose record on placement and average salaries is unimpressive
  • IIT’s competing in the “engineering” category whereas they compete as “universities” in the THE(Times Higher Education) and QS(Quacquarelli Symonds) rankings
  • [The Times Higher Education (THE), formerly the Times Higher Education Supplement (THES), is a weekly magazine based in London, reporting specifically on news and issues related to higher education. It is the United Kingdom’s leading publication in this field]
  • [Quacquarelli Symonds (QS) is a British company specialising in education and study abroad]

[6] Brexit has few pros and many cons

Livemint

Context

Referendum to leave European Union(EU) is due to on June 23

What is Brexit

An unofficial word given to the exit of Britain from EU

What is Britain

England+Scotland+Wales

(UK is Britain+Northern Ireland)

What is a referendum

A referendum (in some countries synonymous with a plebiscite — or a vote on a ballot question) is a direct vote in which an entire electorate is asked to vote on a particular proposal. This may result in the adoption of a new law.

Why the referendum

  • People who are disadvantaged and feel left behind after the britain collaboration with EU
  • Trade and immigration policies on EU terms does not help many in Britain

How would it affect Britain

  • It will hurt Britain’s export competitiveness
  • Markets access to Europe will be hard to negotiate and Britain would have to adhere to quality and product regulation of EU, in the context of China, Chinese products, due to their quality and price have more penetration in markets like EU
  • London trade market, where trade in euro transactions are more, it would place London in a weaker position being outside of EU
  • London where more people in banking, finance and insurance are from outside the country would reduce because then they will no longer be able to take their pension rights and other conveniences that a single labour market provides
  • Seceding from EU, Britain would appear weak in its military prowess and its diplomatic relations, UK will remain member of NATO(North Atlantic Treaty Organization-The organization constitutes a system of collective defence whereby its member states agree to mutual defense in response to an attack by any external party. NATO’s headquarters are located in Haren, Brussels, Belgium)

[7] New law, statutory body imperative to foster fair trade practices in India

Livemint

Issue

A separate legislation and a statutory body like the Competition Commission are imperative to foster fair trade practices in the economy.

Evolution of law regarding unfair trade practices

  • To regulate advertising, in 1984, Parliament inserted a chapter on unfair trade practices in the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP).
  • Under the MRTP Act, any person or trader (business entity) could approach the MRTP Commission against an unfair trade practice.
  • The Consumer Protection Act (CPA) was enacted two years later and it intended to give protection to consumers against unfair trade practices, but the remedy under the CPA has remained dormant.
  • So, following changes worldwide, need was felt for a comprehensive law against monopolies and anti-competition business activities.
  • On the recommendations of a committee, the Competition Act, 2002 was enacted and it repealed the MRTP Act, 1969.  And it excluded unfair trade practices from the draft bill as it did not want to dilute the thrust of the law from anti-competition activities.

Why we need a separate law?

  • In case of CPA,  only a consumer can approach a consumer forum for a remedy.
  • A company is not a consumer and thus cannot approach a consumer forum complaining of unfair trade practices.
  • A business entity must be provided protection against unfair trade practices and a mechanism to claim remedies.
  • As law has evolved, the subject of unfair trade practices has fallen in the gap between the competition law and consumer protection.
  • A separate legislation and a statutory body like the Competition Commission are imperative to foster fair trade practices in the economy.

GS PAPER 3


[1] Stick to fiscal consolidation, IMF tells India

The Hindu

What happened?

In its latest edition of the World Economic Outlook (WEO),  International Monetary Fund (IMF) has asked India to stick to fiscal consolidation.

What else in the report?

Reforms:- The government must  focus on reforms, especially in the labour and infrastructure sectors.

Inflation:- Lower commodity prices, supply side measures, and a relatively tight monetary stance have resulted in a faster-than-expected fall in inflation, making room for nominal interest rate cuts, but upside risks to inflation could necessitate a tightening of monetary policy.

Risks ahead:- It  predicted that India would achieve its inflation target of 5 per cent in the first half of 2017, though it warned that an unfavourable monsoon and the effect of public sector wage increases (due to the adoption of the Seventh Pay Commission’s recommendations) could pose risks.

Growth:- Growth is projected to notch up to 7.5 per cent in 2016-17 and  the main driver of this growth will be private consumption and investment.

[2] The circle of economy, the cycle of drought

The Hindu

News

Drought in the Maharashtra has affected the farmers in a way, that they(farmers) are now committing suicides

Some data

  • In Marathwada 2015, 1133 farmers committed suicide, As of March 2016 it is 253 already
  • In Latur district in marathwada region saw 106 suicides, It is 35 already in Latur
  • In 2013 and 2014 Latur rainfall of July was 331mm(average), in 2015 it was 31mm

Water shortage reasons and their effects

  • Extended drought for 2 years and cramped city with acute water scarcity
  • Pigeon pea crop yield was 5000 quintals from 15000 last year
  • Lack of money is making people delay their treatment for their illness caused by the infections which is caused by not bathing

Agriculture Produce Market Committee (APMC)
An agricultural produce market committee (APMC) is a marketing board established by a state government in India

APMC operate on two principles:

  • Ensure that farmers are not exploited by intermediaries (and money lenders) who compel farmers to sell their produce at the farm gate for an extremely low price.
  • All food produce should first be brought to a market yard and then sold through auction.

