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Front Page / NATIONAL
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INTERATIONAL
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Editorial/Opinion
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Economy
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Science and Technology
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Indian Express
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Live Mint
Click here to Download 9 PM Daily Brief PDF (30th November 2016)
NATIONAL/FRONT PAGE
[1]. Amid disruptions & uproar, Bill to tax deposits passed in Lok Sabha
Context: Illicit deposits in bank accounts after demonetization to cover up black money through circumventing the rules and regulation laid down by government for exchange and deposits of old notes.
What has been done?
The Taxation Laws (2nd Amendment) Bill 2016 was introduced and passed in Lok Sabha to counter the menace of illicit deposits or illegal conversion of black money using different bank accounts.
How will Taxation Law amendment curb conversion of black money?
- It will entail a tax of 30 per cent of the income declared, an additional surcharge of 33 per cent of the tax amount, and a penalty of 10 per cent of the declared income. This adds up to a total liability of about 50 per cent
- If undeclared, then the unexplained amount will face a flat tax of 60 per cent, a surcharge of 25 per cent of the tax amount, and a possible 10 per cent penalty at the discretion of the assessing officer. This takes the total levy on undeclared income or assets to as much as 85 per cent.
- In case of declared income, amendment states that 25 per cent of the declared income is to be deposited in an interest-free deposit scheme with a lock-in of four years.
Benefits of the bill:
1.It will provide a different kind of income declaration scheme for black money hoarders to come out in open,
2. It will help government pool up its resources that can be helpful for implementation of programs like Garib Kalyan Kosh.
[2]. Son has no legal right in parents’ house, can stay at their mercy: HC
Context
Recently Delhi High Court said in its one of verdicts that a son cannot claim a right to live in the self-acquired house of his parents and can do so only at their mercy.
Background
The elderly man told the court that out of love and affection, he and his wife allowed his son and his wife to live with them. But later their own son make their life hell.
Detail Verdict
- Son has no legal right in parents’ house, can stay at their mercy
- Because the parents have allowed him to live in the house when their relations were cordial does not mean they have to bear his burden throughout life, the Delhi High Court has said.
- Where the house is self-acquired, the son whether married or unmarried, has no legal right to live there.
[3]. Industries should use recycled groundwater
Context: It contains the Ministry of Water’s proposal of amending a Bill on ground water management and compelling stake holders to use recycled water.
Back ground: A draft Bill which was made public earlier this year by the Ministry of Water which guaranteed every individual a certain amount of water and tried to protect groundwater from undue exploitation and pollution. This Draft Bill as also made the use of rainwater harvesting in residential projects compulsory. However, this Bill did not compel companies and other stakeholders to use recycled water.
Why this proposal is important?
Through the proposed amendment the ministry seeks to frame a stringent law to deal with the defaulters. A penal has been formed with the representation from all the ministries concerned in order to address the grave ecological threats occurred due to the depletion of ground water.
[4]. Even nil vacancies won’t cut backlog
Context
A Supreme Court appointed study says that pendency of court cases would not end even after filling all vacancies for judges in the High Courts. The report is presented before Chief Justice of India (CJI), T.S. Thakur.
What does the Study say?
- High Courts in India have been unsuccessful in eliminating backlog of cases. Pendency of court cases occur even if the vacancies are filled.
- It questions Chief Justice Thakur’s observation that 70,000 judges are required to clear pendency of cases.
- The report also said that the method of calculating judges’ strength used presently is not scientific.
Observation of the Study
- The committee observed that simply increasing the number of judges would not help reducing the number of backlog of cases.
- The report suggests the use of a new scientific method to assess the number of judges required in courts.
Fund Allocation for Judiciary
The Supreme Court has urged the government to provide details the allocations made under the 14th Finance Commission.
[5]. SC agrees to hear co-op banks’ plea
Context: The Supreme Court will hear petition on the demonetization policy of the government. The petition is filled by district co-operative banks in Kerala.
What are Cooperative banks?
Cooperative banks holds deposits, makes loans and provides other financial services to cooperatives. They have served the poorer layers of the society in India.
