9 PM Daily Current Affairs Brief – April 4 2017

[1]. The best GST there can be

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Live Mint

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[1]. Why RBI should turn ‘accommodative’

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Note: Recommended Booklist for UPSC Prelims

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Front Page / NATIONAL

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1. IISc tops national rankings, IIT-Madras comes second

Context

Overall rankings of institutions are released under National Institutional Ranking Framework (NIRF), by the Centre.

What is National Institutional Ranking Framework (NIRF)?

This framework outlines a methodology to rank institutions across the country. The methodology draws from the overall recommendations broad understanding arrived at by a Core Committee set up by MHRD, to identify the broad parameters for ranking various universities and institutions. Government would give more grants to the institutions ranked higher.

Parameters used in Ranking

• Teaching-learning resources (student strength, faculty-student ratio, faculty qualifications and experience, financial resources and utilization).
• Research and professional practice (publications, quality of publications, patents, projects).
• Graduation outcomes (placement and higher studies, salary, PhD degrees awarded).
• Outreach and inclusivity (diversity in student pool).
• Perception (among peers, employers and the public).

Result of the Rankings

• Indian Institute of Science, Bangalore is rated as the top higher educational institution of India across disciplines.
• The seven top IITs, Jawaharlal Nehru University (JNU) and Banaras Hindu University (BHU) figure in the top 10 among all institutions that participated in the National Institutional Ranking Framework (NIRF), 2017.
• IIT-Madras ranks second, while JNU ranks sixth in the all-India list.

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Editorial/OPINION

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1.  Finally, action on bad loans?

Context

Empowering managements and strengthening governance at public banks can resolve the bad loan problem.

What are bad loans?

A loan where repayments are not being made as originally agreed between the borrower and the lender, and which may never be repaid are bad loans or non-performing assets (NPAs).

Bad loans: Statistics

• Bad loans were 9% of total loans of all Indian banks a year ago.
• At public sector banks (PSBs), bad loans were 12% of all advances.
• Another 3% of loans in the aggregate (and 4% at PSBs) have been restructured.
• Total stressed assets — NPAs, restructured loans and unrecognized bad loans would amount to 16% of all loans and nearly 20% of loans at PSBs.

Why has bad loan problem remained unresolved for so long?

• Failure to resolve bad loan problem over the past several years has increased the problem.
• Policy errors.

Solution to Bad loan Problem

• Banks keep financing projects that are not making repayments in full and qualify as NPAs.
• Banks grow their loan portfolio at a brisk rate.
• We need a larger oversight committee or multiple oversight committees to speedily vet loan write-offs.
• To constitute a Loan Resolution Authority by an Act of Parliament.
• Government to provide adequate capital to the banks to cover write-offs and also facilitate fresh loan growth.

Problem with Bank Board Bureau (BBB)

• Government appointed a Bank Board Bureau (BBB) as suggested by the Nayak committee and tasked it with appointing Chairmen and Managing Directors of PSBs.
• The BBB was assigned the role of advising banks on restructuring and raising capital.
• The bad loan problem and recapitalization of PSBs remained unaddressed.

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2. Welcome assurance

Context

Tackling backlog of cases to improve executive-judiciary relations.

Issue

Cooperation between executive and judiciary in dealing with the high numbers of pending cases in India is essential.

Why lack of Cooperation between Executive and Judiciary?

• Impasse over judicial appointments between the two branches of the state, mainly after Supreme Court struck down legislation to establish National Judicial Appointments Commission.
• Chronic shortage of judicial hands in the superior and subordinate judiciary.

Way Forward

• Efforts to liquidate arrears of cases would involve a significant increase in the speed at which judicial appointments are processed.
• Use of technology and digitalization in judicial system to reduce the backlog.

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 Economy

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1. Defence Ministry nod to buy Barak missiles

Context

The Defence Acquisition Council (DAC) of the Defence Ministry has approved the purchase of Barak surface-to-air missiles (SAM) for the Navy.

