9 PM Daily NEWS Brief

9 PM Daily Current Affairs Brief – 25 January 2017

  • Front Page / NATIONAL [The Hindu]
  1. Centre seeks to withdraw its jallikattu notification:
  2. NHRC notice to Maharashtra over student deaths at govt-run school:
  3. India to ratify amended version of Kyoto Protocol
  4. Improved Pinaka rockets test-fired
  5. 69% of political funds from unknown sources’
  6. EC tells parties to uphold SC order
  • Editorial/OPINION [The Hindu]
  1. The end of a protest
  2. Budgeting for the elections
  3. Navigating a Trumpian world
  4. Flirting with chauvinism
  5. Lift the veil of secrecy
  6. Bridging the Gulf
  • ECONOMY [The Hindu]
  1. Tax guidelines to target shell companies notified
  2. Centre defers move to cut EPF administrative charges
  3. Cabinet clears interest waiver for farm loans
  • Indian Express
  1. Disrespecting heritage
  • Live Mint
  1. Subhas Chandra Bose
  2. Loan for tenants: small reform, big gain

Click to Download 9 PM Daily Current Affairs Brief PDF (25th Jan. 2017)

Front Page / NATIONAL [The Hindu]

[1] Centre seeks to withdraw its jallikattu notification


Centre seeks to withdraw its jallikattu notification

Informs SC that it will move an application in view of T.N. Bill

What has happened?
The Centre has informed the Supreme Court that it will move an application withdrawing the January 7, 2016 central notification allowing Jallikattu in the wake of the Bill passed unanimously by the Tamil Nadu Assembly

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[2] NHRC notice to Maharashtra over student deaths at govt-run school

NHRC notice to Maharashtra over student deaths at govt-run school

National Human Rights Commission (NHRC)’s notice to Maharashtra government

What has happened?
The National Human Rights Commission (NHRC) has issued a notice to the Maharasthra government over the reported deaths of more than 500 girls at State-run schools for tribal students. It had sent a similar notice to the State government in October 2016.

Backdrop: Allegations of sexual abuse
In total, there are about 1,100 State-run and aided residential schools for tribal students where around 1.6 lakh girls and 2.3 lakh boys study. These schools have been plagued by allegations of sexual abuse

SuoMotu cognizance
The NHRC took suomotu cognizance of media reports about the death of more than 500 girls belonging to the Scheduled Tribes (ST) under “suspicious circumstances” at the Ashram schools run by the Maharashtra Government for tribal communities over the last 10 years
• As per reports, some of the girls had been sexually abused by teachers and other staff at these schools.

Violation of right to life
The NHRC observed that the media reports indicated a violation of the Right to Life and Dignity of the students and pointed towards negligence by the authorities

Unethical practice
The NHRC said the reports had revealed that the school authorities kept “menstruation records” of the girls and even “carried out urine tests to check for pregnancies” when any of the girls missed a period or returned from vacations. This “unethical practice” on minors without the consent of parents was questioned

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[3] India to ratify amended version of Kyoto Protocol

India to ratify amended version of Kyoto Protocol


In a token measure to put pressure on developed countries to deliver on climate change commitments, India will soon ratify an amended version of the Kyoto Protocol. The Union Cabinet chaired by Prime Minister Narendra Modi gave its approval to ratify the deal that is set to expire in 2020 and was shunned by several developed countries, most prominently the United States


US Reluctance

Until now, 75 countries have ratified the so-called Doha Amendment of the Kyoto Protocol, which spans from 2012 to 2020, and falls far short of the 144 needed to bring it into force .

  • Emission Reduction commitments: The 1997 Kyoto Protocol came into effect in 2005 and mandated the rich and industrialized countries to reduce emissions by 5.2% of 1990 levels during the 2008-2012 period
  • Lack of will by developed nations: However, the refusal of the U.S., the second largest polluter, to be part of the Protocol and lack of commitments by Canada, Japan and other major developing countries meant that global emissionsactually rose during this period


No mandatory obligations for developing countries

Developing countries like India have no mandatory mitigation obligations or targets under the Kyoto Protocol.

