- Front Page / NATIONAL [The Hindu]
[1]. Rs. 9.2 lakh cr. back in circulation
[2]. Respect sovereignty, India tells China
[3]. Decrees passed by court can’t be flouted, warns SC
[4]. India’s first clinical trial to reduce hair loss in cancer patients
[5]. India, Sri Lanka in talks on port
- Editorial/OPINION [The Hindu]
[1]. Terms of disengagement
[2]. The hard road to Brexit
[3]. Focussing on the marginal farmer
- ECONOMY [The Hindu]
[1]. PMGKY not to apply for non-cash income: Govt
[2]. Regional connectivity plan nets proposals to revive 65 airports
[3]. Cabinet boosts corpus for small enterprises
- Indian Express
[1]. To levy a service charge, or not to
- Live Mint
[1]. Budget 2017
[2]. How e-payments can prevent cartelization
[3]. Making Indians shift to cashless transactions
Front Page / NATIONAL
[1]. Rs. 9.2 lakh cr. back in circulation
Context
RBI chief: Reserve Bank of India Governor Urjit Patel told the Parliamentary Standing Committee on Finance that about Rs. 9.2 lakh crore had been put back in circulation since the demonetisation on November 8
Figures significant
The figures pertaining to money deposited back are crucial as the Opposition is reading the reported return of almost all the money as a sign that black money has been converted into white
- It is also seen as indicating that the liability of the RBI has not been extinguished, denying the government the fiscal space for greater social sector spending
[2]. Respect sovereignty, India tells China
Context
China and Pakistan have fast-tracked work on CPEC, a large part of which passes through Pakistan-occupied Kashmir
Raisina Dialogue
The Raisina Dialogue is an annual conference held in New Delhi, envisioned to be India’s flagship conference of geopolitics and geo-economics.
- The conference, organized like the Shangri-La Dialogue in Singapore, is held jointly by Ministry of External Affairs, India and the Observer Research Foundation (ORF), an independent think tank based in India
- Its inaugural session was held from March 1 through 3rd in 2016
- The conference name comes from Raisina Hill, the elevation in New Delhi, which is the location of both the Government of India as well as the presidential palace of India, RashtrapatiBhavan, which inspired the design of the conference symbol
Respect sovereignty of India
It was during Raisina Dialogue that India asserted its territorial sovereignty and said that the China-Pakistan Economic Corridor (CPEC) passes through its territory
- It should be noted that China and Pakistan have fast-tracked the construction work of the CPEC, a large part of which passes through PoK. Once completed, the CPEC will provide an all-weather energy route for China from the Gulf
Naval cooperation
India’s concerns have also increased in recent weeks with reports of China-Pakistan naval cooperation in Gwadar port of Balochistan, which will serve as the entry point to CPEC.
[3]. Decrees passed by court can’t be flouted, warns SC
Context
Decrees passed in the Sutlej- Yamuna Link (SYL) canal dispute between Punjab and Haryana cannot be flouted, the Supreme Court warned today
Implement the directives
SC Bench said that “We will not allow the decree passed by this court to be flouted and it has to be implemented. How the decree is being implemented is the headache of the concerned parties,”
- File the replies: Bench asked the Centre and Punjab to file their replies to Haryana’s plea seeking compliance of court’s order, said the interim order of status quo will continue.
Backdrop
On November 10, the apex court had thwarted Punjab’s attempt to wriggle out of the SYL water sharing pact, saying it cannot “unilaterally” terminate it or legislate to “nullify” the verdict of the highest court
- Notice to Punjab: The court had issued notice to Punjab on Haryana’s plea seeking enforcement of apex the court verdicts and appointment of the receivers to ensure that the project land in Punjab remains intact
- Hearing Haryana’s plea: Earlier, the apex court had agreed to hear the plea of Haryana alleging that Punjab was violating its earlier interim order that the status quo on land meant for Sutlej-Yamuna Link (SYL) canal be maintained
1981 water-sharing agreement
The controversial 1981 water-sharing agreement came into being after Haryana was carved out of Punjab in 1966.