Defence Acquisition Council (DAC)

Defence Acquisition Council makes decision making in regard to the totality of the new planning process, which involves ‘in principle’ approval of Capital Acquisitions in the long term perspective plan and ‘in principle’ approval for each Capital Acquisition programme.

Deals

• Barak short-range SAMs (Israeli-built) are installed on warships.
• Other deals include procurement of expendable Bathy thermograph systems for the Navy to detect temperature changes under water and procurement of equipment to counter mines in the sea.

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2. ‘SASEC Group can add $70 bn. to GDP’

Context

Cooperation between member-countries of the South Asia Sub-regional Economic Cooperation (SASEC) could generate $70 billion in GDP and more employment.

About SASEC group

• The South Asia Sub-regional Economic Cooperation (SASEC)Program brings together Bangladesh, Bhutan, India, Maldives, Myanmar, Nepal and Sri Lanka in a partnership to promote regional prosperity by improving cross-border connectivity, boosting trade among member countries, and strengthening regional economic cooperation.
• SASEC seeks to strengthen multimodal cross-border transport networks that boosts intraregional trade and open up trade opportunities with East and Southeast Asia.

About the SASEC Meet

• Joint statement: “We envision SASEC to be powering Asia in the 21st century”.
• “We believe that these synergies can generate annually, an estimated $70 billion in incremental GDP and 20 million in incremental aggregate employment by 2025”. The statement added.

How to achieve the goal?

• Countries will drive natural resource-based industries by tapping into latent industrial demand in the sub-region and promote sub-regional industry- to-industry links to develop regional value chains and enhance the area’s competitiveness.
• Enhance the connectivity within the member countries and between them to improve productivity.

New Member: Myanmar

• Myanmar is the new member in the SASEC group.
• Myanmar has an important role in linking South Asia.

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Indian Express

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The best GST there can be

Context

Determining the rate structure of GST.

What is GST?

The GST is a Value added Tax (VAT) to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services.

Key Issues and Suggestions

• Guiding principle should be to have a GST that will: Facilitate compliance, minimize inflationary pressures, be a buoyant source of revenue, and command support from the public at large.
• The GST is a consumption tax, so any differentiation of rates should be less.
• Under the proposed rate structure, India will be seen as a high GST country because the top rate has been set at 28 per cent. The number of goods that are placed in the 28 per cent slab must be kept at an absolute minimum.
• The GST must provide a simple structure.

Conclusion

The GST has now entered its last and critical phase: the determination of the GST’s rate structure.

• GST suffers from weaknesses related to the exemption of many items like: Alcohol, petroleum, electricity, land and real estate, health and education.
• GST has been a great achievement. In order to minimize the damage, the structure of rates on those products not excluded should be low, simple, and efficient.

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 Live Mint

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Why RBI should turn ‘accommodative’

Context

RBI should consider changing the monetary policy stance to “neutral”.

What is Monetary Policy Committee?

• Monetary Policy Committee (MPC) does the job of monetary policy-making in India. The committee will decide interest rates through a majority vote, with each member having one vote.
• The committee is guided by consumer inflation targeting, the government has set in discussion with the RBI (4% with a margin of two percentage points for the five years ending March 2021).

Urjit Patel committee report on monetary policy reform

Following statements from the report are important:

• Under flexible inflation targeting, inflation target is aimed to be achieved on average over the business cycle, while accommodating growth concerns in the short run.
• What limits the space for accommodating growth concerns even in the short run is persistently high inflation.

Why MPC needs to revisit its decision of taking a ‘neutral’ stand?

• Because of lower growth and benign outlook of non-food inflation.
• Output on bonds and debentures (major source of finance) has hardened.
• Factors like uncertainty on the liquidity outlook, reduced probability of policy rate cuts, large supply of state development loans and front-loading of central government market borrowings.
• Moving policy stance from “neutral” to “accommodative” will reduce the risk of eroding investor confidence.

 

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