A brief of newspaper articles for the day bearing
relevance to Civil Services preparation
National
[1]. Foreign funds plan share in India’s infrastructure corpus/Modi Sarkar’s Rs 40kcr Infra Fund Hits Road
The Hindu | The Economic Times
Context:-
Sovereign and pension funds from Russia, Singapore, the U.K. and the UAE are among those to express interest in the Rs. 40,000-crore National Investment and Infrastructure Fund.
The NIIF is meant to fund development of infrastructure projects, including reviving stalled ones. The government will invest Rs 20,000 crore into the NIIF from the Budget, with another Rs 20,000 crore expected to come from private investors.
The government’s share in the corpus will not exceed 49 per cent.
The Governing Council of the Fund has decided to complete by January-end the selection process of the Chief Executive of the investment management company responsible for taking investment decisions of its corpus
What is National Investment and Infrastructure Fund?
National Investment and Infrastructure Fund (NIIF) is a fund created by the Government of India for enhancing infrastructure financing in the country.
This is different from the National Investment Fund.
NIIF, proposed to be set up as a Trust, would raise debt to invest in the equity of infrastructure finance companies such as Indian Rail Finance Corporation (IRFC) and National Housing Bank (NHB).
NIIF is a banker of the banker of the banker.
The objective of NIIF would be to maximize economic impact mainly through infrastructure development in commercially viable projects, both greenfield and brownfield, including stalled projects.
For more: – http://www.arthapedia.in/index.php?title=National_Investment_and_Infrastructure_Fund_(NIIF)
[2]. Govt Changes Rules to Protect Civil Servants
Context:-
IAS officers working with the Centre can now be suspended only with the approval of the minister in charge of the Department of Personnel and Training DoPT)
This is aimed at checking any arbitrary suspension at the Centre’s level as well.
Reason:-
The new rules have kicked in after almost the backdrop of suspensions of IAS officers including Ashok Khemka and Durga Shakti Nagpal.
Earlier:-
Central Review Commitee of bureaucrats would step into the picture only if the suspension was to be continued beyond a year.
Now:-
IAS officers working with the Centre can now be suspended only on the recommendation of the Central Review Committee and with the approval of the DoPT minister in charge.
States will now have to inform the Centre within 48 hours of suspending any all-India services officer (IAS, PS and IFS) working for them.
Copy of the suspension order and reasons for the suspension have to be communicated.
The state cannot keep an officer suspended beyond 30 days if he Centre does not confirm the suspension or if disciplinary proceedings are not initiated. The earlier period was 45 days
Economic Digest
[1]. 2015: Reforms, a retreat and resurgence for banks
Context:-
The article discusses the slew of reforms that were introduced in the banking sector in the year 2015.
Gyan sangam:-
The bankers’ retreat organised in January, where the broad contours of banking sector reforms were chalked out.
Indradanush:-
It aimed to improve governance in public sector banks by
- Separating the post of Chairman and Managing Directors,
- Proposed the formation of Bank Board Bureau for top level appointments
- Announced Rs.70,000 crore capital infusion in public sector bank over four years.
- Opened up the position of public sector bank CEOs to private sector candidates – a first in the history of Indian banking.
New banks, new type of banks:-
Two new full service banks, IDFC Bank and Bandhan Bank started operation during the second half of the year.
21 new niche bank licences were issued in 2015
Payment Banks:-
Eleven new banks were licensed to start operations as payments banks where the main objective is to provide remittance services, apart from distribution of simple financial products like insurance and mutual funds.
This was also the first time business houses are allowed in banking although; the scope of activities was restricted.
Small Banks:-
Ten new small finance bank licences were also granted, of which eight of them are micro-finance institutions.
Small finance banks are mandated to extend small loans mainly to customers who are not covered by formal banking system.
Bad loans:-
News on banking was largely bad debts and institutional reforms to deal with bad debt and wilful defaulters. As new measures to tackle this problem were rolled out in right earnest, success in implementation has been limited.