- SYL canal: For effective allocation of water, SYL canal link was conceptualised and both the states were required to construct its portions in their territory. Haryana constructed the portion of SYL canal in its territory
- However, Punjab after initial work, stopped the work leading to spate of litigations
Punjab Termination of Agreement Act
In 2004, the Punjab government came out with the Punjab Termination of Agreement Act with an intention to terminate the 1981 agreement and all other pacts relating to sharing of waters of rivers Ravi and Beas.
- SC directs Punjab to honor commitments: The apex court had first decreed the suit of Haryana in 2002 asking Punjab to honor its commitments with regard to water sharing in the case
- Challenge by Punjab:Punjab challenged the verdict by filing an original suit which was rejected in 2004 by the Supreme Court which asked the Centre to take over the remaining infrastructural work of the SYL canal project
[4]. India’s first clinical trial to reduce hair loss in cancer patients
Context
The Tata Memorial Hospital (TMH) here has commenced the first ever clinical trial in India to address the problem of hair loss in cancer patients during chemotherapy
Significance
Loss of hair adds to the trauma of the disease and many patients, especially women, suffer from lack of self-esteem and confidence due to sudden baldness. Of all the side effects, hair loss has the worst impact on women. The fear of cancer becomes secondary and the fact that they will lose hair during the treatment takes centre stage
- At present, four breast cancer patients have been placed on the trial
Side effects of Chemo
Since cancer cells are highly dividing, the chemo medicines attack those cells. But at the same time, blood cells, mucosal lining and hair follicles, also get attacked. This is why patients suffer from reduced blood count, mouth ulcers and hair loss during chemotherapy
Chemo induced Hair loss
Doctors define the chemotherapy-induced hair loss in three grades
- Grade 0 is for no hair fall
- Grade 1 is for less than 50 per cent hair loss
- Grade 2 is more than 50 per cent hair loss
[5]. India, Sri Lanka in talks on port
Context
Sri Lanka is in talks to offer the port of Trincomalee to India
Talks going on
Talks are at present going on between India and Sri Lanka and we hope to offer the Trincomalee port, which is one of the best deep sea ports in the world, to India,” said Mr. Fonseka speaking to The Hindu on the sidelines of the Raisina Dialogue
Hambantota hurdles
Colombo’s minister of regional development said that,
- Heavy debt burden: Sri Lanka’s experience with the Chinese, who carried out major infrastructural work at the Hambantota port in southern coast of the island nation, has put a heavy debt burden on the country. The problems and corruption in the project has prompted Sri Lanka to review our policy on infrastructural development
- The port of Hambantota was conceived as a major Sri Lanka-China project during the presidency of Mahinda Rajapakse, but the controversy around the debt burden has slowed down the project
Equal access
- Equal access to both India & China:Trincomalee has been on the table for some time as Sri Lanka wants to maintain a neutral stand and provide equal access to its ports to both China and India
Editorial/OPINION
[1]. Terms of disengagement
Context
Prime Minister Theresa May injects some realism, but not enough, into her vision of Brexit Britain.
Give it a go-through once
[2]. The hard road to Brexit
Context
Prime Minister Theresa May’s speech on her government’s plans for Britain’s exit from the EU was many things at once — a declaration of intent, a warning, a motivational talk and a balancing act with several contradictions
Give it a go-through once
[3]. Focussing on the marginal farmer
Context
Farmer suicides are not a new trend. According to the National Crime Records Bureau (NCRB), 2,195 marginal farmers reportedly committed suicide in 2015.
Issue: Farmer suicides
Marginal farmer
‘Marginal Farmer’ means a farmer cultivating (as owner or tenant or share cropper) agricultural land up to 1 hectare (2.5 acres)
Small farmer
Small Farmer means a farmer cultivating (as owner or tenant or share cropper) agricultural land of more than 1 hectare.
