- Front Page / NATIONAL
- Single tribunal to arbitrate inter-State water disputes
- EC seeks end to nameless donations
- Supreme Court wants woman pilot to get permanent wings
- Editorial/OPINION
- ECONOMY
- Science and Technology
- Indian Express
- Live Mint
- Putting firewalls in place for a digital economy
- The many canards surrounding currency swap
- Agriculture a fertile ground for digitization
- The big impact from big data
Click here to Download 9 PM Daily Brief PDF (19th Dec. 2016)
Front Page / NATIONAL
Single tribunal to arbitrate inter-State water disputes
Context – The Centre has decided to amend the Inter-State Water Disputes Act, 1956.
Introduction
A decision to approve an amendment to the Act was taken at the Union Cabinet earlier this week.
The amendments will create:-
- A single, permanent Tribunal to adjudicate all inter-State river water disputes,
- Besides the tribunal, the government has also proposed to float some Benches.
- Dispute Resolution Committee (DRC) comprising experts and policy-makers
- But Unlike the tribunal, the Benches will cease to exist once the disputes are resolved.
Benefit
Proposed Tribunal is expected to deliver its verdict during a span of three years.
It will resolve the issue of delay in deliveringthe final awards into disputes.
How mechanism will work?
Whenever a State will request, the Centre will set up a DRC.
But if a State is not satisfied with the resolution of DRC, it can approach the tribunal.
EC seeks end to nameless donations
Context – Election Commission has urged the government to amend laws to ban anonymous contributions of Rs. 2,000 and above made to political parties.
Legal side of the issue:-
There is no constitutional or statutory prohibition on receipt of anonymous donations by political parties.
But there is an “indirect partial ban” on anonymous donations through the requirement of declaration of donations under Section 29C of the Representation of the People Act, 1951.
But, such declarations are mandated only for contributions above Rs. 20,000.
No relief for political parties after demonitisation
Revenue secraetary has clarified that:-
- Political parties have not any exemption or privilege, post demonetisation & introduction of Taxation Amendment Act, 2016.
- No political party can accept donations in Rs 500 and Rs 1,000 notes since they were rendered illegal tenders
- Following discripencies, political parties are as liable to be questioned by IT authorities.
Other proposals by election commission
- Exemption of income tax should be extended only to political parties that contest elections and win seats in Lok Sabha or Assembly polls.
It should be noted that Section 13A of the Income-Tax Act, 1961 confers tax exemption to political parties for income from house property, voluntary contributions, capital gains and other sources.
- Political parties should be made to register details of donors for coupons of all amounts on the basis of a Supreme Court order of 1996.
Coupons are printed and used by political parties for collecting donations. There is no limit as to how many coupons can be printed or its total quantum.
Supreme Court wants woman pilot to get permanent wings
Context – A Bench led by Chief Justice of India T.S. Thakur offered relief to Ms. Kaur in her fight against the rules of the “Establishment,” under which her time as a pilot was over.
Introduction
- Armed Forces Tribunal (AFT) rejected Ms. Kaur’s application for a permanent commission in March, 2016.
- The establishment said she was not “entitled” to seek for a permanent commission.
- AFT told the Union to allow Ms. Kaur to stay on if she qualified and was found suitable.
- The AFT asked the authorities to decide her application in two months.
- But Union government appealed in the Supreme Court(SC) against the decision, where SC offered relief to Ms. Kaur.
Why this decision is important
- According to a statement from Delhi High Court order “young ladies have sacrificed the prime of their life to serve the nation,” but got a raw deal as they left service without a pension.
- It is important for women officers, who have been fighting a for equal opportunities.
- The High Court had observed that “if male officers can be granted permanent commission, there is no reason why equally capable women officers can’t.”
Issue
- Many women officers are fighting to stop ‘discrimination against women Army officers, who are given only Short Service Commission for periods extendable up to 10 years.’
- While Army’s reasoning behind this discrimination had been the extreme difficulties a woman officer may have to face in combat situations.
Editorial/OPINION
Bridging the learning deficit
Issue:-MHRD is planning for another revision of National Education Policy.
The state of education, particularly in the critical primary and pre-primary years, is far from satisfactory.
According to the tenth Annual Status of Education Report, in 2014 the proportion of Class 3 and Class 5 students in rural areas who could read a Class 2 textbook was 23.6 and 48.1 per cent, respectively.
