Brief of newspaper articles for the day bearing
relevance to Civil Services preparation
What is 9 PM brief?
- GS PAPER 1
- Gaya-model lantern in Colombo {Art and Culture}
- GS PAPER 2
- Taking stock, two years on {Governance}
- China instigated Naga outfit: Centre {Security}
- India’s Chabahar test {Foreign Policy}
- India, US and an eastward tilt {Foreign Policy}
- Fishermen in troubled waters {Foreign Policy}
- GS PAPER 3
GS PAPER 1
[1] Gaya-model lantern in Colombo
News:
- Lanterns are an integral part of the Vesak Poya festival (Full Moon in May), which is celebrated to mark three important events in the life of Buddha — birth, enlightenment and death.
- This time, in Colombo Sri Lanka, a Vesak lantern kept near the Gangaramaya temple is an additional attraction as it has been modelled on the “stupa” at the Mahabodhi temple in Gaya, Bihar.
- This has been arranged by the Indian government at the invitation of the Sri Lankan government. This year, the Vesak Poya fell on Saturday.
- The lantern will be on display till Wednesday as part of the Buddha Rashmi Vesak celebrations organised by the Presidential Secretariat and the Gangaramaya temple.
Mahabodhi Temple:
- The Mahabodhi temple, one of the oldest brick structures in eastern India, was declared a World Heritage Site by the UNESCO in June 2002.
- Located about 115 km south of Patna, in gaya, the temple is regarded as one of the four holy sites related to the life of Buddha.
- According to the UNESCO, this was the first temple built by Emperor Asoka in the 3rd century BC.
- However, the present temple is of the 5th-6th century CE, belonging to the late Gupta period.
- Another special feature is that the temple is believed to have had a significant influence on the development of brick architecture over the centuries.
GS PAPER 2
[1] Taking stock, two years on
Yield which comes after two years of sowing BJP seeds.
Two features distinguish the social sector strategy of present government.
- It endeavours to make existing programmes more efficient by cutting leakages.
- It gives priority to empowerment over entitlement.
Early in its tenure:
- The government achieved a major success in financial inclusion with empowerment through the Pradhan Mantri Jan-Dhan Yojana.
- This scheme proposed to give a bank account to every family.
- The programme entered the Guinness Book of Records for opening 1.8 crore accounts in one week from August 23 to 29, 2014. By May 2016, the scheme had opened 21.74 crore accounts, with Rs.37,445 crore in deposits.
Straight to the beneficiary
- Alongside this, the Prime Minister not only took the pragmatic decision of retaining and rapidly expanding the Aadhaar biometric identification programme but also accelerated its deployment to cut wasteful expenditure in the delivery of social programmes.
- Recently, legislation has been passed that empowers the government to require the beneficiary of services financed from the Consolidated Fund of India to provide her Aadhaar identity number.
- In turn, the government can link the beneficiary’s Aadhaar identity number and bank account to which benefits are transferred.
- This direct benefit transfer (DBT) instrumentality complemented by Aadhaar seeding of the bank account eliminates the possibility of benefits accruing to multiple accounts of the same beneficiary or ghost accounts.
- Large social programmes such as the Public Distribution System (PDS), the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and subsidised sales of fertilizer and liquid petroleum gas (LPG) cylinders have been subject to massive leakages through the use of multiple and ghost accounts.
- These leakages can now be plugged through the DBT-cum-Aadhaar instrumentality.
- The government has already successfully done this in the disbursement of the subsidy associated with the PDS, MGNREGA and LPG cylinders though the coverage remains far from complete.
- Not all bank accounts have been linked to Aadhaar.
- To date, an estimated 3.5 crore multiple or ghost beneficiaries have been eliminated from the LPG rolls.
- During 2014-15 alone, this resulted in savings of Rs.14,672 crore.
- In MGNREGA, similar weeding out of multiple or ghost beneficiaries has resulted in a saving of Rs.3,000 crore in 2015-16.
- This amount is a little below 10 per cent of the total MGNREGA allocation.