NCRB Data
According to the National Crime Records Bureau (NCRB),
- 2,195 marginal farmers reportedly committed suicide in 2015 (of which 834 were in Maharashtra)
- 3,618 “small farmers” undertook such drastic steps, with Maharashtra alone seeing 1,285
- More number of small farmer suicides: More curiously, a larger number of small farmers rather than marginal farmers reportedly committed suicide in States like Maharashtra, Telangana and Karnataka. Somehow, small farmers are also plagued by the agricultural crisis, and this is not the case in just the traditional drought-stricken States
Reason of farmer suicides in Punjab
Agriculture in States like Punjab is typically a monoculture of wheat and paddy.
- High input costs: When input costs associated with fertilizers, crop-protection chemicals and seeds rose, along with fixed costs associated with agricultural equipment such as tractors and submersible pumps, agriculture became economically unviable
- Rising seed price:Prices have risen — of arhar seeds and staple crops like paddy and sugarcane, of fertilizers and plain barley. The old days of farmers handing seeds as family heirlooms to their sons are long gone
- Expensive labor: Hiring laborers and animals is expensive
- High fertilizer cost:With an increase in application of crop-protection chemicals, soya bean has seen a massive jump in pesticide cost. Given a jump in input costs, cultivation costs have gone up in multiples. The total cost of cultivation for wheat rose three times from 2004-05 to 2012-13
Solving the crisis
- Integrated pest management: Our policies should encourage integrated pest management, an approach that focusses on combining biological, chemical, mechanical and physical means to combat pests with a long-term emphasis on eliminating or significantly reducing the need for pesticides
Example of Vietnam:In Vietnam, over 2 million of the Mekong Delta’s rice farmers adopted a “no spray early” rule, curbing insecticide applications within the first 40 days of rice planting. Predatory beetles that commonly prey on rice pests were sustained, encouraging the crop while cutting pesticide use by over 50 per cent.
- Supporting local fertilizer industry: Timely delivery of subsidies to local fertilizer companies will help them to manage costs via internal sources rather than external loans
- Encouraging new techniques: State seed policies should focus on encouraging contract farming, along with identification of new genotypes for treating pest and disease syndromes, as well as adverse weather conditions. Precision-farming techniques like Systematic Rice Intensification can help increase seed production in this regard
- Manufacturing farm equipment: Our farm equipment policy needs to be reoriented with a focus on manufacturing farming equipment and implements that are currently imported
- Industry role in capacity building: Companies with a corporate social responsibility focus on agriculture can be further encouraged to invest in capacity-building initiatives, skill development and the establishment of CHCs
- Financial credit: Government needs to ensure that institutional financing is easily available and accessible to a farmer
- Monitoring farmers: States should seek to establish early warning signals, monitoring farmers who go past set limits and seek unsustainable loans. Village-wise lists of deeply indebted farmers must be prepared annually to identify farmers on the path to poverty and potential suicide
- Loan restructuring:The National Bank for Agriculture and Rural Development, along with the local administration, should be tasked with analysing such lists for macro and local policy interventions, along with devising timely loan restructuring initiatives, insurance claim settlements and better counselling
ECONOMY
[1]. PMGKY not to apply for non-cash income: Govt
Context
Important clarification regarding Pradhan mantriGarib Kalyan Yojana (PMGKY)
What has happened?
The government has clarified that its income declaration scheme, the Pradhan Mantri Garib Kalyan Yojana (PMGKY), will apply only to cash or deposits in bank accounts and will not be available for income in the form of jewellery, stock or immovable property.
- Not applicable to income stored in foreign accounts: In its FAQs section, the Income Tax Department also said that the scheme would not apply to income stored in foreign accounts. Those under search and seizure notices can also apply under the scheme
Pradhan Mantri Garib Kalyan Yojana (PMGKY)
The government has recently announced the Pradhan Mantri Garib Kalyan Yojana where black money can be deposited by paying a tax of 50%.