Problems
Government hoped to raise the gross enrolment ratio from 81.6 per cent of children in the 6-14 age group in 2000 to 96 per cent or more since 2008 by:-
- Government schools
- Public investment in education
But improving primary education proved to be only the first step, many barriers remained, like:-
- High dropout rates, especially for girls
- Teacher absenteeism and low teaching quality
- Insufficient resources to implement contemporary teaching methods.
Poor learning outcomes
Poor learning outcomes have been very important issue.
Reasons behind that are:-
- Designs of curriculum
- Old learning methods
Way ahead
Together with emphasise on early childhood education and primary schooling, education system should try activity-Based Learning and “teaching at the right level”, tools for real learning and skill-absorption.
ECONOMY
Double counting of deposits ruled out
Issue – Some bankers and former central banks officials have ruled out the possibility of ‘Double Counting’ in the figures on deposits .
Economic Affairs Secretary Shaktikanta Das previously flagged the possibility that the Rs.12.44 lakh crorecould be higher than the actual amount due to double counting.
Why it was said?
As some of the banks do not have their own currency chest, they may have deposited the withdrawn notes in a chest of another bank.
This could have led to both, the bank making the deposit and the bank tallying the deposits made at the chest, reporting the same figures separately to the central bank.
Why double counting is not possible:-
RBI only looks at the currency chest data and the notes that were deposited at the RBI counters.
There were 4,075 currency chests as at the end of March, of which more than 95 per cent are managed by public sector banks.
Why this data is important?
The Centre had expected Rs.10 lakh crore to come back into the banking system, as per the Attorney General’s submission to the Supreme Court last month.
Point of Sale terminals: How they work
Issue:-The government wants banks to install three lakh Point of Sale terminals in the next three months.
PoS terminal
A point-of-sale (POS) terminal is a computerized replacement for a cash register which can process credit and debit cards.
A customer needs to enter a card PIN to complete the transaction using the PoS terminal.
Any merchant can request the bank, where one has bank account, to install PoS machine at his establishment.
Charges of PoS terminals:-
END User doesn’t have to pay any charges (in theory).But in practice, merchants increase the cost of the product and services sold to pass the charges.
Merchant bank has to pay the issuer banks Merchant Discount Rate (MDR).
Charges for debit and credit cards
Merchant Discount Rate for the debit cards are at:-
- 75 per cent for up to Rs 2000
- 1 percent above Rs 2000
For credit cardsMDR varies between 1.5 per cent to 2.5 per cent.
But last week RBI has lowered the MDR cap for debit cards effective between January 1 to March 31, 2017.
In this period, MDR is capped at:-
- 25 per cent up to Rs. 1000
- 5 percent for Rs. 1000- 2000
Who get the charges of MDR?
MDR that merchant pays will be divided among:-
- the issuer bank (which issues the debit card)
- the acquirer bank (which installs the PoS)
- and the payment gateway
The issuer bank gets the maximum share of the MDR.
Science and Technology
‘Zika-linked birth defects more severe than thought’
Zika-linked abnormalities that occur in human foetuses are more extensive and severe than previously thought.
Scientists have concluded that microcephaly is not the most common congenital defect caused by the infection.
What could be the other severe effects:-
foetal development from the mosquito-borne virus can occur throughout pregnancy
And other birth defects are more common than microcephaly, when babies are born with very small heads.
These defects may only be detected weeks or months after the baby is born.
Indian Express
No one took notes
Context: Utmost secrecy was critical to preserve the character and effectiveness of this unprecedented and bold move like demonetization.
Background of the issue:
Recently, on November 8, in his address to the nation, Prime Minister Narendra Modi said secrecy was essential for the demonetization “mahayagna”, which will purify the country of corruption, black money, fake currency and terrorism.
However, many believed that if the information of demonization could leak, it could have neutralized the scheme.
Effects of the demonetization
- Government securities (g-secs) are the only avenue for banks to invest their surpluses, because due to the demonetization there is no demand for credit in the present economy.
- G-secs preferred as it gives them at least a minimum, risk free return. Naturally, demand perked for g-secs, pushing up their prices.
- Foreign investors exited due to lower yields, and most probably, made good capital gains by selling g-secs at higher prices.