  • Crash in prices of carbon credits: The Kyoto Protocol incentivized several firms in India to retrofit their polluting plants with newer technology in the hope of earning carbon credits. However after an initial spike, carbon credit prices — that could be traded in emission-trading markets like shares — have crashed to rock-bottom prices.


Read more: Kyoto Protocol, CDM & Carbon credits


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[4] Improved Pinaka rockets test-fired

Improved Pinaka rockets test-fired


Pinaka rockets, with a guidance system and an enhanced range, were successfully test-fired from the Integrated Test Range (ITR) at Chandipurin Odisha


The improvement: Pinaka Mark II

The earlier Pinaka version (Mark I), which was an unguided one, has now been transformed into a guided version, with a navigation, guidance and control kit developed by the Research Centre, Imarat (RCI), Hyderabad

  • The RCI comes under the Defence Research and Development Organisation (DRDO)


Longer range

The conversion has helped in enhancing the range and accuracy of Pinaka. If its range was earlier 40 km, it is more than 70 km now



  • Showcases Technological prowess: The success of the guided Pinaka has reinforced the technological strength of the country in converting the unguided systems into weapons of high precision


Developed by

The guided Pinaka was developed jointly by the Armament Research and Development Establishment (ARDE), Pune, the RCI, and the Defence Research and Development Laboratory (DRDL), Hyderabad. The ITR, Chandipur, provided the range and launch support


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[5] 69% of political funds from unknown sources’

‘69% of political funds from unknown sources’


Article talks about the findings of a recent report by Association of Democratic Reforms (ADR)


Findings of the report

  • Total income: The total income of national and regional political parties between 2004-05 and 2014-15 stood at ₹11,367 crore, with the highest of ₹3,982 crore being the Congress’s share
  • Major income from unknown sources: However, 69% of the income of these parties was from unknown sources, according to an analysis done by the Association for Democratic Reforms (ADR)
    • Increase in income from unknown sources:The income of national parties from unknown sources increased by 313% during the decade
      • For the regional parties, it went up by 652%
      • The BSP is the only party which has got 100% of its income through donations from unknown sources. Its total income increased by 2,057%, from ₹5.19 crore during 2004-05 to ₹111.96 crore in 2014-15.
    • Voluntary contributions: The total donations above ₹20,000 per entry, for which the national parties are to declare the sources, was about ₹1405.19 crore
    • IT Returns: The Income-Tax returns of 42 of the 51 regional parties analysed were unavailable for at least one financial year. The total declared income of regional parties during the period stood at ₹2,089 crore, the highest being that of the Samajwadi Party at ₹819 crore, followed by the DMK with ₹203 crore and the AIADMK with ₹165 crore


    Recommendations of ADR

    Based on the report, ADR has recommended that,

    • Details of donors: Full details of all donors be made available for public scrutiny under the RTI
    • Some countries where this is done include Bhutan, Nepal, Germany, France, Italy, Brazil, Bulgaria, the United States and Japan. In none of these countries it is possible for almost 75% of the source of funds to be unknown, but at present it is so in India
    • Any organisation that receives foreign funding should not be allowed to support or campaign for any candidate or political party
    • Scrutiny by a separate body: Scrutiny of the political party’s financial documents should be conducted annually by a body approved by the EC and the Comptroller and Auditor General for greater transparency and accountability


    Read More: You can find the report here

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[6] EC tells parties to uphold SC order

EC tells parties to uphold SC order


Article mentions the latest order by EC to the political parties


What has happened?

The Election Commission (EC) has issued an order to all political parties to strictly adhere to the recent Supreme Court judgment that soliciting of votes on the ground of religion, caste, race, community or language is a “corrupt practice” and calls for disqualification of the candidate.