What is their stand on demonetization?
- Cooperative banks have urged the Supreme Court to declare the government’s decision on demonetization as unconstitutional.
- There is a fear that the demonetization move would affect the entire cooperative sector in India.
- Liquidity crisis is also an issue faced by the cooperative banks post-demonetization.
- According to the cooperative banks, the government is not vested with the power to demonetize currency notes.
Conclusion The petition filled by cooperative banks in the Supreme court would analyze whether the demonetization move of the government would affect co-operative sector across India.
INTERNATIONAL
[1]. Mini-nukes pose a big threat:
Context
A major nuclear negotiator has asked for the support of India for a new U.N.-backed resolution to ban nuclear weapons.
What do you mean by Mini-nukes?
A mini-nuke or suitcase nuclear is a tactical nuclear weapon that uses a suitcase as its delivery method.
Proliferation of Mini-nukes
The development of mini-nukes may well breach the Nuclear Non-Proliferation Treaty. Proliferation of Mini-nukes increases the risk of its use in conflict zones.
What is the Stand of India on nuclear ban?
India has abstained from voting on nuclear disarmament. India’s stand is that there is no help in joining the Non-Proliferation Treaty (NPT) as a non-nuclear weapon State, even though it supports nuclear disarmament.
Conclusion
The ‘low yield’ mini-nukes are easier to use on the battlefield than the more powerful ones. Thus, their effect would deadlier than conventional weapons. Therefore, there is a need to ban the use of mini-nuclear weapons over a period of time.
EDITORIAL
[1]. Dashed expectations
While demonetization can result in lower interest rates over the long run, there are good reasons to not expect lending rates to fall quickly
Context: It contains the long-term benefits to be delivered after the demonetization of high-value currency notes.
What are the short-term challenges of demonetization?
- Liquidity crunch
- Disruption of small business, trade, transport and agriculture
- Speculations on a lower GDP comparing the previous years.
What are the immediate benefits of demonetization?
- Liquidity in banks
- Lower rates would boost spending
What should be the approach to deal with the excess liquidity?
- The RBI has announced an Incremental Cash Reserve Ratio (CRR) For Banks through which Banks will have to park with the RBI, at zero return, all the deposits they got in the period September 16 to November 11.
- Any decline in interest rates has to be carefully managed. If the difference between the rate on Indian securities and that on dollar securities becomes too wide, foreign investors will want to exit.
- There could be large, destabilizing capital outflows.
- Foreign Portfolio Investment (FPI)s have been selling Indian debt furiously after demonetization.
- The US President Mr. Trump’s ambitious spending plans, tax cuts for investors, the U.S. Federal Reserve’s policy rate cut to be announce in the coming days have already been able to attract large inflows into the US Market.
Impact:
- Bank will be left with lesser deposits
- The prospects of a cut in lending rate may take time.
Why RBI has come up with Incremental Cash Reserve Ratio (CRR) for Banks?
The RBI does not have enough stock of securities to absorb the excess liquidity.
What are the challenges in front of public sector banks (PSB) in using the liquidity for lending?
- Many PSBs are constrained by lack of capital.
- Some PSBs are operating close to the minimum capital requirement of 9 per cent.
- All PSBs are wrestling with high levels of non-performing assets (NPA).
How the India’s economy will be benefited?
- Impact on black money or uncounted income
- Impact on counterfeit currency
- Behavioral changes of both consumer and businesses
- Better tax compliance
- A higher tax to GDP ratio
[2]. A last chance for amnesty
Context
Lok Sabha passed amendments to the Income Tax Law. It is an offer to those who have unaccounted cash. It is a last shot at amnesty.
What are the amendments in the Income Tax Law?
- Amendment stated that those who have unaccounted cash can pay half their cash as tax and deposit a quarter into a new Pradhan Mantri Garib Kalyan Yojana.
- However, If some people who fail to do this voluntarily for bank deposits made since November 8 would end up retaining about 15 per cent of the total amount if they cannot establish a legitimate source for the funds.
