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Front Page / NATIONAL
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Rs. 35,000 cr. to ease rural cash crunch
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Sack 70-year-old cricket bosses, says Lodha panel
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Prithvi-II missiles successfully test-fired
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Editorial/OPINION
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ECONOMY
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Indian Express
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Live Mint
Click here to Download 9 PM Daily Brief (22nd November 2016)
Front Page / NATIONAL
[1] Rs. 35,000 cr. to ease rural cash crunch
Context
Union Finance Minister ArunJaitley directed commercial bank chiefs on Monday to focus their attention on rural India’s cash crunch over the next 40 days, with a war chest of Rs. 35,000 crore for providing credit to farmers by December.
Norms relaxed
Government has allowed farmers to buy seeds for the Rabi sowing season using the old Rs. 500 notes.
Helping out district central co-operative banks
Centre has asked banks to provide Rs. 5,000 crore to the currency chests of district central co-operative banks to ensure farmers face no cash shortages for the Rabi season
RBI eases norms
Reserve Bank of India (RBI) has eased asset classification norms for loans less than Rs. 1 crore to allow businesses, home loan borrowers and farmers 60 more days to pay instalments for November and December, to prevent them from being classified as non-performing assets (NPAs) owing to the ongoing cash crisis.
RBI yet to notify
RBI is yet to notify another relaxation announced for farmers, allowing withdrawal of Rs. 25,000 a week from payments received in bank accounts against sale of kharif produce in APMC mandis
What isAgricultural Produce Market Committee (APMC)?
As per APMC Act, APMC’s are responsible for the operation of the markets in various states (since agriculture is the state subject). The entire State is divided and declared as a market area where in the markets are managed by the Market Committees constituted by the State Governments
APMC operate on two principles:
- Ensure that farmers are not exploited by intermediaries (or 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.
[2] Sack 70-year-old cricket bosses, says Lodha panel
Context
Tightening the leash on the powerful and the political among the administrators in the Board of Control for Cricket in India (BCCI) and its member State associations, the R.M. Lodha-led Supreme Court Committee reiterated before the apex court its recommendation to remove office-bearers who are over 70 years old, government ministers and those who have already served at the Board’s helm for nine years.
Committee files 3rd report
In its third report filed in the court, the committee said the Supreme Court had upheld its recommendations in a July 18, 2016, judgment, and the time had come to implement them so that work on reforming the Board could go ahead
Recommendations
- Observer: Former Union Home Secretary G.K. Pillai be made ‘observer’ to “guide” the BCCI in its administration by the chief executive officer, particularly with regard to the award of contracts, transparency norms, and audit for domestic, international and IPL cricket
- if appointed, he should be allowed to appoint an auditor and the necessary secretarial staff
- Disqualification: BCCI office-bearers who are not Indian citizens, those who hold any office or post in a sports or athletic association or federation apart from cricket, those declared insolvent or of unsound mind and administrators charged with a crime, should all be disqualified.
[3] Prithvi-II missiles successfully test-fired
Context
Two Prithvi-II missiles were successfully test-fired from the launch the Integrated Test Range near Balasore in Odisha. The Strategic Forces Command (SFC) fired the missiles from a road-mobile launcher.
Designed & developed by: The Defence Research and Development Organisation (DRDO) designed and developed the Prithvi-II
- The missile, capable of reaching targets 350 km away, can carry a 500-kg nuclear warhead
- Launch demonstrated the Army’s operational preparedness
Future launches
Preparations are under way for the launch of the Agni-I strategic missile from Balasore on 22nd November. Agni-I has a range of 750 km and carries a nuclear warhead.
Editorial/Opinion
[1] Lessons from a disaster
Context
In the light of the derailment of the Indore-Patna Express in Kanpur Dehat, with the death toll at least 146, author lists out possible remedial steps that can be taken by railways to prevent any future accidents
Situation vis-à-vis derailments
An average of 50 derailments a year over the past four years and a peak of 63 derailments
Impact
Author states that due to such derailments, public confidence in the system suffers a severe blow
Steps that can be taken
- Regular audit: Author states that there are several elements to safety, of which the following needs a regular audit,
- Integrity of the tracks
- Signaling
- Engines and coaches
- Training & strict operational discipline: As per Internal investigations by the Commissioners of Railway Safety human errorwas found to be responsible for 70 per cent of serious rail accidents. So, instilling a sense of operational discipline and proper training to the staff can be the key in preventing such accidents.