Strategic debt restructuring
The banking regulator allowed banks to acquire 51 per cent or more stake in companies defaulting even after restructuring of their loans.
The move is expected to improve repayment culture of the borrowers.
The government is also keen for a bankruptcy code as it could have a positive impact on recoverability from weak assets.
New Monetary policy framework
A historical agreement between Central bank and the government to tackle price rise which.
According to the framework, RBI has the explicit mandate to have an inflation target, for which it is accountable.
The central bank will aim to bring retail inflation below 6 percent by January 2016 — and to four percent by fiscal 2016-17 and thereafter, with a band of +/- 2 per cent.
Sharp interest rate cuts
During the year, repo rate was reduced by 125 bps to 6.75 per cent – a four and half year low level.
MCLR:-
The banks were reluctant to cut rates as evident from the fact that base rates were reduced by only about 70 bps during the year.
RBI issued guidelines for the computation of the benchmark lending rate using the marginal cost of funds method.
Banks will now follow the new Marginal Cost of Funds based Lending Rate (MCLR).
This improves the efficiency of monetary policy transmission for new borrowings, and will impact new borrowers immediately.
[2]. Government pitches for global north-south corridor
Context:-
The commerce ministry has pitched for popularisation of International North-South Transport Corridor (INSTC) as an alternative route through Tehran that significantly reduces costs and travel time.
This will boost trade with former Soviet Union countries, Iran and Russia.
Why?
To help Indian exporters reduce their dependence on traditional markets in the West where there is currently not much demand.
To gain more access in growing markets in Asia, Africa and Latin America which are unexplored.
INSTC:-
The INSTC is a multi-modal route (ship, road and rail) from Mumbai to the Iranian port of Bander Abbas then via Tehran to Baku (Azerbaijan) and further to Astrakhan, Moscow and St Petersburg in Russia. Alternatively, there is also a road route from Iran to former Soviet Union countries such as Azerbaijan.
This concept was formalised by India, Iran and Russia (in 2000)
Reasons for delay:-
Delay is due to outstanding issues concerning logistics, banking connections, insurance cover as well as harmonisation of documentation and procedures for cargo.
Poor rail connectivity and the shortage of wagons in Iran as well as the lack of incentives including discounts for using the INSTC are also some problems.
Initiatives:-
The ministry also wanted banks (to help in trade finance) and insurance companies (to provide trade credit insurance, cargo insurance and risk management) to play an active role in boosting traffic through INSTC.
Meanwhile, Export Import Bank of India has expressed interest in financing projects in the infrastructure sector and joint ventures involving Indian companies to better the prospects of INSTC.
[3]. ‘Banks should fund first generation entrepreneurs’
Context:-
Prime minister has said that banks should finance more greenfield projects by first generation entrepreneurs instead of extending loans for expansion projects of established firms.
Problems of dalit youth:-
Industrialisation is a tool for uplifting the backward classes from a vicious circle of Poverty and the government is committed to facilitating skills and finance for Dalit youth to become job creators instead of job seekers.
MUDRA achievements:-
Nearly 80 lakh people have been granted loans worth Rs.50,000 crore without any collateral under the Mudra scheme in its first eight months. Mudra is an acronym for Micro Units Development and Refinance Agency.
Venture capital funds:-
The government has now set up a venture capital fund for first generation entrepreneurs, which is fundamentally for scheduled castes and scheduled tribes.
Criticism about JDY:-
Some experts feel that maintaining zero balance accounts imposes a cost on the banking system and the economy. But the government feels that those at the bottom of the pyramid should be strengthened so that the pyramid itself becomes stronger.
Opinion & Editorials
[1]. Fear of Facebook colonising digital space looms over IT capital/ Nothing free or basic about it/ Crony connectivity, and Internet for us
The Hindu – Business | The Hindu Editorial 1 | The Hindu Editorial 2
What is net neutrality?