- Fearing its existing g-sec stock may not be enough and to suck out excess liquidity, the RBI on November 26 hiked the Cash Reserve Ratio (CRR), the money banks are expected to keep with the RBI. But, money for CRR, however, does not carry any interest and will certainly weigh adversely on bank profits in the near quarter.
- In the past 40 days, uncertainty has become the order of the day. It doesn’t serve very well particularly when confidence levels in the private sector are at a low and private investment almost moribund
Loophole in the demonetization scheme
Earlier 2 yrs ago, RaghuramRajan said that clever people find ways around the demonetization and further they also find ways to divide up their hoard (Black money) in to many smaller pieces.
Solution to avoid ramification of the demonetization
- Earlier, the RBI, given the institution it is, could not plan for keeping a stock of g-secs or bonds under the market stabilization scheme (MSS) ready in advance without impinging on “secrecy”.
But, finally on December 3 the RBI got government approval to issue MSS bonds that banks could subscribe to and earn some return.
- Revenue secretary HasmukhAdhia and his team could have devised counter-mechanisms against the one find ways to divide up their hoard (Black money) in to many smaller pieces.Instead of issuing one-and-a-half orders a day — 50 and still counting — the government could have simultaneously drafted another income disclosure scheme ab initio and also taken specific measures to prevent breaking up the hoard “into smaller pieces”.
Conclusion:
Presently, the government narrative too has changed leaving the machinery itself unprepared. The government shifted his mindset from a war on black money corruption to become bringing all the money back into the banking system and the black part is to be tracked down by the I-T department later. At the same time a good thing is that it has transformed into a wholesale push to a cashless economy.
Illegal cap
Context
The right to withdraw money cannot be extinguished by demonetization.
What is the issue?
The Reserve Bank of India Act, 1934, Section 26(2), empowers the Centre to demonetize any series of bank notes of any denomination. But that cannot be done without the recommendation of the Central Board of the Reserve Bank constituted under this Act.
Section 26(2) of the RBI Act provides for the issue of a notification in the Gazette of India specifying the date on which two demonetization will come into effect as well as the series and denomination(s) of bank notes to be demonetized.
Why the issue raised?
Recently, on November 8, the PM informed the nation Rs 500 and Rs 1,000 notes would be demonetised with effect from that midnight.
This decision of demonetization followed with imposition of cap on the withdrawal of money from one’s own account.
But, the objection to the above is, this matter unconnected with the subject matter of demonetisation dealt with in the notification and the ministry was a bit disingenuous inserting this condition in paragraph (vi) of the notification.
But, the notification referred to in section 26(2) of the RBI Act, 1934 is a subordinate legislation. And the Practice and Procedure of Parliament by M.N. Kaul and S.L. Shakdher says, “In order to be valid, subordinate legislation must be intra vires the statute… As a corollary to the general rule of ultra vires the power of subordinate legislation can be exercised only in the manner laid down in the Parent Act and not in any other way.”
What is the observation of the Supreme Court regarding the issue?
The observations of the Supreme Court on the nature and scope of subordinate legislation are as follows:
- “Power to frame rules is conferred by the Act and that power may be exercised within the strict limits of the authority conferred. If in making a rule the State transcends its authority the rule will be invalid for statutory rules made in exercise of delegated authority are valid and binding only if made within the limits of authority conferred.” (State of Kerala v. K.M. ChariaAdulka& Co.; 1965 SCR (I) 601).
- “Any rule which is shown to have been made in contravention of the provisions of the Act for any reason other than to give effect to the purposes of the Act or for any reason other than to give effect to the purposes of the Act, would be declared void by the Court on the ground that it goes beyond the scope of the power conferred on the Government”. (Shiv Kripal Singh vs V.V. Giri (1970) 2 SCC 567).
Hence, it becomes clear from the above observations of the SC that a subordinate legislation which goes beyond the scope of the power conferred on the government by the legislature is void and therefore is not binding.
What is the argument against the cap imposed on withdrawal of money?
- Demonetisation only makes certain currency notes illegal from a particular date. It does not change the legal status of the personal accounts.
- He has the right to withdraw the entire money and close his account any time. That right cannot be limited or extinguished by a notification on demonetisation.
- The money deposited in a bank by an individual is his personal property and the bank is keeping that money as a custodian of the account holder.