- In PDS, an estimated Rs.10,000 crore has been saved by eliminating 1.6 crore fake ration cards using Aadhaar instrumentality.
To empower rural households, the government has greatly accelerated the process of rural electrification and rural road construction.
- During its two years in office, the government has supplied electricity to 7,654 villages compared with 5,189 villages in the preceding three years.
- Likewise, the total rural road length constructed has been 36,340 and 36,450 km during 2014-15 and 2015-16 respectively.
- In comparison, only 24,160 and 25,320 km has been constructed during 2012-13 and 2013-14, respectively.
Clean cooking strategy
- Approximately 12 crore households in India continue to use solid biomass fuels for cooking, with the attendant harmful effects on health.
- To date, no serious effort has been made to free these households of the black carbon they inhale while cooking.
- For years, efficient cooking stoves have been promoted but they cover less than 1 per cent of the affected families.
- For the first time too, the government has resolved to bring LPG cylinders to these households.
- The government has launched the Pradhan Mantri Ujjwala Yojana under which five crore below poverty line households will be provided subsidised LPG cylinders over the next three years.
- The target for the current fiscal year is 1.5 crore households.
- The scheme is being financed in part from the savings generated through the voluntary surrender of the LPG subsidy by existing richer households.
- After the Prime Minister’s appeal, one crore richer households have already given up this subsidy.
Social security platform
- In the Budget 2015-16, the government launched the Atal Pension Yojana (APY) to provide a minimal insurance cover to workers in the unorganised sector.
- Under the scheme, the Central government co-contributes the lower of 50 per cent of the total contribution and Rs.1,000 per annum to each subscriber account for a period of five years.
- Depending on his contribution, a subscriber under the age of 40 receives the fixed monthly pension of Rs.1,000 to Rs.5,000 at the age of 60 years.
- It provides cover for Rs.2 lakh in case of death and Rs.1 lakh in case of partial disability to individuals between 18 to 70 years for a premium of Rs.12 per annum.
- In parallel, the Central government has also introduced the Pradhan Mantri Suraksha Bima Yojana (insurance against accidental death) and the Jeevan Jyoti Bima Yojana (insurance against death) schemes.
- It covers individuals between 18 and 50 years for Rs.2 lakh at a premium of Rs.330 per year. By May 9, 2016, 9.4 crore beneficiaries had enrolled under the Suraksha Bima Yojana and three crore under the Jeevan Jyoti scheme. Enrolment in APY — at 20 lakh — was significantly lower.
Budget 2016-17 announced three major initiatives related to health:
- Insurance, the Jan Aushadhi scheme and a dialysis programme.
- Insurance:
- Under the health insurance scheme, coverage for Rs.1 lakh is provided against hospitalisation expenditure.
- For senior citizens, there is an additional cover of Rs.30,000.
- The government will cover eight crore families from economically weaker sections free of charge through an Aadhaar-linked programme.
- Jan Aushadhi Scheme:
- Under the Jan Aushadhi programme, the government will open 3,000 stores nationwide to provide low-cost, generic drugs.
- Dialysis Programme:
- With 2.2 lakh new cases of end-stage renal disease patients added each year, the government has also announced a programme to provide dialysis services in all district hospitals.
Other reforms by the government:
- The government has introduced several measures towards improved implementation of MGNREGA.
- It has given priority to low-hanging fruit such as water ponds and de-silting of water ponds in asset creation.
- It has also taken a more liberal approach towards building of private assets such as houses, wells and toilets for the poor.
- This has created ownership of assets by the respective beneficiaries and led to better supervision of work.
- The government has improved convergence between MGNREGA works and schemes such as skill development, the Pradhan Mantri Krishi Sinchai Yojana (PMKSY), Housing for All and the Swachh Bharat Mission.
Reform in education
- In the area of higher education, regulations have been liberalised to give greater flexibility to women to complete their MPhil and PhD degrees.
- Upon fulfilling certain conditions, women PhD scholars relocating to other towns can now transfer to a university in the destination town rather than having to begin afresh.