- Besides, declarant must make mandatory deposit of 25% of undisclosed income in the zero-interest Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 with lock-in period of 4 years.
- Investment in rural infrastructure: With this amount the government will be making investments in rural infrastructure
Read More: PMGKY
[2]. Regional connectivity plan nets proposals to revive 65 airports
Context
AAI received 45 proposals from 11 bidders, covering more than 200 routes
What has happened?
Airlines have shown interest in flying out of underserved and dormant airports including Kadapa in Andhra Pradesh, Jamnagar and Bhavnagar in Gujarat, Jorhat in Assam, Kullu in Himachal Pradesh, Diu, Puducherry, Agra in Uttar Pradesh, Pant Nagar in Uttarakhand, Gwalior in Madhya Pradesh and Durgapur in West Bengal
Regional connectivity scheme
As per the scheme, the Centre will subsidise the losses incurred by airlines flying out of dormant airports, to allow airlines to charge Rs. 2,500 for an hour’s flight to passengers. About 80% of the subsidy will be collected by charging a levy of up to Rs. 8,500 on each departing flight of domestic airlines and the rest 20% will come from the respective state governments.
Read More: Regional Connectivity Scheme
[3]. Cabinet boosts corpus for small enterprises
Context
The Union Cabinet has given ex-post facto (in retrospect) approval for a larger package supporting small and medium enterprises
Corpus increased
The Corpus of Credit Guarantee Trust Fund for Micro and Small Enterprises (CGTMSE) will increase from Rs. 2,500 crore to Rs. 7,500 crore. The Centre has increased the coverage of loans covered under the credit guarantee scheme to Rs. 2 crore from Rs. 1 crore.
- The government will put another Rs. 5,000 crore to make it Rs. 7,500 crore and the intent is to extend the credit guarantee scheme to allow guarantees up to Rs. 2 crore instead of the present Rs. 1 crore
CGTMSE
- Collateral-free credit: The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) was launched by the Government of India (GoI) to make available collateral-free credit to the micro and small enterprise sector.
- Both the existing and the new enterprises are eligible to be covered under the scheme
- The Ministry of Micro, Small and Medium Enterprises, GoI and Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises
- The scheme was formally launched on August 30, 2000
- Corpus contribution ratio: The corpus of CGTMSE is being contributed by the GOI and SIDBI in the ratio of 4:1 respectively and has contributed Rs. 2477.78 crore to the corpus of the Trust up to May 31, 2016. As announced in the Package for MSEs, the corpus was to be raised to Rs.2500 crore by the end of 11th Plan
Read More: CGTMSE
Indian Express
[1]. To levy a service charge, or not to
Context
And thereby hangs a tale
caveat emptor: the principle that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made
caveat venditor means let the seller beware. The person selling goods is accountable for providing information about the goods to the seller
caveat lectormeans let the reader beware. This warning is usually applied specifically, such as to suggest that a given text has inaccuracies or is biased
What has happened?
On December 20th 2016, the ministry of consumer affairs wrote to all state governments about consumer complaints regarding the 5-20 per cent “service charge” imposed by hotels and restaurants in lieu of tips.
- Unfair trade practices: The letter mentioned unfair trade practices under the Consumer Protection Act (CPA) and added that Hotel Association of India concurred about service charge being discretionary/voluntary. A dissatisfied customer need not pay it. Hence, hotels/restaurants should prominently display this option of not paying
- Service charge should be mandatory: The National Restaurant Association of India (NRAI) feels service charge shouldn’t be voluntary. Nor does it think there is a violation of CPA.
Rest of the article cites historical texts to identify the first usage of the Latin expressions listed above. You can leave it entirely
Live Mint
[1]. Budget 2017
Context
Government should stick to fiscal targets: The best policy defence for a country like India in an uncertain global environment is to keep its own house in order.
In the light of the upcoming budget, article presents us with a brief overview of various factors that it needs to take into account and various policy measures that it should aim for.