EC order

By a majority judgment, the apex court has held that any appeal to vote or to refrain from voting for a candidate on the ground of religion, caste, race, community or language of the candidate, election agent, any person making the appeal with the consent of the candidate or on the ground of the religion, caste, etc., of the electors would amount to corrupt practice [under the Representation of the People Act],” said the EC order


The political parties may also suitably brief and inform their lower formations and party cadres and all their candidates about the ruling of the SC and ask them to desist from any activities that would amount to soliciting votes in the name of religion, caste, etc…such appeals may also fall within the ambit of the Model Code of Conduct,” said the order


Read More: SC judgement has been dealt in detail here

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Editorial/OPINION [The Hindu]

[1] The end of a protest

The end of a protest


What began as a people’s protest on Chennai’s Marina beach against the ban on jallikattu quickly descended into chaos and confusion when the protesters stood their ground even after the government came up with a practical, legislative solution to the judiciary-imposed prohibition of the annual bull-taming ritual


Article highlights the sequence of events as it transpired during Jallikattu protest on Marina beach in Chennai.


Give it a go-through once.

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[2] Budgeting for the elections

Budgeting for the elections


The suspense over the timing of the Union Budget for 2017-18 finally ended with the Election Commission and the Supreme Court scotching calls, in the light of upcoming elections for five State Assemblies, to defer the February 1 date proposed by the Centre



  • Advancing of Union budget to Feb 1st: A detailed analysis of the issue has already been done here
  • Simultaneous elections: A detailed overview of the issue has been presented here


What has happened?

In the light of upcoming assembly polls in 5 states, opposition had demanded EC & SC that the presentation of Union Budget should be deferred but both SC & EC have given green light to the government to go forward with the tabling of annual financial statement in the parliament.

  • Caution: The Election Commission’s nod for a February 1 Budget comes with the caveat that it must not announce schemes aimed at poll-bound Uttar Pradesh, Uttarakhand, Manipur, Punjab and Goa, or even expound on any achievements of development programmes in these States.
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[3] Navigating a Trumpian world


Navigating a Trumpian world


The past is no longer a guide to the future. In the coming years, Indian foreign policy will need less red lines and greater agility and pragmatism as the country seeks to find its place in this Age of Uncertainty


Article tries to predict the trajectory of American policy as Donald Trump assumes Presidential office.


Implications to India

Author states that for the last quarter century, relations with the U.S. have followed a predictable trajectory, determined by three key factors

  • The end of the Cold War and the disintegration of the former USSR
  • Opening up of the Indian economy, a process that has continued uninterrupted despite changes of government though the pace of change has varied. This trajectory will continue in the same direction for India sees itself as a beneficiary of globalization
  • Coming of age of the Indian diaspora in the U.S. Gradually, the first generation of Indian professionals who migrated in the 1960s and 1970s has moved towards forming political groupings and has made its presence felt in local and national politics. The second generation is also entering the policy-making arena by joining government and running for public office. With every election, the number of Indians in the administration and in the Congress continues to rise.


Natural Allies

These three factors encouraged Prime Minister Atal Bihari Vajpayee to describe India and the U.S. as “natural allies” when India was still subjected to U.S. sanctions after the nuclear tests of 1998.


Nuclear and defence sectors

Author points out that during the last decade, the major transformation has been in the nuclear and the defence sectors

  • The sales of U.S. defence platforms to India during the past decade have exceeded $15 billion covering howitzers, helicopters, transport aircraft and maritime surveillance planes


Age of uncertainty

Areas of uncertainty

  • Tightening of Visa norms: A retreat from globalization translates into U.S. protectionism and tightening of the H1B visa regime

Closer ties with Russia: Trump’s stated policy of forging closer ties with Russia would have implications for U.S. policy on Afghanistan, which is bound to raise concerns in Delhi, given Russia’s (and Iran’s) newfound acceptance of the Taliban

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[4] Flirting with chauvinism

Flirting with chauvinism


In Tamil Nadu right now, the danger lies in the possibility that political elites within the Dravidian parties may empower the more intolerant strand of Tamil identity politics.


Issue: Jallikattu protests


What is Jallikattu?

It is a traditional bull-taming sport organised in Tamil Nadu during Pongal. Also known as Eruthazhuvuthal or Manju virattu, the sport involves a natively reared stud that is set free inside an arena filled with young participants. The challenge lies in taming the bull with bare hands. Ideally, participants try to grab the bull by its horns or tail and wrestle it into submission. A few also tend to latch on to the bull by clinging to the hump at the back of its neck. The participants are usually young men in their 20s.