- Rules have also been liberalised to give autonomy to colleges that receive the highest accreditation grade for three consecutive cycles from the National Assessment and Accreditation Council.
- Furthermore, the government has committed to turning 10 private and 10 public institutions into world-class teaching and research institutions. Steps towards achieving this objective can lead to far-reaching reform of the higher education system in India.
- Separately, the government has made the reform of medical education in India a higher priority, assigning the task to a high-level committee.
The Swachh Bharat Mission:
- The mission is not only critical for a healthy India but also essential to creating a modern India.
- Among other things, it proposes to make India open defecation free by October 2, 2019, the 150th birth anniversary of Mahatma Gandhi.
- The number of toilets built has risen from five million in 2013-14 to 5.88 million in 2014-15 and 12.7 million in 2015-16.
There is much else being done via housing for all, the PMKSY, livelihood mission and more that touches people’s lives.
Conclusion:
- The distinguishing feature of the policies under the present government is that they promise to sustain high growth in GDP, revenues and social spending and deliver social services more efficiently and effectively.
[2] China instigated Naga outfit: Centre
News:
- For the first time, the Centre has admitted officially that the National Socialist Council of Nagaland (Khaplang), named after its Myanmar-based leader S.S. Khaplang, intensified violence in the Northeast in 2015 at the behest of the Chinese.
- The admission was made in depositions by the Centre and other States before a tribunal set up early this year to adjudicate the ban on the insurgent outfit under the Unlawful Activities (Prevention) Act (UAPA).
- The full order of the tribunal, which upheld the decision to ban the outfit for five years, has neither been posted online nor publicised.
- The order reveals that Nagaland was the only State which was not in favour of declaring the NSCN-K an unlawful association and sought a “peaceful political solution”. Arunachal Pradesh and Manipur supported the ban.
- It was in September 2015, the Centre moved to ban the NSCN-K following which the tribunal under the UAPA, led by Delhi High Court judge Najmi Waziri, was set up.
- On February 12, when the tribunal was hearing the case in Gangtok, Sikkim, the Ministry of Home Affairs made a written submission that the NSCN-K “obtained assistance from anti-India forces in other countries to procure arms…in its struggle for the creation of a separate State,” the only direct reference to foreign help to the outfit.
Given to violence
- According to the Central government, the NSCN-K is professed to violent activities.
- According to the government’s intelligence report of April 2015, 130 cadres of NSCN-K were camping across the Myanmar border with the intention to assault Assam Rifles personnel and attacking their outposts at Longwa village in Mon district, while another armed group of 30-40 cadres was found to be proceeding towards Chenmoho in Mon district from its general headquarters at Throillo in Myanmar.
- It is the government’s view that the NSCN-K has been aiding and sheltering other unlawful groups such as ULFA, NDFB and CorCom, particularly at their bases in Myanmar.
[3] India’s Chabahar test + Immense opportunities after lifting of sanctions, says Modi
Issue
- India-Iran relationship.
Context
- Iran visit of PM Modi.
Direction of India’s Foreign Policy after economic reforms of 1991
- Focus on mobilising external support for India’s rapid economic development
- Engage all major powers
- Normalise relations with the neighbours
- Raise profile in the extended neighbourhood
- And improve India’s international standing.
India’s relations with Iran
- As the US sought India’s support in international forums against Iran, Delhi got into a funk, debating the issue in terms of non-alignment and strategic autonomy. In the end, the government was pragmatic enough to go along with the majority opinion of the international community rather than line up behind Iran and risk undermining its own nuclear deal with America.
- The real challenge in India’s engagement with Iran was not about holding up the high principles of “strategic autonomy”, but of effectively navigating the international complexities surrounding economic and energy ties and seizing upon the few opportunities that were available for building a partnership under adverse conditions.
- India’s performance here has been underwhelming.
- India’s vote against Iran at the International Atomic Energy Agency on the nuclear issue has done a lot less damage than India’s inability to find practical ways to advance the relationship on the ground.