Tim Wu, the father of net neutrality, has written that keeping the two sides of the Internet free of gatekeepers is what has given a huge incentive for generating innovation and creating content.
This is what has made the Internet so different from other mass communications platforms such as radio and television.
It has unleashed the creativity of the masses; and it is this creativity we see in the hundreds of millions of active websites.
What is free basics?
Fecebook wants to provide a subset of the Internet free of charge to consumers, with mobile telecom operators bearing the costs of the traffic.
Free Basics allows customers to access selected social networks, and services like healthcare, education and job listings from their phones without a data plan.
Since Google hasn’t signed up as a partner with Facebook, users cannot access it. This also includes any of the billions of websites that haven’t partnered with Facebook.
This practice of zero rating (toll-free data or sponsored data) is not compatible with net neutrality.
Arguments against Free Basics:-
Facebook is not charity:-
Facebook’s central role puts it in a privileged position to monitor its users’ traffic, and allows it to act as gatekeeper (or, depending on the situation, censor).
There is no technical restriction that prevents the company from monitoring and recording the traffic of Free Basics users.
This means there is no guarantee that the good faith promise Facebook has made today to protect Free Basics users’ privacy will be permanent.
“more Internet users in the world means more users for Facebook, which they monetise in their usual ways”.
Being the gatekeeper of Internet content for hundreds of millions of people will give Facebook a lot more market power.
Digital Colonisation:-
Facebook’s controversial Internet service is feared as ‘digital colonisation by the West.’
The British Empire was based on the control of the seas. Today, whoever controls the data oceans controls the global economy.
“In sociology, the locus of decision-making ability is called ‘agency.
Free Basics shifts ‘agency’ (who has decision making rights) from the end user to Facebook. But India’s constitution guarantees ‘agency’ to each citizen, which is why they have fundamental rights and universal franchise. “Free Basics wants to take it away
This is ‘Digital Colonialism, the exploitation of resources while denying rights”.
It believes that a ‘benevolent dictatorship’ is better than democracy for progress.
Haves versus have nots lists:-
The scheme risks breaking the network into many smaller ones and skewing the playing field in favour of apps and services that enjoy privileged pricing.
India has just woken up to the advantages of mobile Internet and splitting Internet will create a ‘have versus have not’s list’ in the country
Near Death Experience for Start ups:-
At the start of startup India revolution, we cannot have some Indian developers and entrepreneurs blocked by large corporates to access consumer
If telecom operators are allowed to split Internet, it will be a near death experience for Indian startup eco system.
Biased Unequal Internet:-
Free Basics developers can’t innovate on technology without the permission of Facebook, experts said.
Telecom operators and Facebook also need to approve services.
Entrepreneurs say there is a need for unbiased, equal Internet that treats all developers same.
No developer should need to take a license or apply to someone to bring new idea to Indians or anyone in the world
Undermines Digital India:-
Any segregation of the Internet into fast and slow, free or paid, app or web will undermine the government’s digital India program.
Mass scale privatisation of services:-
The Internet monopolies’ agenda is hidden and mass-scale privatisation of public services.
People will have Internet connectivity instead of education, and Uber will provide private taxis, instead of public transport.
Data is Currency:-
Personal data is the currency of the Internet economy. Data as commodity is the oil of the 21st century.
Facebook and Google’s revenue model is based on monetising personal data and selling it to advertisers. Facebook generates estimated revenue of nearly $1 billion from its Indian subscribers.
Is free basics the only solution for bridging digital divide?
Allow market to take its course:-
Mobile penetration has not happened due to “no-frills services for poor and developing country users” but by ensuring that market competition is allowed to take its course.
There is no reason why mobile Internet services will not become as popular as mobile phone services as long as there is adequate competition.
Unless government policies get in the way, the same forces will reduce prices further to make the service affordable to ever more people, with lower disposable incomes.
Create Level playing field
Government should be answering questions given below.