- Upgrading district hospitals: Author points out that most of the disasters happen in rural areas where medical facilities are not optimum thereby compromising the chances of victims’ survival. Therefore, railways need to ensure the upgradation of district hospitals
- Rescue operations: Immediate rescue and relief is often carried out by residents in the neighbourhood of the accident site, who may be well-meaning but ill-trained and ill-equipped for the task. There has to be more urgency in reaching help — for instance, choppers could be used — and rescue and relief work must be more sophisticated and better coordinated.
- Depreciation Reserve Fund : A DRF is a reserve in which each year funds are accumulated so that at the end of an asset’s life i.e. when it becomes obsolete it can be replaced. This fund needs to be maintained at proper levels so that old and unsafe assets like railway coaches can be replaced immediately.To replace an old asset (tracks, rolling stock or signaling systems), one needs to put money in the DRF. On an average, the system requires Rs 20,000-25,000 crore year after year to replace old assets. Instead of that, a provision had been made for a mere Rs 3,200 crore for the DRF in the 2016 budget. Therefore, the much required replacement of old assets is postponed — knowingly compromising safety
- Continuous Track Circuiting (CTC): Continuous track circuiting (CTC) is needed on all tracks to detect rail fractures. With CTC, the derailment of the Indore-Patna Express would not have occurred.
- Competing with the best: Indian railways needs to be benchmarked against Shinkansen, the Japanese railway system, which since 1964 has recorded zero fatalities.
- Recommendations of committees: Committees like BibekDebroy& Anil Kakodkar committees have recommended major reforms like,
- Creation of a statutory safety authority
- Speedy replacement of ageing coaches with modern LHB(Linkehoffman Busch) design
- Revamped management that keeps its focus on core train operations
Conclusion
A railway network that adheres to about six billion passenger trips a year poses extraordinary management challenges but learning from the past and its proper implementation can ensure that this vast network runs smoothly and safely.
Read more: BibekDebroy Committee, Anil Kakodkar Committee, Importance of LHB coaches
[2] Quick fixes for deep-rooted issues
Context
Reducing corruption, illicit money and market informality are worthy objectives. But as yet, there is no road map for creating the institutional architecture needed for a cashless society.
Author begins with listing out certain benefits of going cashless
- Illegal activities: Cash facilitates drug trafficking, human trafficking, extortion, money laundering and illegal immigration. In a cashless society, people would be forced to keep their saving in the bank thereby leading to a decrease in all such illegal activities.
- Safety: If shopkeepers had no cash, they would remain safe from burglars
- Hygiene: More electronic transactions would be good for hygiene. We have all come across banknotes that carry an assortment of germs
After listing out the benefits, author states the reasons as to why cash still remains a dominant form of payment method
- Intuitive: It is an intuitive method of exchange. Paying via cash comes naturally instead of paying via a card.
- Unbanked population: In India and similarly in many parts of the world there are still millions of people who remain unbanked. They have no idea about the cashless methods of exchange. So, for such a populace, cash will always remain a medium of transaction
- No transaction fee: When you pay with card, a transaction fee is levied while there is no such thing with cash payments
- Privacy: Keeping money in cash provides a degree of privacy that more modern form of payments are unable to guarantee
- Security Threat: Recently we witnessed a security breach wherein information of millions of customers was compromised. Such events further force people to keep their transactions limited to cash only
- Readiness of transition:There is also the issue of readiness for transition to a cashless economy. In 2014, Citibank constructed a “Digital Money Readiness Index” that assessed a country’s intensity of cash use and “cultural” barriers to transitioning from cash. India scored very low on the index. That should not surprise us since over 85 per cent of transactions are in cash and millions remain unbanked
What must India do?
- Road map for creating the institutional architecture to implement the idea of cashless economy is required
- Long term strategic approach with safeguards for millions of poor and vulnerable people
- There should be a public discussion on some fundamental questions such as
- Why is Japan, with its high cash-GDP ratio, not considered a haven for black money while Brazil, with its low cash-GDP ratio, has a reputation for corruption and illicit wealth?
- What safeguards would savings account holders have if their money was stored in banks laden with high non-performing assets?
- What happens if there is a Lehman Brothers-style meltdown at the State Bank of India or at ICICI?
- What happens if macroeconomic conditions lead to negative interest rates?
- Not having cash could be disempowering not just for the poor but most Indians. What about the unbanked millions?
Conclusion
Author concludes by saying that there are no quick fixes for deep rooted problems of illicit money and corruption. Government should rather engage in systematic institutional & regulatory reforms
[3] The buck stops with the States
Context
Given the diversity in development between States, it is only prudent that land acquisition laws be customized to suit local requirements.
Backdrop
In 2013, government had passed the Land Acquisition, Rehabilitation and Resettlement Act.