Silverlining
- The current Government deserve credit for developing the necessary institutional mechanisms for India’s participation in the Chabahar project.
Importance of Chabahar project
- The Chabahar project has the potential to alter the hostile regional geography that Delhi had inherited in 1947.
- The partition of the subcontinent and Pakistan’s control of parts of Kashmir had left India without physical access to Afghanistan.
- Pakistan, which resented Kabul’s special relationship with Delhi, had no desire to provide overland transit rights to India or facilitate an expansive cooperation between Afghanistan and India.
- Chabahar’s significance also rose, as China began to develop Gwadar and unveiled ambitious plans for linking its far western province of Xinjiang with the Arabian Sea with a transport corridor running through Pakistan.
- The successful launch of the Chabahar project allows India to circumvent the geographic limitations imposed by Partition and the enduring hostility with Pakistan.
Additional points
- With Farzad-B [gas field], India has gone beyond the buyer-seller relationship to being genuine partners in the field of energy.
- ONGC is in talks to secure development rights for the gas field it had discovered in 2008. It has already invested about $100 million in the project.
- Taking concrete steps for enhancing regional connectivity has become one of the most important and promising dimensions of the growing cooperation between the two countries.
- Chabahar port project has raised hopes for reordering India’s geopolitics to the north-west of the subcontinent.
[4] India, US and an eastward tilt
Issue
- India-US foreign Policy
Context
- Author has raised a question that, Why does India-US military cooperation not include northern Arabian Sea and Persian Gulf — a region of great importance for India’s security?
Background
- The US is pressing India to sign a number of what it calls “foundational agreements” to operationalise India’s military commitments implicit in the Joint Strategic Vision for Asia-Pacific and the Indian Ocean arrived at during President Barack Obama’s visit to New Delhi in January 2015.
US has ignored India in the Arabian sea and the Persian Gulf
- India is dealt with in the US politico-military system by the Pacific Command, headquartered in Hawaii, and whose responsibilities extend up to Diego Garcia.
- The Central Command, headquartered in Florida, “looks after” the Persian Gulf, Central Asia, Afghanistan and Pakistan.
- Technically speaking , the Joint Strategic Vision should cover northern Arabian Sea and the Persian Gulf.
- But US has shown lukewarm approach to an Indian connection in Afghanistan or, for that matter, the Persian Gulf and the Saudi peninsula.
- Whereas it has shown eagerness for Indian participation in action in the South China Sea.
Importance of northern Arabian Sea and the Persian Gulf for India
- Both from the geo-economic and geo-strategic view, this is the most important external region for India’s security.
- We source 70 per cent of our oil from there, and 7 million Indian citizens working there send back $30 billion in remittances.
- As our energy needs increase, this area will only become more important.
- In the past, we have had to carry out large-scale evacuations of our nationals because of war-like situations in this region, most recently from Yemen in 2015. The prognosis for the stability of the whole region is not particularly good.
- Yet, somehow, there are no drills, joint exercises or planning between the US, which is the dominant power, with a fleet headquartered in Bahrain, and India for conflict contingencies.
- India should keep national interest firmly in mind.
Where do we need US?
- Given the rapid rise of China and our own considerable difficulties with Beijing, having the US as a security partner is useful.
- But India does not really need the US for its existential security, certainly not from any direct threat from China.
- India needs the US as a guarantor of a secure and stable world system, but especially as a security provider in the Persian Gulf region, where we have no military capacity.
[5] Fishermen in troubled waters
Issue
- Plight of Indian prisoners in Pakistan and vice versa.
Profile of prisoners
- These are mostly fishermen and not criminals or terrorists.
- They have low economic status, are semi-literate, and invisible to the public in both countries.
- These prisoners are denied sufficient food, health services, communication with family members, and have to face delay in consular access.
- What ties their stories together is pain, pathos, and a sense of being victimised.
- Small errors on their part and hostilities between their nations can cost their lives.
- The sad reality is that neither India nor Pakistan treats these prisoners within the norms laid down by international covenants or with any decency.