Conclusion:
The above discussed is beyond the scope of the power conferred on the government by Section 26(2) of the Act.
Therefore, the discussed issue is void and not binding.
Partial security for farmers
Context:Review of PMFBY(Pradhan MantriFasalBimaYojana)
It’s a good policy to arrest the agriculture distress caused due to vicious cycle of droughts and floods.
Issues with the previous agricultural schemes
The problems associated with the National Agriculture Insurance Scheme (NAIS) and Modified NAIS (MNAIS) were:-
- The sum insured was meager.
- It was implemented only in risk prone districts and not at pan India level.
- It was based on capping of sum insured.
- The crop damage assessment was time consuming.
- Compensation to farmers took several months, many times more than a year.
Hence, government decided to revamp all this by launching a new scheme Pradhan MantriFasalBimaYojana
Provisions of PMFBY are:-
- Technical committee at each district level will decide the cost accrued by farmers in raising the crops and then that amount will be insured.
- To decide the premiums bids will be made both by public and private insurance companies.
- Then the premium will be subsidized for the farmers, who have to pay only two per cent for kharif crops, 1.5 per cent for rabi crops and five per cent for annual commercial crops including horticulture crops.
- Subsidy will be beard by both centre and state equally.
- High technology such as drones, smart phones, GPS and satellites will be used for accuracy, transparency, and faster assessment of damages and settling claims.
Positive takeaways from PMFBY are:-
- More farmers are covered. There number has increased over 193 per cent over kharif 2013 and 40 per cent over kharif 2015.
- Area insured has also increased.
- Sum insured has spectacularly increased and nearly doubled from 2015 levels.
All these indicators point that the programmed is going in the right direction and at the correct pace. At this rate, India may soon have half of its cropped area insured within three to five years.
Some implementation glitches with PMFBY:-
- The actuarial premium has increased with the increasing scale of coverage. Logically it should have been decreased due to economies of scale.
- There was a failure in timely assessment of Damages. As the technology employment guidelines were defied and it was done through eye inspection.
- Advance payment of premiums to the companies was not made by the states.
To ensure the effective implementation of the scheme a high level committee needs to be appointed so that potential cost savings can be done. Along with this ‘chaltahai’ (passive mindset) attitude of state governments and officials needs to be transformed. Then Only PMFBY will truly serve the cause of peasantry.
New channel
Context – Union cabinet announced wide-ranging amendments to the Inter-State Water Disputes Act, 1956.
Proposal
Data collection agency
- It has proposed an agency to collect and maintain water data including those pertaining to rainfall, irrigation and inter-basin flows.
Benefits
- Collection of data is the first step towards resolving water disputes.
- The country has lacked a specialised agency for the purpose.
- The new agency will ensure that water data is regularly updated and this will obviate the haste to collect data every time there is a water dispute.
Permanent tribunal
- Cabinet has also decided to constitute a permanent tribunal to adjudicate on all inter-state water disputes over river waters.
- The cabinet’s decision to constitute a permanent tribunal is in consonance with the National Water Policy 2012.
Benefits
- It will finish practice of having a separate tribunal for every inter-state river dispute.
- Multiplicity of tribunals militates against the early resolution of water conflicts and tribunals often work at cross purposes.
Challenge ahead of single tribunal
- Although neither Supreme Court’s nor any other court’s can adjudicate in the matters of water disputes
- The award is binding, but legal anomalies have meant that a tribunal’s decision is not enforceable.
- Non-compliance of tribunal awards by states remains a weak link in dispute resolution.
- That might persist even when there is a permanent tribunal.
Conclusion
A permanent water tribunal too can facilitate the just sharing of water resources. But it should be free of the legal anomalies of its ad hoc predecessors and also try to work around the changing discourse of water management.
Live Mint
Putting firewalls in place for a digital economy
Issue: Post demonetization digital economy and associated vulnerabilities.
Why digitization:
The steps taken by the incumbent government to make India a digitized economy are appreciable. It will bring the much needed transparency and effectiveness in to the economy.
But a digital economy comes with its own pressure points and vulnerabilities.
What is the concern?
- Recently a group of hackers revealed that they have critical information about the NPCI (National Payments Corporation of India), its servers, and even the encryption keys and certificates used by some banks in India.