- Present government is trying to pass certain amendments to LARR Act of 2013 via The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Bill, 2015. The bill has been passed in Lok Sabha but is still pending with Rajya Sabha
- Government has said that if it is not able to get through the amendments then it will permit states to make amendments to the Land Acquisition and Rehabilitation and Resettlement Act, 2013
- After the announcements many states have announced changes to the LARR Act
Note: Till 2013, land acquisition in India was governed by Land Acquisition Act of 1894
The present article takes into account the exceptions behind the idea of allowing states to carry through with changes to LARR Act
- State specificity: Different states in India present varied levels of development. So, customizing the law as per their own needs and exigencies is a valid reason. Moreover, even constitution allows a state law to override a central law in case it receives a presidential assent.
- Better expertise:States have much more experience and expertise in land acquisition and have also given, at times, better compensation than stipulated by the Central law.
- Dilution: The argument that the provision of Social Impact Assessment (SIA) & consent have been diluted by state laws does not hold ground because LARR Act itself diluted the SIA requirement. How?
- Section 7(4):9 of the Act states that even if the SIA authority and the Expert Group reject a particular land acquisition, the government can proceed with the acquisition as long as “its reasons for doing so are recorded in writing”.
- As far as consent clause is concerned, so only difference is that the LARR act stipulates a greater percentage of population accepting the acquisition then what is stipulated in state laws
- Presidential assent: Presidential assent to state laws under the article 254(2) is not a mere formality. Based on a Supreme Court ruling, the President would need to engage in “active application of mind” before giving assent. So, the argument that states would easily bypass central authority via this route or it would lead to arbitrary state laws harming rights of common people, are hence uncalled for.
- Judiciary to the help: Aggrieved persons can always move to courts if they find that their lands have been forcibly acquired by the state. The recent verdict by SC in Singur Land acquisition case is a case in point where justice, though delayed, was still given to the needy.
Economy
[1] Give tax breaks for digital payments, says NitiAayog
Context
Article talks about suggestions made by NITI Aayog to encourage electronic transactions
Suggestions of NITI Aayog
- Tax rebates: Tax breaks to consumers and merchants for debit or credit card payments. This system has been adopted by South Korea. In South Korea, the government promoted electronic payments by providing tax breaks for both shoppers and merchants on card transactions
- Surcharge: Levying surcharge for cash transactions beyond a set limit to encourage electronic transactions
- Mobile wallets: Mobile wallets should be allowed to participate in one of the government’s key reforms – Direct Benefit Transfer Scheme – for subsidies, minimum wage payments for various government schemes and other payments, using JanDhan, Aadhaar and Mobile (JAM)
- Protecting interests of online shoppers: Stronger policy for protection of interests of online shoppers
- Legislation: As the existing legislation does not recognise e-commerce consumers the Aayog recommended early enactment of Consumer Protection Bill 2005 that was introduced in Lok Sabha in October 2015 and updating National Consumer Helpline regularly for e-commerce complaints
For example: In China, on one hand, online shoppers can return goods within seven days without assigning any reason and on the other, it is mandatory for sellers to be registered and compensate users in case of fraud, among other things.
Indian Express
[1] Learn by accident
Context
Railways needs greater focus on flagging infrastructure, improvement of rescue and relief operations.
This article also stresses upon the need to ensure passenger safety in the light of the recent Kanpur tragedy.
Points from this article have been included in the Hindu editorial article related to the accident.
Give it a go through once.
[2] Why trains derail
Context
The system needs a generational change.
Former railway minister has penned his thoughts as to what ails the railways and ways in which it can reduce fatalities to near zero.
Points from this article has also been clubbed into the Hindu editorial article.
Just give it a go through.
Live Mint
[1] Marrakech fails to live up to the promise of Paris
Context
Author points out that from India’s point of view, Marrakech was quite a dampener after the Paris high. Read on to find out why
Climate finance: The key
Author begins the article by delineating the importance of climate finance. He argues that the core issue to be settled at Marrakech was “climate finance”. Importance of climate finance cannot be overstated because,
- It is only when developed countries put in the money they have promised that developing countries can realize their climate commitments. Once these commitments are on track to being fulfilled, it is likely to trigger higher and bigger commitments which might just be enough to achieve the Paris objective of limiting temperature rise to 2 degrees Celsius above pre-industrial levels
Chinese Hoax
The recent President elect Mr. Trump had termed the climate change as a Chinese hoax. Considering his berating views on climate change, it is quite clear that fund flow from US would remain uninspiring in the coming years
- Transfer burden to private sector: The US government may transfer a greater share of its financial commitments to the private sector, and this will be just as problematic for developing countries as private funds are profit-driven and erratic.