The need for timely repatriation
- India and Pakistan had signed the Agreement on Consular Access in 2008, according to which consular access must be provided within 90 days of arrest of either country’s prisoners.
- This period is given to help verify the person’s nationality and enable necessary steps to repatriate the person to his or her country of origin.
India-Pakistan Joint Judicial Committee on Prisoners
- In January 2008, India and Pakistan set up the India-Pakistan Joint Judicial Committee on Prisoners, which consisted of retired judges from both countries.
- The committee worked hard to seek early repatriation of prisoners who have completed their sentences in the other country’s jail and also ensure that they are treated humanely.
- It met every six months and visited prisoners in both countries.
- It discussed issues such as health and food of the prisoners and the need to evolve a mechanism for humanitarian treatment of women, the mentally challenged, juvenile prisoners, and so on.
Hope for the prisoners
- For prisoners lodged in jails in the neighbouring country, meeting judges from the higher judiciary meant a lot.
- It gave them hope and confidence of returning to their homes.
- They brought to the notice of the committee members the hardships they faced in these prisons.
- This intervention helped the prisoners receive better medical treatment.
- It also allowed family members to find them through the committee members.
- Both governments applauded the role played by the committee.
Give them their Hope back
- This committee has not met for the last couple of years.
- India and Pakistan must immediately revive the committee to ensure that the prisoners are ensured their rights and are repatriated at the earliest.
- It is time that these prisoners, who are victims twice — first of poverty and circumstance, and then of a geo-political conflict — are not held hostage.
- The least India and Pakistan can do is evolve a policy of no arrest on straying fishermen.
GS PAPER 3
[1] ‘Make in India’, Choppergate clip forces’ wings
News:
- A combination of the ‘Make in India’ initiative and AgustaWestland chopper scam have effectively stalled the services efforts to procure new helicopters to replace the ageing Cheetah and Chetaks in service.
- While the Indian Air Force (IAF) inducted several medium lift choppers and signed deals for attack and heavy lift variants, along with the Army it is awaiting new utility helicopters to support its troops in far flung areas.
- The Navy is the worst hit with procurements struck in all categories and practically one helicopter being shared by several frontline warships.
The Defence Procurement Procedure (DPP) 2016 which came into force in April promises a level playing field and boost domestic manufacturing but is still without crucial chapters on strategic partnerships and blacklisting norms in case of wrongdoing.
- There are also added dimension of capacity building and disaster relief support in the neighbourhood.
- There are 139 ships in the Navy of which barring about 30-40 ships the rest can carry 1-2 helicopters.
- The two aircraft carriers INS Viraaat and INS Vikramaditya are capable of carrying 12 helicopters each in various roles.
Obsolete Chetaks, Kamovs
- In contrast the Navy has about 40 obsolete Chetaks, 24 Kamov 28/31s which are now being upgraded, 10 Dhruvs and some Sea Kings.
- Except the 10 Dhruv Advanced Light Helicopter all others vintage and are in urgent of replacement.
Helicopters
- Helicopters are crucial in supporting ships or responding to distress calls on the high seas. But currently the numbers are so less that several ships are sharing a helicopter.
- The Parliamentary Standing Committee on Defence in one of the reports tabled in the last session noted that the Navy requires aircraft and helicopters as these are critical for surveillance and Stand-off targeting at sea.
- Further, the Committee has been informed by the representatives of Indian Navy that the force is short of 61 integral helicopters on existing ships.
- Several procurement processes under various categories of helicopters, Naval utility, Multi-Role, Naval Multi-Role (NMRH), are all stuck due to re tendering or for clarity in DPP on blacklisting norms.
[2] Gulf remittances fall 2.2%, offset by slide in oil imports
News:
- Remittances from the Gulf nations to India declined for the first time in six years due to sliding oil prices, according to a Crisil report.
- It fell by 2.2 per cent in 2015-16 but the slide had also resulted in a contraction of oil imports, which offset the drop.