Reports of local APMC in Latur in turnover terms

  • In 2013-14 it was Rs. 1875 crores
  • 2014-15 Rs.1460 crores
  • 2015-16 Rs.905 crores

What the region is going though

  • Northeast Belt of marathwada is going through hydrological drought
  • North western belt is going through a agricultural and meteorological drought
  • Groundwater levels below -3 meter is considered alarming, many places are well below this danger mark
  • 33 projects in Ahmadpur is dry or zero which has a total capacity of 14.4 million cubic meters
  • Western region called the “sugar belt” has been declared drought prone zone, although it is a high rainfall receiving region with sugar factories(sugarcane need much water to grow)

What is a drought

A drought is a period of below-average precipitation in a given region, resulting in prolonged shortages in its water supply, whether atmospheric, surface or groundwater

Types of drought

  • Meteorological drought is brought about when there is a prolonged time with less than average precipitation. Meteorological drought usually precedes the other kinds of drought.
  • Agricultural droughts are droughts that affect crop production or the ecology of the range. This condition can also arise independently from any change in precipitation levels when soil conditions and erosion triggered by poorly planned agricultural endeavors cause a shortfall in water available to the crops.
  • Hydrological drought is brought about when the water reserves available in sources such as aquifers, lakes and reservoirs fall below the statistical average. Hydrological drought tends to show up more slowly because it involves stored water that is used but not replenished.
  • Ecological drought is generally defined as the prolonged and widespread deficit in soil moisture, or biologically available water, that imposes multiple stresses in terrestrial and aquatic ecosystems.

[3] Lessons from the Mallya case     +  Should bank defaulters’ list be made public?

The Hindu                                                                         Livemint 

Issue

Wilful Defaulters

“Crony Capitalism” or “Crony Socialism”

  • The term crony capitalism is used to describe a situation of private players being shielded from competition or vaulting over rivals due to the intervention of the ruling class. This usually takes the form of a relaxation of rules or granting of exclusive licences.
  • An economist have described this  as “crony socialism”, as  it is the public sector banks that had lent so fecklessly to Mr. Mallya.

How can bank officials be so reckless?

  • It is not that individual public officials can dispense such large sums of public money so freely to a dubious client struggling to establish himself in an highly competitive industry.
  • There is reason to believe that Mr. Mallya was the beneficiary of pressure brought to bear upon the banks from the outside.
  • And this could only have come from politicians who preside over the banking system in a governing capacity.
  • Hence, it is a case of crony capitalism and not crony socialism.

What if Mr. Mallya does not pay back?

  • If he does not pay back, the loans will be written-off and there will be depletion in the assets of the banks.
  • And if the banks are recapitalised via the budget,  then tax payers’ money will be spent in the banks alive.
  • So, there is direct bearing upon us of the actions of public sector banks.

What can be done now?

  • Mr. Mallya  is perceived as a wilful defaulter and must be given exemplary treatment.
  • There are no grounds for giving him more time to present himself or to settle for less than what he owes the banks.
  • And secondly, we need to ensure that public sector banks do not find themselves in a similar situation ever again.
  • There should be checks and balances in our public sector banks.

Wilful defaulters

  • A wilful defaulter is one who has the ability to pay up but doesn’t pay or diverts funds.
  • India’s apex court is in favour of making public the names of bank defaulters but the country’s central bank does not support the idea.
  • The Reserve Bank of India (RBI) has submitted a defaulters’ list to the Supreme Court and requested it not to reveal the names to the public, citing confidentiality.
  • Supreme Court had directed the RBI to provide it with a list of companies which have defaulted in repaying bank loans of at least Rs.500 crore each as well those whose loans have been restructured.
  • Clearly, the Supreme Court is acknowledging the public outcry over swelling bad loans in banks.

Will it work?

Livemint The Hindu
The reasons behind a bank loan going bad vary from bad business decisions by a corporation to a slump in the economy, domestic or global, delay in getting regulatory clearances for projects, as well as the lenders’ lack of expertise and skill in project appraisal, risk management and monitoring. Then, there could be political interference too.

If the idea is to recover the money, making the list public will not serve the purpose.

Details of every loan sanctioned by the nationalised banking sector, including the history of the borrower, the grounds on which viability has been ascertained, the guarantors, the collateral pledged and the officials involved may be posted on the website of the bank concerned.

There is reason to believe that full disclosure will lead to better outcomes.