The practice dates back to as far as 2000 years ago, according to a few historical accounts. It mainly was active in the districts of Madurai, Tiruchirappalli, Theni, Pudukkottai and Dindigul of Tamil Nadu until its ban in 2011


What do Jallikattu organizers have to say?

Organisers of the event argue that it is closely associated with village life and the bulls are specially reared for this purpose. Breeders often claim they treat the bulls like their own children and spend large sums of money towards their upkeep. Many participants, however, are either fatally gored, trampled or mauled by the bull

  • Jallikattu essential to preserving biodiversity: They claim that as a key event of Mattu Pongal, jallikattu is essential to preserving the indigenous bull species, a way of life in rural, pastoral Tamil Nadu, and is indeed a celebrated feature of Tamil identity itself, described as it is at several points in the cherished Sangam literary tradition.


Animal rights groups and Animal welfare board of India’s stand

  • Bulls subjected to torture: Animal rights organisations such as the Animal Welfare Board of India and the People for the Ethical Treatment of Animals (PETA) that the Bosindicus bulls used in jallikatu are subject to cruelty, are physically and mentally tortured for human pleasure, and the sport is thus directly in contravention of the POCA. This appears to be borne out by a plethora of photographic and video evidence, some of it available on the YouTube channels of the aforementioned animal rights groups.


Author’s contention

The argument of biodiversity preservation doesn’t constitute a full and consistent defence of jallikattu, for that reasoning does not address the charge of animal cruelty


Nature of protest

Author points out that the nature of agitation and mob led violence indicates that the movement is being fomented by political interests.



Author concludes by stating that local parties should assume leadership of the movement as a failure to do so shall leave a huge space for separatist Tamil identity politics to take ground

Read More:

1). Why SC banned Jallikattu? Read about it here

2). Demands by protestors. Read it here

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[5] Lift the veil of secrecy

Lift the veil of secrecy


The primary aim of the demonetisation exercise was to tap black money


A fairly simple article on demonetisation. Nothing new has been offered by the author which has not been already covered.


Give it a light read

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[6] Bridging the Gulf

Bridging the Gulf


India-UAE ties are an exemplar for the changing Indian approach towards the wider region



India’s ties with the United Arab Emirates (UAE) are set to get a major boost with the crown prince of Abu Dhabi, Sheikh Mohammed bin Zayed al Nahyan, visiting New Delhi as the chief guest at the Republic Day parade


Ties with UAE

Author points out that present government has invested significant diplomatic capital in strengthening ties with UAE.

  • A new Beginning: The vigor in India-UAE ties today owes its origins to Prime Minister Narendra Modi’s visit to the UAE in 2015, the first by an Indian Prime Minister to the Emirates in 34 years
    • Joint Statement: In the joint statement, both the countries denounced and opposed terrorism in all forms and manifestations

With the conclusion of a Comprehensive Strategic Partnership agreement between India and the UAE this week, this relationship is poised for a dramatic leap


Trade & Investment

  • Current trade: Currently, India and the UAE have a $350 billion bilateral trade, which they plan to increase three times in the near future. After China and the U.S., the UAE is India’s largest trading partner
  • Investments in India: The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, is seeking to identify investment opportunities in the Indian infrastructure sector
  • Fast tracking UAE-India Infrastructure Investment Fund: The $75 billion UAE-India Infrastructure Investment Fund, to support investment in India’s infrastructure sector over a decade, has not seen much progress and the two sides are hoping to put it on a fast track
  • Trading with GCC: The Gulf Cooperation Council (GCC) is India’s second-largest trading partner, the largest single origin of imports into the country, and the second largest destination for exports from India
  • The GCC countries supply 45 per cent of India’s petroleum, with the UAE being the sixth largest source of imports of crude oil. The region remains a major destination for Indian investment
  • India hopes that major GCC states such as Saudi Arabia, the UAE, and Oman will participate in its planned infrastructure expansion
  • Interest in India’s human resources: Meanwhile, the Gulf states are interested in human resources from India in order to develop sectors as varied as information technology, construction, transportation and services


Link between India’s trade & Energy security and security of Straits of Hormuz & Bab-el-Mandeb