- “Falling oil prices have had a sweeping impact on the oil producing economies of GCC (Gulf Cooperation Council), severely denting their oil revenues and spending by both governments and households,” according to the report.
- “This has had a negative impact on remittances from the region, which declined for the first time in six years, falling 2.2 per cent.”
- More than half of India’s remittance income comes from the GCC.
- Remittances to India from the GCC amounted to $35.9 billion in 2015-16 down from the $36.7 billion seen in the previous year.
- However, the report points out that India’s imports from the GCC have fallen sharply, down 34.5 per cent in financial year 2015-16.
- “This has helped alleviate some stress from lower remittance and export income,” according to Crisil.
Trade deficit
- Trade deficit is an economic measure of a negative balance of trade in which a country’s imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets.
- “In fact, India’s trade deficit with the GCC has fallen a whopping $46 billion, or 77 per cent, in three years, to $14 billion because of rapidly declining imports.”
- “So while the big news is that remittance incomes from GCC have dropped, what is less known is that, even at the current level (around $36 billion), remittances have been stickier and more than funded the goods trade deficit—leaving a surplus of $22 billion,” according to the report.
- The fact that GCC remittances to India contracted only 2.2 per cent despite a 47 per cent slump in oil prices shows that these economies, especially Saudi Arabia and the United Arab Emirates (the two largest remitters in the GCC), are less dependent on oil income.
Vulnerability
- “India’s dependence on remittances and the resultant vulnerability is much lower than some of its Asian peers who receive similar proportions of remittances from GCC countries.”
- Remittances make up 3.7 per cent of India’s GDP, compared with 28 per cent in Nepal, 9.7 per cent in Sri Lanka, and 6.5 per cent in Pakistan.
- “If oil prices remain weak for an extended period, economic activity in GCC will come down sharply as the fiscal stress mounts,” according to the report.
- “This can certainly impact GCC remittances to India.” While oil prices are expected to remain low for some time to come, they have likely bottomed out for now, according to Crisil.
[3] Rajan: Politically tough to speed up structural reforms
RBI governor said:
- It is ‘politically difficult’ to speed up structural reforms in India.
- He stressed on the need for cleansing the banks and checking inflation to ensure faster growth.
- Labour market reforms can boost growth, but the process may draw opposition.
- India is fairly safe from volatile global economy and it has posted 7.5 per cent growth despite two droughts and weak international market.
- While there is a need to ensure macro level stabilisation, the country would have to keep inflation under control and cleanse the banks. This can strengthen macro level stability.
- In addition to that, maintaining reforms would attract both international and domestic investors and spur activities.
- Stating that structural reforms are important for elevating the potential of economy.
- Degree of competition and level of participation of different segments of society should be raised in order to bring more and more people into the workforce.
The former Chief Economist of IMF said in a lecture that new rules need to be evolved for international monetary policy and called for the emerging markets like India to “speak up and raise their voice louder” to have a say in setting the global agenda.
Conclusion:
- India is fairly safe from a volatile global economy and has posted 7.5 % growth rate
[4] Govt. to extend benefits of e-bidding for power
Issue
- Benefits of e-bidding for power
DEEP
- Government has launched DEEP (Discovery of Efficient Electricity Price) e-Bidding & e-Reverse Auction portal for procurement of short term power by DISCOMs.
- The web portal will ensure seamless flow of power from seller to buyer. It will be a very strong weapon to curb illegal transactions and will help in price reduction through competition.
- The short term procurement could be for a period of more than one day up to one year. Currently out of total generation of around 91671.33MUs, above 10% (9215.24MUs) is transacted through short term through bilateral and through power exchanges etc.
- The Government has made it mandatory for all procurer(s) to procure short term power by using this e-Bidding portal.
- Power Procurement from Power Exchange shall be excluded from the scope of these guidelines This would introduce uniformity and transparency in power procurement by the DISCOMs and at the same time promote competition in electricity sector.
- The scope of this portal shall be further expanded soon to cover medium term and long term procurement of power.
- This e-Reverse auction process for competitive procurement is expected to result in overall reduction of cost of procurement of power thereby significantly benefiting the ultimate consumers.
