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9 PM Daily NEWS Brief

9 PM Daily Current Affairs Brief – May 25, 2017

 


The Hindu


NATIONAL


[1]. ‘Rich get bail, poor remain in jails’

[2]. An Abe-Modi plan for Africa


Editorial/OPINION


[1]. A flawed rescue act

[2]. Say no to GM mustard

[3]. Access denied


Economy


[1]. Govt. orders to favour local suppliers

[2]. GST rollout deadline will not be extended

[3]. Centre may expand UDAN’s wingspan


Indian Express


[1]. The sword of global justice


Live Mint


[1]. GST structure: an unfortunate compromise

[2]. NITI Aayog and the emperor’s clothes


NATIONAL


[1]. ‘Rich get bail, poor remain in jails’

The Hindu

Context

Law Commission advocates relaxation of bail provisions for undertrial prisoners

What has happened?

Law Commission has come out with its 268th report

Observations

  • The rich and powerful get bail with ease while the commoner and the poor languish in jail
  • Prolonged periods in prison where undertrials and convicts were not segregated would only make hardened criminals of the former
  • A majority of the undertrials (70.6 per cent) are illiterate or semiliterate and belong to socio-economically marginalised groups. Sixty-seven per cent of the prison population is awaiting trial
  • The Commission quoted an expert study which said that a majority of the arrests are for “very minor prosecutions.” Over 60 per cent of arrests were unnecessary and such arrests accounted for 42.3 per cent of jail expenditure
  • Pressure on prisons: According to the Prison Statistics of India, the prison occupancy stands at 114 per cent. The prisons have 53,009 officials to take care of 4,19,623 inmates which amounts to one official per eight inmates

Recommendations

  • Amendments to bail provisions: The Commission recommended to the government amendments to the bail provisions in the Criminal Procedure Code with emphasis on the early release on bail of undertrials
  • Undertrials who have completed one-third of the maximum sentence for offences up to seven years be released on bail
  • Those who are awaiting trial for offences punishable with imprisonment of more than seven years, should be bailed out if they have completed one-half of their sentence
  • New legal provisions for remission: The Commission said new legal provisions for remission should be included to cover those undertrials who have already endured the full length of the maximum sentence

[2]. An Abe-Modi plan for Africa

The Hindu

Context

Proposal for growth corridor presented to the Board of Governors of AfDB

What has happened?

India and Japan have unveiled a vision document for the Asia Africa Growth Corridor, proposed by the Prime Ministers of the two countries last November

Asia Africa Growth Corridor

Unlike China’s One Belt One Road (OBOR) project, about which India has raised several concerns, the Asia Africa Growth Corridor is conceived as a more open and inclusive programme that will be based on more consultations and keep people as the centre piece rather than just trade and economic ties, said officials who worked on the vision document

4 key elements

The document presented to the board of the African Development Bank’s governors at their annual meeting here, proposes four key elements that leverage the strengths of India and Japan

They are

  • Enhancing capacity and skills
  • Building quality infrastructure and connecting institutions
  • Development and cooperation projects in health, farming, manufacturing and disaster management
  • People-to-people partnerships

Editorial/OPINION


[1]. A flawed rescue act

The Hindu

Context

The banking regulation ordinance puts its seal of approval on corporate subsidy at the cost of public banks

New Licenses

The RBI recently granted bank licences to 23 applicants which included Aditya Birla Nuvo, Reliance Industries, Tech Mahindra and Vodafone M-pesa and Airtel

  • These corporates need to invest Rs. 100 crore each to gain entry into the banking sector

Source of NPAs

In India, corporates rely on banks as the main source for funds.

  • IMF Report: The February 2017 International Monetary Fund (IMF) report states that 65.7% of Indian corporate debt as of March 31, 2016 is funded by banks
  • The 2017 IMF report also states that about half of the over all debt is owed by firms who are already highly indebted (debt-equity ratio more than 150%). These borrowers are simply not earning enough to meet their interest commitments
  • Financial Stability Report: The December 2016 Financial Stability Report states that large borrowers account for 56% of bank debt and 88% of their NPAs
  • Credit Suisse Report: A recent Credit Suisse report highlights the inability of top Indian corporates to make timely interest payments by stating that about 40% of debt lies with companies with an interest coverage ratio of less than 1

Author’s contention

Grant of loans to even corporates that lacked expertise was made at the behest of RBI and government as some of these major corporate groups are key drivers of growth of the Indian economy. Now, RBI cannot thrust resolution of stressed assets on banks via haircut (a waiver of of a part of the loan without inviting criticism of poor financial discipline)

Conclusion

Passing of corporate losses into the banking system for the benefit of elite corporate borrowers is not the right way to go about this whole NPA resolution process

[2]. Say no to GM mustard

The Hindu

Context

There are formidable social, economic and environmental reasons why it should not be cultivated

GM Mustard debate has been covered in ample detail here

[3]. Access denied

The Hindu

Context

The government needs to engage with Internet companies directly for encrypted data

What has happened?

An iPhone used by Abu Dujana, said to be among the Lashkar-e-Taiba’s commanders in Kashmir, which fell into the hands of security forces, could be a valuable source of information for the National Investigation Agency (NIA). The odds that the agency is able to break into the device are, however, slim. For now, the government has sent the iPhone to the U.S., seeking assistance from its federal agencies

Increasing encryption                                                                                                 

Entire article stresses on the increasing trend of encryption by global companies. Author cites the example of Apple, the encryption technology of whose phones has become virtually out of reach of the law making agencies making such device vulnerable to being used by terrorists and criminals.