India’s trade and energy security is inextricably linked to the security of the Straits of Hormuz and Bab-el-Mandeb

  • Naval exercises with Gulf States: The Indian Navy regularly visits Gulf ports, and trains with states in the region. It has undertaken a series of naval exercises with a number of Gulf States in recent years, thereby helping in expanding India’s reach in the region. Indian warships have also been deployed in the Gulf of Aden to carry out anti-piracy patrols


Expatriate labor

Indians are the largest expatriate community in the GCC states, numbering around 7 million

  • Expatriate strength: Indian expatriate labour constitutes around 30 per cent of the total population of the UAE, and Indians have a significant presence in Bahrain, Oman, and Qatar
  • Remittances:India receives around 52 per cent of its remittances from its Gulf expatriates, which have contributed significantly to India’s economic resurgence, even as there have been growing concerns about the living and working conditions in the host countries
    • ¨ Addressing the concerns:India is pursuing manpower and labour agreements with Gulf states to help Indian workers in the region. It has also launched the eMigrate system for recruitment of Indian workers across the 17 Emigration Check Required countries


Read More: eMigrate system

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ECONOMY [The Hindu]

[1] Tax guidelines to target shell companies notified


Tax guidelines to target shell companies notified


The Finance Ministry made public the final guidelines on the Place of Effective Management (POEM), underlining the government’s intent to target shell companies created to keep income out of India even when real management is taking place within the country


What is a shell company?

According to, a shell company is:

“An incorporated company with no significant assets or operations, often formed to obtain financing before beginning actual business, or as a front tax evasion.”


Operation of a shell company

Multinational businesses have been known to set up shell companies in countries with super-low corporate tax rates.

  • They do their international operations through their shell, thus not having to report to the country (where their operations are taking place) the sums involved, and considerably reduce their tax bill


Read More: Please visit this page to know more about shell companies


What is POEM?

The Place of Effective Management is defined in the Income Tax Act to mean

“a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance, made”



According to the guidelines,

  • A company will be deemed to be engaged in active business outside India if the passive income is not more than 50% of its total income and less than 50% of its total assets are situated in India, less than 50% of the total number of employees are situated in India or are resident in India, and the payroll expenses on such employees is less than 50% of the total payroll expenditure


What is Passive income?

Under the guidelines, ‘Passive income’ is,

  • income from the transactions where both the purchase and sale of goods is from/to its associated enterprises and income by way of royalty, dividend, capital gains, interest or rental income
  • Exception: This definition, however, will not apply in the case of a banking company or public financial institution
    • Targeting only shell companies: This clarifies that the intent is not to target Indian multinationals which are engaged in business activity outside India, but to target shell companies and companies which are created for retaining income outside India although real control and management of affairs is located in India


What is a Head office?

As per the guidelines,

  • Head Office’ of a company would be the place where the company’s senior management and their direct support staff are located or, if they are located at more than one location, the place where they are primarily or predominantly located
  • A company’s head office is not necessarily the same as the place where the majority of its employees work or where its board typically meets
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[2] Centre defers move to cut EPF administrative charges


Centre defers move to cut EPF administrative charges


The Employees’ Provident Fund Organisation’s (EPFO) long-pending proposal to reduce administrative charges for employers may face further delays till March due to the model code of conduct coming into force in various states going for polls beginning next month


The Proposal

The EPFO had sent a formal proposal to the Labour Ministry on January 4 to,

  • Decrease administrative charges for companies from 0.85% to 0.65% of worker’s salary for its EPF scheme
    • Rationale: Considering the need to promote ‘ease of doing business’ in India and to make Indian business more competitive, and in response to the financial efficiency gained by EPFO, the Central Board decided to recommend further reduction of administrative charges to 0.65%
    • Reduction in collection: According to EPFO’s estimates, decreasing administrative charges for EPF scheme by 0.20 per cent will lead to a reduction in collection by ₹1,000 crore
  • Remove administrative charges: It also proposed doing away with administrative charges 0.01 per cent of worker’s salary levied to implement the Employees’ Deposit Linked Insurance (EDLI) scheme, 1976