- Cyber wars have an edge on conventional wars. Enemy countries that cannot face India’s military strength will definitely try to attack our cyberspace.
- If the vulnerabilities are not address on priority basis it can pose a threat towards India’s national security.
- Taking down vital banking systems could trigger a financial crisis, and thus interruption in the supply of electricity can bring businesses, cities and entire regions to a standstill in a digitized economy.
- The Supervisory Control and Data Acquisition systems managing India’s vital infrastructure such as oil pipelines and steel plants make it particularly vulnerable here.
Recent security incidents:
- The debit card data compromise that took place cards earlier this year had affected about 3.2 million cards.
- Online publication of information related to the Scorpene submarine programme.
- A major global cybersecurity firm named Symantec claimed that a number of Indian organizations including central government systems, a financial institution and a vendor to a stock exchange had been breached by Suckfly, a cyberespionage group.
Evidence from the past:
- The hacking of US company Lockheed-Martin’s F-35 stealth fighter programme.
- The massive wave of Russian cyberattacks against Estonia and Georgia in 2007 and 2008.
- In 2013 a billion Yahoo accounts were hacked.
- $81 million stolen from Bangladesh’s central bank’s New York Federal Reserve account earlier this year via malware attack on the Swift interbank transfer network.
Current security infrastructures in place to deal with cyber attacks:
- The Computer Emergency Response Team (CERT-In) established in 2004.
- The proposed National Cyber Security Coordination Centre.
Area of opportunities:
- We need to address all threats including attacks or attempted attacks on the Indian cyber space and vital cyber infrastructures, public and private sectors both.
- Engage all stake holders to be alert and plan their own strategies. This will reduce the impact if any such attack takes place.
The many canards surrounding currency swap
Issue: Demonetization
Implication of demonetization in Indian economy:
- There is no concrete official assertion by the government that a fiscal gain could be realized by cancelling the liabilities associated with old notes that were not turned in by a certain date.
- Only some fraction of the old notes, representing a portion of black money has been brought back to the banking system after the demonetization.
- A shortage of cash (not of money) may be a nudge for the behavioural change towards less cash and more digitization in the economy.
- The proceeds entered the formal financial system due to the demonization do not benefit the treasury; they certainly represent a tax on the holders.
- The accuracy of the mechanism of data analysis to filter suspicious black money deposited in to bank may cannot be guaranteed.
Reasons of inefficiency:
- It is mistaken to assume that notes not turned in cease to be a liability on the books of the central bank, unless they are explicitly and legally demonetized—which has not been done thus far.
- It is always possible for the Reserve Bank of India to sterilize the monetary effects of a portion of the currency stock being destroyed.
Conclusion:
The intervention of the Reserve Bank of India is crucial in this transitional phase. The apex bank has already announced its bi-monthly policy review and kept the repo rate unchanged on 7 December.
Agriculture a fertile ground for digitization
Issue: The use the digital platform to address concerns related Indian agriculture sector.
The role of agriculture sector in Indian economy:
It accounts for nearly 15% of India’s gross domestic product.
- It constitutes 10% of the overall exports.
- Over 58% of rural households depend on the sector as their principal means of livelihood.
- It feeds more than 1.2 billion people.
What are the causes of concern:
- Rapid population growth
- The sector has seen a sustained increase in demand, especially over the past decade.
- The sector continues to face significant bottlenecks in feeding nutritious food to a large chunk of the population
- Chronic undernourishment and malnutrition as well as lifestyle diseases.
- To feed the currently undernourished population, India would require a 3-4% increase in food supply.
- With the population expected to grow even further, the strain on the sector is likely to grow more in the coming years.What are the new challenges?Diet diversification: Rising incomes lead to diet diversification. Example: away from staple grains and towards higher-cost foods like poultry, fruits and vegetables, and dairy products.Dairy Segment
- The dairy segment will require significant investments to improve its productivity and ensure that the sector sustains its growth to meet demand requirements in the coming years.
- Substantial gaps in availability of livestock feed supply and competition for acreage from food crops pose fundamental threats to necessary dairy production.
Edible Oil
- Rising incomes will also drive higher consumption of edible oil.
- While India is one of the largest producers of oilseeds in the world.
- It imports around 55-60% of domestic edible oil consumption requirements.