Limited progress at Marrakech
- Funding needs not highlighted: A setback for the developing world at Marrakech was that their funding requirements for adaptation measures failed to be adequately highlighted.
- Reiteration of commitments: Developed nations reiterated their commitments of a $100 Billion fund by 2020 but didn’t specify as to how and from where this money is going to flow from
- Action Proclamation: Author states that the limited progress made during the meet can be summed up as the Marrakech Action Proclamation for Our Climate and Sustainable Development which was revised to finally reflect the concerns and aspirations of developing countries
With respect to India
As far as India is concerned the Marrakech process was a dampener.
- Issues pushed by New Delhi, such as “climate justice” and “sustainable lifestyles”, were largely ignored
Way forward
Author states that apart from climate financing, India needs to take care that its domestic interests are not compromised wrt setting of “green regulations”.
Conclusion
The Kigali and Montreal meets where regulations for air conditioning and aviation industry were set, should serve as a reminder that the future of the climate negotiations is going to be bumpy ride. As a leader of developing countries, it is imperative that India ensures that a biased regulatory framework is not allowed to perpetrate at a global level
[2] Economic aspirations and the Indian State
Context
State-capability failure broadly manifests itself in two ways: implementation deficit, and decision-making paralysis.
Article argues that those people who are stating that demonetization move should have been rolled out after a detailed planning and then executed miss the moot point here, that is, India is yet not ready for such nationwide mobilization of state machinery on a sustained basis
Article then tries to find answers to the problem of failure of state-capability in the light of the recently released report titled “Can India Grow?” by Carnegie India
Author states that the failure of state-capability has two elements:
- Implementation deficit
- Decision-making paralysis
Factors contributing to Implementation deficit
- Rampant corruption
- Badly managed public facilities
- Poor quality of public-service delivery
- Extensive failures in the bidding and management of various types of contracts
Overcoming Implementation deficit
- Reforms to procurements and personnel deployments
- Extensive use of information technology applications and data analytics
- Performance-management measures
- Decentralization of functions to promote accountability and recruitments to fill acute deficiencies, especially in important regulatory positions
Factors contributing to decision-making paralysis
- The major reason is the institutional power shift in the recent years meaning political representatives and public servants have been left very little space to work in the wake of actions of judges, anti-corruption investigators and vigilance agencies, auditors, and right to information administrators
Addressing decision paralysis
- Amendments to POCA: It would help to pass the proposed amendments pending in Parliament to Section 13(1)(d)(iii) of the Prevention of Corruption Act that introduces means to implicate officials for “criminal misconduct”.
- Exemptions under RTI:Since the Right to Information Act, 2005 has reached its 10-year anniversary, this may be a good time to review its implementation. Exempting communications related to deliberative processes in the government, which are exempted even in the US Freedom of Information Act, must be considered
- Auditing the auditors: A committee should examine the methods and processes used by auditors and investigative agencies.
- No comments on policy decisions: Auditors should confine themselves to their constitutional mandate of examining whether public money has been spent in accordance with prevailing rules and whether due process has been followed in decision making. They should refrain from passing judgement on the merits of departmental decisions or policies. (Read in the light of CAG reports).
- Independent agencies: Performance and policy audits should be done by independent and professionally competent third-party agencies, not by auditors.
- Training investigators in financial domain: Investigative processes have to be reformed by equipping investigators with professional expertise in scrutinizing cases involving financial and other domain knowledge complexities. Once it is established that the decision has been made by a competent authority following due process, investigations should cease. Both investigators and auditors should keep in mind that their findings should clearly distinguish between genuine errors and mala fide actions
- Restraining judicial overreach: Reforms to restrain judicial overreach and continuous litigation are both urgent and important. It is a worry if imagined riots by the highest court in the land become a basis for its intervention into an executive decision (Read in the light of recent concerns expressed by Supreme Court of possible riots in light problems being faced by citizens due to demonetization)
- Laying down rules: A committee of ex-SC judges can be appointed to lay down principles and rules that limit the range of a judge’s individual discretion and draw the line between judicial activism and judicial excess, especially on the issue of entertaining public interest litigation. The Supreme Court should then require that all courts across the country—itself included—follow those guidelines
A word of Caution
The struggle with effective implementation of demonetization is a cautionary tale for the other major project involving similar mobilization, the rollout of the goods and services tax.
Conclusion
Authors conclude by stating that the short-term economic costs and hardships that have arisen out of the sudden and massive demonetization will have been worth it, if government would have begun a simultaneous exercise to address the hurdles to enhancement of state capability
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