Earlier schemes to curb the black money
- Scheme for disclosing foreign assets
- Income disclosure scheme
Pros of the amendments in the Income Tax Law
PMGKY approach helps for welfare of the poor by linking black money benefits directly to the poor.
Strategies used to get benefits of the loopholes of the policies to curb the black money
hiring people to exchange currency
- tapping cash-in-hand entries of firms to launder illicit cash
- Pumping funds in the bank account for the poor
- Purchasing goods in bulk where old notes are still allowed
The Government’s recent amendment in an Income Tax Laws is a big step to curb such ingenuity
Conclusion
Amendment to the Income Tax Law is welcome step by the government because it will not only help to curb the black money but also it would directly help for the welfare of the poor.
[3]. Securing a cashless economy
Context
Due to the recent demonetization there is current cash flow deficit and hence, indirectly people are being forced to make digital payments. However, if we do not take proper precautions and do not have proper security policies then, the highly reactive nature of cyber security would leave us vulnerable to cyber attacks.
Why cashless society is needed to be secure?
E.g. Recently in October 2016, biggest financial data breaches in India is exposed. It victimized major banking companies.
Following this, companies issued new cards and asked customers to limit their ATM usage to those operated by their banks
Digital Transactions
- Recently, Because of demonetization digital payments have hit record transactions: Eg. PayTM, MobiKwik, Oxigen, PayU etc.
- However, with this cashless growth of the economy we should be able to mitigate the cyber attacks.
- We already have certain good measures to mitigate these cyber attacks. PayTM, for instance, is certified under the Payment Card Industry Data Security Standard (PCI DSS) 2.0 certification. Further PayTM and other such companies also use 128-bit encryption technology which would takes more than a hundred trillion years to crack a password.
- However, this does not mean that these precautions won’t make us invulnerable. Apart from login credentials, hackers target other things.
- According to the 2015 data breaches study by IBM and the Ponemon Institute, India is the most targeted country for data breaches.
Collective responsibility
Collective participation is very vital to mitigate cyber attacks and minimize damages. So, Companies, customers, and the government all three should participate for the same.
- All companies that offer platforms or services enabling digital payments should
- Increase awareness among their customers
- Educate them on ways to secure themselves
- Employ behavior analytics and pattern analysis at their fraud prevention departments
- Proactive in looking out for any fake applications
- Monitor discussion boards and social media platforms that discuss hacking and fraud tactics
- The government should check the adequacy of the current policies regulating these platforms and update them regularly
- Customers should educate themselves about the risks involved and take precautions.
- Customers must also minimize vulnerability with two-factor authentication and change their password frequently.
Conclusion
While going towards a cashless economy, we should not ignore the angle of security of the digital payments. We all share a collective responsibility to build a safe and secure digital infrastructure.
ECONOMY
[1]. AIIB driven by projects and not politics: Alexander
Context: The growing concerns of India with projects in China-Pakistan Economic Corridor (CPEC).
Asian Infrastructure Investment Bank (AIIB) -The Asian Infrastructure Investment Bank (AIIB) is an international financial institution proposed by the government of China. The purpose of the multilateral development bank is to provide finance to infrastructure projects in the Asia region.
The article, mostly deals with Vice President AIIB, Danny Alexander refuting India’s concern regarding funding of projects by AIIB.
AIIB is funding One Belt One Road (OBOR) which plans for infrastructure in over 60 countries. CPEC is a flagship project under OBOR.
Why India should not be concerned with AIIB funding?
- India is an influential member of the AIIB as it has the second-largest voting share and percentage of shares
- India, with a higher growth rate than most economies and with huge infrastructure financing requirements, is an important country for AIIB
AIIB funding and funding of projects with environmental concern
- AIIB’s ‘environmental and social framework’ is consistent with the Sustainable Development Goals (an initiative by the United Nations).
- Still, every country has its own transition to a green economy. Transition has different manifestations and AIIB will work with country to move towards that transition.
[2]. Fitch lowers GDP forecast to 6.9% post cash crunch
Context: Speculation that demonetization will downgrade the GDP growth for the country.