- This poses a major challenge as high import dependence means an uncertainty in supply and potential for significant variability in prices.
- A meager increase in the land under production, stagnant yield growth could see a shortfall of as much as 11 million tonnes of food grains by 2025.
- Double cropping, lack of crop rotation, lack of time for soil recreation, are putting further pressure on fertility and yields.
Digitizing growth:
- The use of technology can be of immense help.
- Technologies such as automation, decision support system and agriculture robots are being widely adopted in the sector globally.
- Farmers are using the Internet and smart sensors to get access to valuable information like soil moisture, nutrient levels, temperature of produce in storage and status of farming equipment.
- The use of big data analytics and artificial intelligence, technologies that have been deployed successfully in various sectors across the globe.
Use of technology in Indian agriculture sector:
- The use of technology in Indian agriculture sector has limited to application fields only.
- The logical step for the sector, especially in India, would be to build an all-inclusive digital platform
- An inclusive platform will be able to provide end-to-end services for farmers.
Where technology can be used in the agriculture sector:
- Crops selection
- Optimizing plantation timings
- Seeding and fertilization rates based on plants
How the use of technology can be a game changer:
- It will reduce wastage in the value chain
- It will improve food safety.
- Technology can help detect pathogens and allergens before they reach consumers.
- It can also help address the price discovery issue.
- Technology will bring transparency.
- It will help in decision making process among the buyers and sellers by providing accurate data on prevailing prices or inventory levels.
- It will link farmers with the profitable customers in the urban areas directly.
Conclusion:
Availability, affordability, consumer awareness, quality, safety and access to food are the major issues that need to be addressed. A holistic digital platform can help to address these and catapult Indian agriculture to the next level.
The big impact from big data
Link:http://www.livemint.com/Opinion/QtWoDuIfVAkk4n4jRbjwFP/The-big-impact-from-big-data.html
Issue: The big data revolution and a major shift in the global business.
What is data revolution?
- One piece of information may be insignificant, but billions of data points can illuminate.
- New research from the McKinsey Global Institute (MGI),The Age of Analytics: Competing In a Data-driven World, takes stock of the rapid technology advances being made in the field of analytics as well as the disruptions they are setting off across various industries.
- The volume of available data has continued to double every three years.
- Data storage capacity has increased, while its cost has plummeted.
- The upshot of all this innovation is that decisions no longer have to be based on gut instinct, or subject to human error.
- Systems enabled by machine learning can provide customer service, manage logistics, analyse medical records, or even write news stories.
New business opportunities:
- Some are introducing radically new business models that are reshaping entire industries.
- Fintech firms are providing financial services without building bank branches
- Airbnb has become a major player in the hospitality sector virtually overnight without building a single hotel.
- Online streaming services use recommendation engines to shape the way billions of people consume TV, movies and music.
- Ride-sharing services such as Uber have disrupted once-inefficient taxi markets in cities around the world by using geospatial mapping technology.
- Even some legacy industrial companies are using data gleaned from the Internet of Things to make their equipment, plants and supply chains more efficient.
How data analytics can help in competition:
- Analytics capabilities are now the basis of corporate competition.
- In many industries, a small group of technology leaders are consolidating major advantages.
How should a management team approach this challenge?
- Selecting the right data architecture and technology tools for their needs, organizations also need to establish processes and policies for handling and evaluating data.
- Helping people adapt to a new way of working. Most organizations will need to rethink existing roles and develop new types of talent to take full advantage of data and analytics.
- Adding a data science team or finding the right external analytics provider.
- Some organizations may need to designate a team that is charged with pioneering new ways of working and it also helps if senior leadership visibly embraces the change.
Future applications
- Data and analytics could transform multiple sectors in the years ahead.
- Banking and insurance could dramatically improve their risk assessments by building massive data integration capabilities.
- Digital platforms that offer large-scale, real-time matching with dynamic pricing could make labour and energy markets more efficient.
- Granular data about individual characteristics and behaviour can be used to customize products and services.
- It can be used to re-imagine the way healthcare and education are delivered.
- Data and analytics can improve the accuracy and transparency of decision making.
Conclusion:
Developing nations with fewer deeply entrenched legacy systems to overhaul can take advantage of the data revolution. It will bring transparency and efficiency that spurs commerce, builds more inclusive economies, and makes government services more effective.
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