Give it a go-through once
[2]. How e-payments can prevent cartelization
Context
The spike in onion prices in 2010 provides an example of the perils of opaque data in informal markets.
The Onion case
In the first few paragraphs, author has cited the investigation by the Competition Commission of India (CCI) into the price surge of onion that hit the country in December 2010. This price surge remained for over two weeks
- CCI initiated a suo-motu enquiry into the onion market
- Data from agri markets: Data used in the investigation was from the agricultural produce market committee (APMC) website, the official record of transactions in agricultural markets. Correlations were run on arrivals in the AzadpurMandi (Delhi) and prevailing market prices. Records at the auction platforms at Lasalgaon and Pimpalgaon, the main onion markets of India, and the books of traders or arthiyaswere examined
- No evidence of hoarding found:The extensive exercise revealed no discernible spike in prices or evidence of speculative hoarding during the period under investigation. Given the fact that all the evidence pointed to normalcy, the Commission closed the case
Author’s contention
APMC data, although official, displays these inaccuracies
- No indication of the transactions pre-auction: The information sourced pertained to rates at the auction platform under the APMC. This data gives no indication of the transactions pre-auction between farmers and traders
- Distortions between time lags & authenticity of data: There is a time lag between transactions at different stages of the supply chain and the hosting of data on the APMC website. Distortions are to be expected with time lags. Equally disturbing is the authenticity of data as APMC data is based on information provided by the arthiyas
- Collusion possibility: The possibility of collusion between auction officers and arthiyascannot be ruled out. Last, the use of modal data from the APMC in the analysis may fail to capture deviations in the onion market
So,
Do e-payments help?
Author states that a brief look at the manner in which informal markets function would help to understand the advantages of digital payments.
- Loans by traders: The indebtedness of farmers to traders for loans is well documented and a major source of data distortion in the onion market. Loans are given by traders against the collateral of standing crop
- No record of these loans:Records of these loans are not maintained as they are sanctified by social relationships. This places traders in a position to exert downward pressure on the crop prior to harvesting and definitely before the produce reaches the auction platform
- Price is already fixed:The floor price at the auction is, therefore, already fixed as arthiyas are the licensed traders at the auction. The entire produce may not reach the auction market at all. Again, no records are either maintained or available
Free auctions: A far cry
Arthiyas are the main source of information for the APMC. As licensed traders, the arthiyas’ word carries weight, with single traders having market shares as high as 13%. It is common for a single trader to have multiple licences. The assumption of free auctions, where sellers and buyers meet as independent agents and auction prices are competitively arrived at, lacks credibility
Benefits of digitization
- Prevents data opacity: Digitization of payments prevents this opacity in data records that is possible in informal markets. All transactions where payments are involved, including payments to farmers by traders, get recorded.
- Data cannot be deletedpost transaction: A major advantage is that once a transaction has been effected, data cannot be manipulated or deleted, unlike in informal markets.
- Detecting cartels:Plugging data gaps and building databases are essential for detecting cartels. This enables the application of forensics and econometric techniques to pick out variations in patterns of trading
- Exposed with the underlying data on weather, these patterns indicate whether cartels were the cause of the spike in prices in the onion market—or, as claimed in December, the rise in prices was purely on account of untimely rain
- For identifying cartels, the existence of databases is where modern markets score over informal markets
CCI’s powers
Author states that CCI vested with wide powers to requisition data from all sources can proceed fully once e-payments are in place
- Powers akin to a civil court: Section 36 (2) (b) empowers the Commission with the same powers as a civil court
- Powers of inspector:The director general has the powers of an inspector under Section 41, with permission to conduct dawn raids
- Admission of records: Regulation 41 permits admission of all records, including email and mobile telephone records that meet the requirement of material evidence as in Section 3(3).
Conclusion
Author concludes by stating that Cartels will not end with digitization. But digitization does make cartelization a more difficult process to hide.