Fitch Ratings: Fitch Ratings Inc. is one of the “Big Three credit rating agencies”.
What has Fitch Ratings Predicted?
The economic growth of the country (GDP) slowing down to 6.9% compared to earlier prediction of 7.4%.
Also, downward revision of GDP for financial year 2017 – 18 to 7.7% from 8.4%.
Why the downward revision of economic growth?
The demonetization will lead to economic slowdown as it has created a situation where,
- Economic activity has been hit in fourth quarter (September – December) by the cash crunch. Cash crunch has been due to replacement and withdrawal of bank notes.
- Productivity affected: The productivity can be said to be affected in following ways:
- Lack of cash for transaction affecting purchasing capacity.
- Sowing season affected as farmers find hard to by resources like seeds.
- This has also led to supply chain disruption where there is requirement of purchasing and selling.
Demonetization: A corrective path for the informal sector?
The article argues once the chaos of demonetization is over the informal sector will go back to its ways and store their wealth as there is no incentive for cash transactions.
Hope for higher growth
Factors that provide a hope for a higher growth are:
- implementation of structural reform agenda
- Higher real disposable income supported by Seventh Pay Commission recommendation implementation.
SCIENCE & TECHNOLOGY
[1]. Australia’s Great Barrier Reef sees largest coral die-off ever
Context:
The Great Barrier Reef in Australia has been hit by a major “bleaching” event that has killed moral corals than ever before.
Background:
The Great Barrier Reef is the world’s largest coral reef system located off the coast of Queensland, Australia. It is the world’s biggest single structure made by living organisms i.e. corals.
Bleaching:
When water is too warm, corals expel the algae living in their tissues causing the corals to turn completely white. Bleaching makes the corals vulnerable to diseases, eventually causing them to die.
Algae are vital to the coral, which uses the organic products of photosynthesis to help it grow.
However, coral can recover if the water temperature drops and the algae are able to recolonise them.
Causes:
Global warming which results in rising temperature of sea water. Environmentalists blame coal burning and the Australian government’s boost to the coal industry for this disaster.
A study notes that due to climate change, ocean temperatures have risen by 1.0 degree Celsius off the Queensland coast in March, when corals were first seen turning white.
Impact:
Out of the 2300 km long reef, 2/3 of the 700 km stretch in its northern part have lost its shallow water reefs between March-April this year.
This region saw 2 previous bleaching events in 1998 and 2002 but in a very small scale.
Scientists estimate the northern region, which teems with marine life, will take at least 10-15 years to regain lost corals, but are concerned that a fourth major bleaching event may occur before that, hampering the recovery.
Consequences:
Corals take a long time to recover from severe bleaching. Given the rising temperatures, it is feared that large parts of the Great Barrier Reef will be lost in a few decades.
[2]. ISRO drones help map disasters in north-east
Context:
ISRO has started using Drones (UAVs) for land assessment in remote unaccessible areas of the North-Eastern states through its Shillong-based North-Eastern Space Applications Centre (NE-SAC).
Background:
Drones or unmanned aerial vehicles (UAVs) are known to be technology assisting military needs.
However, the North-Eastern Space Applications Centre (NE-SAC)which was started in the year 2000 to provide Space technology-based communication and technology support to the region, tested a fixed wing aircraft to assess the physically inaccessible areas of north-east for various civil needs.
Uses:
NE-SAC are designing and assembling UAVs that can –
- Measure disease affected paddy fields
- Quick damage assessment of landslides, floods and earthquakes
- Enable timely relief measures
- Reach inaccessible areas
- Cut down on physical ground survey which is time-consuming
Application:
- NE-SAC mapped the area affected by landslides along Meghalaya’s life line, NH40.
- It gave the extent of damage caused to pest-infested paddy fields in Naramari village of Assam.
- Based on the images given by the drones, NE-SAC has created a land use map of Meghalaya’s Nongpoh town and a 3D terrain model.
Hurdles:
- The area studied by a drone will be smaller compared to the area assessed from space by satellites.