Present situation

At present, employers contribute 9.69% as their own share and 12 per cent as employee’s share towards EPFO schemes. All companies with at least 20 workers are covered under the EPFO

  • Collection of administrative charge: EPFO collects administrative charges from employers to meet its administrative and inspection costs, including staff pension and gratuity. In 2015-16, the EPFO had collected Rs 3,758 crore from administrative charges towards both EPF and EDLI schemes
  • Meeting costs: The EPFO collects administrative charges from employers to meet its administrative and inspection costs, including staff pension and gratuity
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[3] Cabinet clears interest waiver for farm loans


Cabinet clears interest waiver for farm loans


The Cabinet has given its ex-post facto approval for an interest waiver for the two months of November and December, 2016 for farmers accessing short-term crop loans from cooperative banks


What has happened?

The Cabinet has given its ex-post facto (with retrospective effect) approval for an interest waiver for the two months of November and December, 2016 for farmers accessing short-term crop loans from cooperative banks.

  • It also approved an interest subvention to NABARD on the additional refinance by NABARD to cooperative banks
  • Benefit to farmers: Farmers in the whole of India availing short term crop loans from cooperative banks will be benefited. The decision intends to ensure availability of resources with cooperative banks helps farmers in easily accessing crop loans from cooperative banks to overcome the difficulties in view of the reduction in availability of cash for carrying out Rabi operations”
  • The Cabinet also approved NABARD to make short-term borrowings
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Indian Express

[1] Disrespecting heritage


Disrespecting heritage


The ministry of culture’s proposal to allow construction near historical monuments betrays a lack of understanding of their value.


Issue: Proposed amendment to the Ancient Monuments and Archaeological Sites and Remains (Amendments and Validation) Act, 2010 (AMASR Act, 2010)


Amending the AMASR

A recent note of the culture ministry to the cabinet has a proposal to amend the law that accords protection to heritage sites in the country


What has been proposed?

The note suggests,       

  • Amendments to the Ancient Monuments and Archaeological Sites and Remains (Amendments and Validation) Act, 2010 (AMASR Act, 2010). The note concludes by referring to a 2016 bill to amend the act
  • Supersession of ASI: Giving legal powers to the Central government with respect to new construction in protected sites by superceding existing bodies like the Archaeological Survey of India (ASI) and National Monuments’ Authority (NMA) respectively.


What, if the bill is cleared by the parliament?

If the 2016 bill is cleared by Parliament, construction could happen in the immediate vicinity of protected properties of national importance


Prohibited areas

Such “prohibited areas”, are within 100m of the delineated boundaries of monuments. Historic structures and archaeological remains are most susceptible to heavy vibrations, chemical effects or mechanical stresses in this zone


Colonial roots

The AMASR Act, 2010 and its 1958 predecessor can be traced to a colonial legislation, namely the Ancient Monuments Preservation Act, 1904, which deemed it “expedient to provide for the preservation of Ancient Monuments”.

  • The blanket rule on the “prohibited areas” should, and has, been debated at various professional and academic for a
  • Certainly a law originating from a colonial outlook needs review, given our current depth of knowledge on heritage. However, doing away with protection without survey and documentation, can be catastrophic


Proposals in the note

Author states that two of the three projects justified in the proposal have contradictions.

  • Construction of elevated road nearby Akbar’s tomb: The first relates to the construction of an elevated road next to Akbar’s tomb at Sikandra to “reduce road accidents” and “for organised traffic movement”
    • High speed traffic: While an elevated road would visually obliterate the historic structure, it would also encourage high-speed traffic,one of the leading causes of road accidents
    • Traffic movement and automobile fumes would scar an elaborately painted gateway
    • Vibrations: Cranes and piles operating in the immediate vicinity of the 500-year old Mughal structure will cause excessive vibrations
  • Rani-Ki-Vav: The other project, Rani-Ki-Vav in Patan, Gujarat is slated to be the site for a railway track
    • Whether a railway track is as irreplaceable or sustainable, as an 11th century, seven-storied, subterranean step-well demonstrating the best in water management in the past, is surely not a very difficult question to answer
    • World heritage site: Incidentally, Rani-Ki-Vav is one of the recent most inclusions from India in UNESCO’s World Heritage List