- This will also provide a common e-bidding platform with e-Reverse Auction facility, provide nation-wide power procurement to a wider network including the stakeholders in power sector, to bring uniformity in the process of power procurement.
Benefits of e-bidding
- The process has resulted in substantial savings as the prices discovered through e-bidding are significantly lower than the prices at which power was procured during the similar period in the last year.
[5] A heavy financial sector reform agenda
Issue
- Financial sector reforms.
Difficult financial sector reforms introduced by the Government.
Jan Dhan Yojana
- PMJDY is a National Mission on Financial Inclusion encompassing an integrated approach to bring about comprehensive financial inclusion of all the households in the country.
- The plan envisages universal access to banking facilities with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension facility.
- In addition, the beneficiaries would get RuPay Debit card having inbuilt accident insurance cover of र 1 lakh.
- The plan also envisages channeling all Government benefits (from Centre / State / Local Body) to the beneficiaries accounts and pushing the Direct Benefits Transfer (DBT) scheme of the Union Government.
Banks Board Bureau (BBB)
- With a view to improve the governance of public sector banks, the government had decided to set up an autonomous Bank Board Bureau.
- The bureau will recommend for selection the heads of public sector banks and financial institutions and help banks in developing strategies and capital raising plans and how to go ahead with mergers and acquisitions.
Bankruptcy Code
- The Code creates time-bound processes for insolvency resolution of companies and individuals. These processes will be completed within 180 days. If insolvency cannot be resolved, the assets of the borrowers may be sold to repay creditors.
- The resolution processes will be conducted by licensed insolvency professionals (IPs). These IPs will be members of insolvency professional agencies (IPAs). IPAs will also furnish performance bonds equal to the assets of a company under insolvency resolution.
- Information utilities (IUs) will be established to collect, collate and disseminate financial information to facilitate insolvency resolution.
- The National Company Law Tribunal (NCLT) will adjudicate insolvency resolution for companies. The Debt Recovery Tribunal (DRT) will adjudicate insolvency resolution for individuals.
- The Insolvency and Bankruptcy Board of India will be set up to regulate functioning of IPs, IPAs and IUs.
Consolidation within the banking sector.
- At present there are 27 Public Sector Banks in India. But none of the bank is so large so that it could match the largest Bank of the world. For example India’s largest Bank State Bank of India is not even among top 50 largest bank of the world.
- At present, public sector banks are fighting with each other for market share, but with so many payments and small finance banks coming in, the need is to consolidate and focus on strengthening the balance sheets to create big banks.
- A consolidated Indian banking structure would be a positive development in the long term for the Indian banking system as strong banks rather than a numerically large number of banks would be beneficial.
- Large bank would have sufficient lending capacity to fund large corporate as India Inc expands and extends its global reach.
- Merger has been started with the merger of SBI’s five associates bank and Bharatiya Mahila Bank with State Bank of India (SBI)
Need of the hour.
- It is unclear whether BBB will go further and get involved in devising capital-raising plans for these banks, which is the real need of the hour.
- The Reserve Bank of India has pushed banks into a much-delayed clean-up of their balance sheets.
- As a consequence of this, banks have reported heavy losses and are in need of capital to strengthen their balance sheets.
- India Ratings and Research Pvt. Ltd estimates that banks need a total ofRs.3.7 trillion between fiscal year 2017 and fiscal year 2019 to meet Basel-III norms.
- While the government has committed to a Rs.70,000 crore capital infusion into banks over three years (starting with last fiscal year), that amount is nowhere near enough.
How to get this capital?
- A better strategy, if the government can find an out-of-the-box way to raise capital, would be to first recapitalize these banks and then attempt a reduction in the state’s holding.
- Consolidation, an effort worth pursuing to reduce redundancies in the banking sector, is not the answer to the shortage of capital.
What else we need?
- We need adequate judicial infrastructure to fully reap the benefits of the Bankruptcy Code.
- It will go a long way in improving the working environment for investors and lenders
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