- The processing and storage of large amounts of data given by a drone are a problem.
INDIAN EXPRESS
[1]. Bitter Pills
Indian pharma industry must put its own house in order. It must be monitored stringently.
Context: It contains the issues related to the quality of drugs in Indian medicine industry which are to be addressed on priority basis.
What are the concerns?
- Twenty-seven commonly-used medicines in the country have failed quality tests in seven states
- Medicines include antibiotics, painkillers, cough syrups, anti-psychotic and anti-inflammatory drugs.
- False labeling
- Inadequate quantity of ingredients.
- Only three of the medicine brands in question have been recalled from the market.
- A 2014 study by ASSOCHAM estimated that around a fourth of the drugs sold are either substandard or counterfeit which contradicts the government’s (Central Drug Standard Control Organization) claim.
What are the bottlenecks?
- Absence of adequate regulations
- Shortage of drug inspectors:
- Shortage of drug specialists (allopathic drugs, homeopathic drugs, blood banks, even cosmetics)
- Shortage of lab facilities to check purity
- No consolidated list of drug manufacturing outfits
- Very less use of technology
What are the consequences may occur due to the usage of substandard drugs?
- Prolong illness
- Cause antibiotic resistance.
- Even death
Why the issues must address on priority basis?
- Internationally, India’s generic medicine industry has been questioned for compromising on product quality.
- The US Food and Drug Administration, for example, has banned medicines from at least 35 plants in the country. Last year, the EU banned 700 Indian drugs on grounds of quality.
LIVE MINT
[1]. Long road to gender equality in India
Context: Gender budgeting and its role in women empowerment. Also, what is required for more economic freedom of women.
What is Gender Budgeting?
An ongoing process keeping weaker gender in perspective while formulating policy and programme, so as to bring better gender equality in the state. Can be termed as a tool for gender mainstreaming and empowerment.
When did it start in India?
Though preparatory work done by Finance Minister Yashwant Sinha under NDA regime, the first gender budget was presented by P Chidambaram in 2005. Sixteen states out of 29 have also embraced gender budgeting approach.
What constitute Gender Budget?
There are two types of schemes that are included—those in which the entire provision is for women and those where at least 30% of the money is meant for women.
The Impact of Gender Budgeting in India: Is it for real?
A new research paper by economists at the International Monetary Fund (IMF) suggests that it did see better trends in gender equity in states that have adopted Gender Budgeting. The claim is validated by:
- increasing female to male enrolment ratios at different levels of schooling; especially visible at primary level
- gender budgeting has shown a significant impact on spending on infrastructure
An example of Gender Budgeting leading to betterment of Gender:
Some state governments decided to give free bicycles to girls going to school has shown an increase in female enrolment especially in Bihar. It is also widely accepted that the lack of safe toilets for girls in schools is one big reason why so many drop out. A presence of safe toilet give confidence to parents to send their daughters to school.
Is gender budgeting alone enough to solve the major issue of gender inequality in India?
No, then what are the issues that doesn’t seem to be solved by gender budgeting and require other policy attention.
- Peculiar Women labour force participation pattern: India has the lowest level of female participation in the labour force when compared to most other regional economies. The employment of women in India is driven by requirement of the family, when needed they take up employment else they retreat to their household chores as the situation improves.
- Economic Freedom: The correlation between economic freedom of a country to the economic freedom enjoyed by its women has been brought out by Fraser institute. They have developed an index of gender disparity which measure the legal barriers women face when it comes to exercising the same economic freedom available to men in their countries. The parameters of this index are namely,a) Freedom of movement b) Property rights c) Financial Rights, and d) Freedom to work and legal status. In India the conservative social norms tend to outweigh liberal constitution (which guarantees these rights to women), which has constrained women exercising their freedom.
- Public Goods: These goods, though exclusive and available for all, lacks of certain amenities which hurt the economic prospects of women. For instance, lack of safe roads see women not taking up employment opportunities in that part. Also, lack of clean water or lack of enough taps in clustered areas, see women losing lot of time to fetch water.
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