Should it be licensing more telecom operators? Has the government made enough spectrum available so that mobile operators can lower prices and ensure adequate service quality? Are there bottlenecks in the hands of monopolists that raise the costs of service?
This calls for the regulator to have a hawkish approach towards anti-competitive behaviour by existing market players.
Regulate tariffs:-
High cost of data services in the country is the main barrier to Internet penetration.
Till now, TRAI has not regulated data tariffs. It is time it addresses the high price of data in the country and not let such prices lead to a completely truncated Internet for the poor.
Improve economy:-
The best method to achieve this outcome is to raise people’s incomes. If the Indian economy grows at 8 per cent over several years, the income effect will make Internet connections more affordable even if prices do not fall.
Conclusion:-
The best scheme to bring the Internet to all involves
- Boosting competition to bring down prices
- Pursuing economic growth to raise people’s incomes.
This is the formula that has worked elsewhere in the world and will continue to work in India too. Schemes like Free Basics by Facebook and Airtel Zero are unnecessary from the perspective of connecting the unconnected.
Other violations be Face book :-
In its campaign, Facebook is also using the generic phrase “free, basic Internet” interchangeably with “Free Basics”. This is in blatant violation of Indian rules on advertising, which forbid generic words being used for brands and products.
In spite of having 125 million Indian subscribers, It refuses to be sued in India, claiming to be an American company and therefore outside the purview of Indian law. Nor does it pay any tax in India.
Add-ons:-
People who have signed up to support the online campaign of ‘Free Basics’ can reverse their decision by visiting their website saynotofreebasics.fsmi.in
[2]. Impersonal government is good
Context:-
The article highlights the need for active transparency in public institutions .
Problems of RTI Activists:-
India’s RTI Act completed its first decade of implementation this year and is arguably one of the world’s most widely used freedom of information acts.
Exposing corruption can make you enemies, and accounts abound of RTI users and activists being threatened, harassed, even assaulted or killed as a result of their requests
Active Transparency:-
As the RTI starts its second decade, we need India’s government to ensure that information provision has a more impersonal face.
This requires the government to invest in a data infrastructure that will allow it to go from passive to active transparency.
What is active transparency?
Many countries have opened their administrative datasets to the public, with several goals in mind:
To make government more transparent and accountable,
Track progress toward performance targets,
Help policymakers and administrators do their jobs effectively.
Here the citizens can directly access data without filing requests.
Requirements for active transparency:-
- Invest in technical inputs:-
Technicians should be hired to complement the skills of the government staff
It can also improve its digital services, especially website speed, by increasing the use of open-source technologies, which avoid costly licensing fees that can create procurement bottlenecks, and by taking advantage of efficient cloud web-hosting services.
- Encourage collaboration between policymakers, researchers and technicians
- Employ “agile” methodologies:-
“Agile” methodology keeps fast-moving projects from going astray and creating waste
It uses clearly defined set of user needs; the team creates prototypes and proceeds through short rounds of cooperative iteration.
This method can benefit a wide range of government initiatives by keeping all sides informed and involved, and the project on track.
Long term benefits:-
Investments in data infrastructure are like investments in physical infrastructure such as roads and power lines — up-front costs may well be outweighed by long-run benefits.
Conclusion:-
The more real-time data we have, the earlier we can correct ourselves and set a path toward goals that will improve the lives of individuals.
[3]. The LPG Model
The government’s decision to bar taxpayers earning more than Rs 10 lakh per annum from availing of subsidy on LPG cylinder sales is welcome for signalling a clear intent of targeting subsidies to the deserving.
The trajectory of LPG subsidy rationalisation sets a template that other sectors can follow.
The move aims to make the subsidy targeted, as opposed to being near-universal.
Already the direct benefit transfer system has reduced the scope for diversion of subsidies.
The true test for the government would be whether it is able to extend the LPG model of targeting and DBTs in other politically sensitive and fiscally significant sectors such as fertiliser and food.
by: ForumIAS Editorial Team
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