Conclusion

  • The names of wilful defaulters are in any case in the public domain because the banks have filed suits against them.
  • The debt recovery tribunal is a fast-track route to dispose of such cases but the borrower can appeal against a tribunal judgement in a high court and even Supreme Court.
  • Thousands of such cases have dragged on for years because of an extremely slow legal process.
  • The ease-of-doing -business must be balanced by the difficulty of evading the law.
  • Strengthening the legal system will lead to quicker bad loan recovery and help nurse the banking system to health.
  • Any other way might scare the bankers and kill entrepreneurship, which is not healthy for the economy.

[4] ‘WB’s green norms must not compromise on development’

The Hindu

News

FM has suggested the World bank to increase the assistance to $100 Bn over the next five years at the recent Spring Meetings and continuation of concessional financing till 2030

Issue

There are certain norms related to environmental policies that needs to be fulfilled to be a beneficiary of the assistance, India which reeling under the development first issue, FM has said that there should be no compromise on the primacy of the development

About India

  • Largest recipient of World Bank loans
  • Has received $52 billion from IBRD
  • Has received $49 billion from IDA

IBRD

The International Bank for Reconstruction and Development (IBRD) is an international financial institution that offers loans to middle-income developing countries. HQ in Washington DC

IDA

The International Development Association (IDA) is an international financial institution which offers concessional loans and grants to the world’s poorest developing countries. HQ in Washington DC

Sustainable Development Goals

  • SDGs, officially known as Transforming our world: the 2030 Agenda for Sustainable Development, are an intergovernmental set of aspiration Goals with 169 targets
  • These included ending poverty and hunger, improving health and education, making cities more sustainable, combating climate change, and protecting oceans and forests
  • 17 goals with 169 targets covering a broad range of sustainable development issues.

What else FM said

To remove extreme poverty strong replenishments will be needed in the IDA 18 (IDA 18 is the money developed contribute in IDA for development assistance to developing countries)
IDA issue

India is no longer eligible for IDA fund because India per capita income is greater than $1260, so it’s a debate whether India will be a beneficiary because India really needs support from it.

Environmental policies

World bank will be issuing new Environmental and Social Framework(ESF) guidelines for the world bank assistance beneficiaries to adhere to the norms

[5] Small enterprises rather than big corporations are driving the economic recovery

Livemint

Context

MSME’s are the force which is driving the indian economy on a path of growth

What is an MSME

Micro, Small and Medium Enterprises (MSME) are classified in two Classes:

  • Manufacturing Enterprises-the enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the industries (Development and regulation) Act, 1951) or employing plant and machinery in the process of value addition to the final product having a distinct name or character or use. The Manufacturing Enterprise are defined in terms of investment in Plant & Machinery.
  • Service Enterprises:-The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment..

Facts about MSME’s

  • The GDP share of all MSME’s is 37.5%
  • Their Export share is 40%
  • Data of 2013-14 to 2014-15 have shown an increase in incomes, production and overall sales
  • Growth rate of their gross savings have gone up from 11.6% to 17.9%
  • Foreign currency has increased because of them from Rs.17,170.6 million in 2012-13 to Rs.34,374.3 million in 2014-15.
  • Ministry of corporate affairs puts these companies in very strong economic position after auditing the accounts of these
  • Remuneration not only in terms of salaries, wages and bonus but also provident fund has increased from 16.2% to 17.6%
  • In services, real estate has shown increase in growth rate from 7.7% to 23.6%

[6] Tough times ahead for India’s start-ups

Livemint

Context

Venture capitalists who funded the startups are now less interested in the startups

What has happened

  • Data from CB Insights and KPMG International suggests that investment in Asia in the startups have declined for the last two consecutive quarters
  • For companies like Flipkart have had their share prices marked down by 15% after the recent marked down of shares in February by 27%

Who is a Venture Capitalist

Venture capital (VC) is money that is provided to seed early-stage, emerging growth companies. Venture capital funds invest in companies in exchange for equity in the companies they invest in, which usually have a novel technology or business model in high technology industries, such as biotechnology and IT. Venture Capitalist is the person who provides capital.

What is marking down

Temporary reduction in the selling price of an item to stimulate its demand or to drive a competitor out of the market. Permanent markdowns are created to remove a slow-selling item from the inventory.

VC investments are on a decline in the world

  • This year only $6.5 billion was invested compared $14.3 billion in previous two quarters
  • In US also it’s on decline, furthermore no tech company in US has gone public this year yet

Why is it happening

  • The way of doing business and no clear path for making profits by startups, is making VC’s question and rethink about investing
  • The companies have not been able to uniquely differentiate themselves in what they offer to their consumers
  • There seems to be an effort to find an Indian cloned international success story rather than find something unique, which would actually offer something and provide solutions to real problems

 


1. The lead article of the day is covered under Editorial Today. Click here to read.

2. Science and Technology and Environment articles has been left out, they will be covered in weekly compilation for next week.

BY: ForumIAS Editorial Team 

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