Significance of Built heritage

  • Public good: Built heritage is a significant public good and is recognised as such in the Constitution’s Seventh Schedule. It nurtures our collective memories of places and is a significant constituent in the identity of cities
  • Repository of knowledge:It has invaluable potential to contribute to our knowledge of not just history and the arts, but also science and technology. Several buildings and sites throughout the country, even entire areas or parts of historic cities, are examples of sustainable development. They demonstrate complex connections of man with nature.Knowledge gained from such resources can provide constructive ways to address development challenges
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Live Mint

[1] Subhas Chandra Bose


Subhas Chandra Bose

The leading nationalist: His nationalist credentials largely explain Bose’s continued popularity


In the light of Netaji’s 120th birth anniversary, article throws light on his contributions to the nationalist thought


Give it a go-through

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[2] Loan for tenants: small reform, big gain

Loan for tenants: small reform, big gain


The experience of states like Andhra Pradesh is encouraging and some other states are already experimenting with empowering tenant farmers.


Dual challenge

Author states that more than half of India’s labour force is still connected directly or indirectly to agriculture for its livelihood. This sector gets one-seventh of the national income. Its income share is shrinking rapidly but its employment share is not. Hence the dual challenge is to

  • Increase income share of Agriculture sector
  • Increase the rate of employment absorption into industry and services


Unique development model

Author points out that India will perhaps have to forge a new and unique development model.

  • Increasing the income as well: This would mean that unlike in the West or even in China, our aim should not be solely to decrease the number of households that depend on agriculture, but in fact increase the incomes accruing to them


Credit flow to agriculture

  • The 70th round of the National Sample Survey on the “Situation of Agricultural Households” shows that 48% of the households do not get any credit
  • The remaining 52% borrow from banks, cooperatives, landlords, shopkeepers, relatives and friends


Author presents us with a questions that,

Despite decades of effort at extending credit to agriculture, ambitious targets, schemes of financial inclusion, systems of banking correspondents and facilitators, kisan credit cards, why is it that almost half the households have no recourse to credit?


Peculiar nature of economic activity in agriculture

The economic activity in agriculture is peculiar, because

  • Upfront investment: It requires upfront investment (in seeds, irrigation, fertilizer, pesticides) and the income is received only after three-four months.
  • Price crash in case of a bumper crop: If there is a bumper crop, then prices crash, which has an adverse impact on net income to the farming household. There are other attendant risks such as weather, pests and monsoon failure.


Absentee landlordism or tenancy farming

Author states that one particular aspect of agriculture needs attention,

  • Tenancy farming: Leasing of farmland is quite common in India.
    • No legal status: In most parts of India, the tenant farmer has no legal status, much like the slum-dweller in cities. Hence reliable statistics are difficult to get. In Andhra Pradesh, almost 30% of farming is done by tenants
      • Most are landless, hence no banking access: Data collected a few years ago showed that of 1.7 million tenants, more than one-third are landless and almost half of them have landholdings of their own of less than 0.5 hectares. Such farmers have no access to bank loans, crop insurance, loan waivers or subsidies
        • In fact, in 2013, of the Rs23,000 crore given away as loan waivers, only 0.1% went to tenant farmers, although their share in farmer suicides is almost 80%


Access to credit: Empowering tenants

How then do these farmers access credit?There is a small reform that can a go a long way in enabling credit flow to tenants. Such an act was, in fact, passed by Andhra Pradesh in 2011. It is called the Land Licensed Cultivators Act, which empowers tenants with annual loan eligibility cards

  • Avail the loan: The name of the tenant is penciled on the land record (as a tenant), on the basis of which he can avail of a bank or cooperative loan
  • No property rights:This reform doesn’t give any property rights on the leased land to the tenant, but just gives him a sound “borrower status”



Author concludes by stating that the experience of states like Andhra Pradesh is encouraging and some other states are already experimenting with this tenancy empowerment. Hence while we wait for tenancy farming to regain legal status, this reform of enabling institutional credit flow to tenants should be enabled by the Central government and be adopted nationwide.

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