Challenge for policymakers

The distinct trend towards greater adoption of encryption poses a dilemma for Indian policymakers. Strong encryption protocols increase consumer confidence in the digital economy, but the Indian government fears a scenario where criminals or terrorists can easily “go dark” behind secure channels.

MLAT Treaty

The current process of information-sharing through the India-U.S. Mutual Legal Assistance Treaty suffers from almost irreparable hurdles, ranging from bureaucratic delays on both sides to inconsistencies in domestic legal standards

What is MLAT?

A mutual legal assistance treaty (MLAT) is an agreement between two or more countries for the purpose of gathering and exchanging information in an effort to enforce public laws or criminal laws. Modern states have developed mechanisms for requesting and obtaining evidence for criminal investigations and prosecutions

Solution

Perhaps the solution lies in a bilateral data-sharing agreement to help the Indian government engage with Internet companies directly, rather than routing requests through the U.S. government.


Economy


[1]. Govt. orders to favour local suppliers

The Hindu

Context

Aims to boost domestic manufacturing thus creating jobs and increasing income

What has happened?

The Union Cabinet has approved a policy that provides preference to local suppliers in Government procurement.

  • The policy, approved by the cabinet will be implemented through an order pursuant to the General Financial Rules, 2017 to provide purchase preference (linked with local content) in Government procurement
  • The order also covers autonomous bodies, government companies/entities under the government’s control

Aim of the policy

  • The new policy is aimed at boosting domestic manufacturing and services, thereby creating employment and enhancing income
  • It will also stimulate the flow of capital and technology into domestic manufacturing and services
  • t will also provide a further thrust towards the manufacture of parts, components and sub-components of these items

Defining local supplier

Under the new policy, local suppliers are those whose goods or services meet prescribed minimum thresholds (ordinarily 50%) for local content

Local content

Local content is essentially domestic value-addition

Who will oversee?

A Standing Committee in the Department of Industrial Policy and Promotion will oversee the implementation of this order and issues arising out of them, and make recommendations to nodal ministries and procuring entities

[2]. GST rollout deadline will not be extended

The Hindu

Context

The government is not considering extending the rollout date for the Goods and Services Tax (GST) past July 1, and the GST Network is almost ready for that deadline

Nothing relevant here. Give it a go through once

[3]. Centre may expand UDAN’s wingspan 

The Hindu

Context

The Centre has proposed widening the scope of its UDAN scheme for regional connectivity by making more flight operations eligible for a host of concessions, including viability gap funding

The proposal

The airlines operating on Lucknow-Varanasi route may be eligible for concessions under the UDAN scheme as there are no flights on the route at present although there are flights operating out of these airports to other destinations.

What airlines need to do to be a part of the scheme?

To be eligible, airlines need to participate in the bidding process. At present, only airports that are either categorised as unserved or underserved fall under the Scheme

Decreasing exclusivity

The Civil Aviation Ministry has further proposed decreasing the exclusivity on flight operations under the RCS from three years to one year. However, the subsidy to airlines will continue for three years

  • At present, no other airline, except the one which has won the bid, is allowed to operate on routes awarded under the Scheme

Indian Express


[1]. The sword of global justice

Indian Express

Context

In Jadhav case, ICJ shows creativity by balancing its powers with principle of state sovereignty and consent

Relevant points from the article

Vienna convention (VC)

ICJ decided that the dispute between the two countries arose under Vienna Convention on Consular Relations, 1963 and that it had jurisdiction over the case since both India and Pakistan had ratified, without reservation, Article 1 of the Optional Protocol to the VC

  • Article 36(1) of the VC assures consular access to a treaty national providing for certain obligations in the event of an arrest or detention of a foreign national, to guarantee the inalienable right to counsel, and due process through consular notification and effective access to consular protection. However, Pakistan denied this access, despite as many as 13 process verbal by India

Live Mint


[1]. GST structure: an unfortunate compromise

Live Mint

Context

Political optics have overpowered economic logic in the framing of the GST structure

Article’s contention

The GST structure that has been decided on is too complicated and distortionary for India to reap the benefits of the national value-added tax

What should have been?

There should have been a simple GST structure, with zero taxes on a few essentials, a high tax rate for a few sin goods and almost everything else taxed at a single rate.

Flawed GST Structure

Author states that India is heading towards a flawed GST structure with multiple tax rates and complex tax structure. This should be a cause of worry for the following reasons,

  1. The sheer complexity of the GST structure will result in tax disputes, lobbying and corruption in the future
  2. The second problem with a complicated tax structure is that it will lead to distortions
  3. A more complicated tax structure will actually increase business costs, while on the other, exemptions will mean cascading of costs because of the absence of input tax credits

Pushing for a simple GST

Author states that economic reformers would now have to push for a simpler GST in the coming years. Following are the ways in which it can be done,

  1. Gradual removal of exemptions: Governments should gradually remove exemptions, on the one hand and equally gradually, bring taxes on most goods and services to a standard rate on the other hand
  2. Direct tax code: There is now a strong case to push ahead with the direct tax code so that higher collections of income and corporate taxes create fiscal space for a rationalization of indirect taxes

 

[2]. NITI Aayog and the emperor’s clothes

Live Mint

Context

Instead of letting the government set the agenda, NITI Aayog needs to inform the government of its failings

Article details on the NITI Aayog, the unfulfilled expectations and how it should work in the future

Give it a go through once.

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