[3]. Making Indians shift to cashless transactions
Context
Shifting to a digital platform will call for a change in behaviour across many economic transaction contexts on a sustained basis
Change in behavior
Author states that the task government has set out to achieve looks simple enough. While completing any economic transaction, instead of taking a wad of currency notes, get every Indian to take his debit card from his wallet or pull out his mobile phone instead to complete the transaction.
- The big question is, how easy is it to achieve this “simple” behaviour change?
Psychological distance
Author, CEO of a behavior architectural firm, states that while studying the behaviour of the unbanked segment in India, we found that
- The majority among them do not use a bank for financial transactions not because of the physical distance from a bank branch but because of a psychological distance
- The drive towards cashless India could further increase the “class divide” among the banked and unbanked in India
Significant events can lower the barriers
Author states that any significant behavioral change faces many barriers. Many a time, barriers to behaviour change are lowered during significant events
- Immediately after the 9/11 terrorist attack, the number of Americans who felt the need for religion in their lives shot up exponentially
- Immediately after natural disasters, there is a dramatic increase in the number of people opting to start life insurance policies
Demonetization didn’t increase card transactions
Demonetization was a significant event that affected everyone in India. But according to Reserve Bank of India data,
- At the height of cash non-availability, the number of debit card transactions and use of prepaid payment instruments barely doubled. This is an indicator that the path to building a cashless India is not going to be an easy one
Different speeds of adoption
As mentioned in “Slow Ideas”, a 2013 New Yorker article by AtulGawande, different innovations have very different speeds of adoption. According to Gawande,
- The use of anaesthesia spread across hospitals within months of its discovery. But the use of antiseptics took much longer
- Knowing why one behaviour becomes a habit while another equally important one struggles to sustain itself is a lesson for all behaviour-change projects
Love for Status Quo
The human brain loves the status quo. It is very difficult to get the human brain to start a new behaviour. It becomes even tougher when the problems attached with the existing behaviour are not visible and cannot be experienced
- In the case of anaesthesia, the problem it was solving was very visible. Many attendants had to hold a patient down before an operation could be performed
- In the case of disinfection, the germs it was fighting were not visible
- In a similar manner, the common man experiences no apparent problems while transacting in cash. For that matter, the service charge, however small, that digital transactions will entail could become a visible problem that could slow down one’s transition to digital payments
The right way
- Develop the infrastructure first: The earnestness to find the perfect usage of anaesthesia led to the development of the science of anaesthesiology and the creation of a clear role for an anaesthesiologist during an operation procedure. Similarly, systems and infrastructure should be in place before a behaviour-change initiative can begin
- By implementing demonetization before the digital infrastructure was in place, the government was putting the cart before the horse. Demonetization would have had a very different impact on encouraging cashless transactions if the government had focused first on developing a fairly robust infrastructure for digital payments
No guarantees
Even if infrastructure is in place, there is no guarantee that right behaviour will take root. The open defecation problem persisting despite the availability of toilets is a clear pointer that behaviour-change initiatives go beyond the mere construction of infrastructure
- Getting people to use the infrastructure on a sustained basis is a different ball game all together
Cashless economy: An entirely different behavioral change
The move to a cashless economy is different from all other behaviour-change projects of the government, particularly for one reason—there is a significantly large number of people who will try to thwart all attempts towards the change
Way forward
Author states that making India cashless is not a single-event change project like the polio eradication programme, where the behaviour required was putting only one dose of medicine in the child’s mouth
- Shifting to a digital platform will call for a change in behaviour across many economic transaction contexts on a sustained basis
- Active efforts by leaders: Encouragement by leaders, awareness campaigns and availability of the required infrastructure are all essential starting points of a behaviour-change project
Conclusion: A long journey ahead
Author concludes by stating that it has been more than 150 years since antiseptics were discovered. But even today, hospitals are struggling to get doctors to use it regularly. This is a reminder that changing the behaviour of every Indian to use a debit card instead of a currency note the next time he has to pay the sabziwala (vegetable seller) is going to be a long, arduous journey.
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