9 PM Daily NEWS Brief

9 PM Daily Current Affairs Brief – 16 February

Front Page / NATIONAL

[1]. ISRO launches 104 satellites in one go, creates history

[2]. Constitution Bench to hear Delhi-Centre spat

[3]. Clouds over Maharashtra will have a silver iodide lining 

[4]. Can’t advance Rafale deliveries


[1]. The devil is in the fine print

[2]. ISRO sets the bar high

[3]. The foul air we breathe

[4]. Time to Break in India

[5]. A few good officers


[1]. RBI signalling end to easing cycle

Indian Express

[1]. Happiness, beyond measure

Live Mint

[1]. The GPS is a time machine

NoteDownload the Summary of ECONOMIC SURVEY 2016-17 Here 

Click here to Download 9 PM Brief PDF (16 Feb. 2017)

Front Page / NATIONAL

[1]. ISRO launches 104 satellites in one go, creates history

ISRO launches 104 satellites in one go, creates history

The Hindu


Satellites include the country’s earth observation satellite Cartosat-2 series

What has happened?

ISRO launched 104 satellites on 15thFeb 2016 creating world record

Relevant points from this article has been covered in the editorial later on.


[2]. Constitution Bench to hear Delhi-Centre spat

Constitution Bench to hear Delhi-Centre spat

The Hindu


A two-judge Bench of the Supreme Court referred to a Constitution Bench a series of appeals filed by the Delhi government for laying down the law on whether the Lieutenant Governor (LG) can unilaterally administer the National Capital — without being bound by the “aid and advice” of the elected government

Appeals referred

A Bench of Justices A.K. Sikri and R.K. Agrawal referred the appeals to the Chief Justice of India J.S. Khehar, who will constitute a Constitution Bench of the appropriate number of judges

The burning question

A question that arises now is whether the appeals would have to be heard by an eleven-judge Constitution Bench of the Supreme Court. This is because a nine-judge Bench of the court had, in 1996, in the NDMC versus State of Punjab case, recognised Delhi as a Union Territory for taxation purposes.


[3]. Clouds over Maharashtra will have a silver iodide lining

Clouds over Maharashtra will have a silver iodide lining

The Hindu


State government responds to frequent droughts in Vidarbha with a three-year cloud seeding experiment

 Investigating an old question

During monsoon 2017, weather scientists will fly airplanes loaded with silver iodide over clouds hovering above Solapur, Maharashtra and will begin a three-year investigation into an old question: does cloud seeding produce sufficient rain?

The programme

The programme will account for the variability of the monsoon and quantify the extent to which clouds form water drops large enough to make rain.

  • The move is part of a larger experiment of the Earth Sciences Ministry to understand how clouds and aerosols interact and influence climate.

 How it will be done?

Scientists will fly two aircraft and spray dry ice and silver iodide on 100 clouds and compare them with 100 unseeded clouds. Ground radar will track the clouds and verify which ones contributed rain.

Cost of the programme: ₹250-crore.

It is coordinated by the Indian Institute of Tropical Meteorology.

How cloud seeding works?

China: Ahead of the pack

China used the technique during the 2008 Olympics to steer rain away from the inaugural venue and now has a full-fledged department that blasts rockets into clouds to induce rain and control pollution.


 [4]. Can’t advance Rafale deliveries

Can’t advance Rafale deliveries

The Hindu


Dassault: India has ordered 36 jets, and the deliveries are scheduled between 2019 and 2022

Give it a light read. Nothing pertinent



[1]. The devil is in the fine print

The devil is in the fine print

The Hindu


Electoral reforms announced in the Budget are not what they are claimed to be — they will neither cleanse our politics nor bring transparency

Issue: Dissection of the Budget proposals wrt electoral funding

 Reforms announced

  • Cash ceiling for donations: A ceiling of ₹2,000 on the amount of cash donation that a political party can receive from one person in a year
  • Donations through cheque or digital mode: Political parties would be “entitled to receive” donations by cheque or digital mode from their donors
  • Electoral bonds: A new scheme of Electoral Bonds
  • Filing of IT return in prescribed time: The Finance Bill now proposes a new proviso in Section 13A clause (d) of the Income Tax Act 1961 that explicitly says that the return should be filed within the stipulated time limit

Critique of the reforms

The second and the fourth components of this scheme are redundant, as these are no different from what the existing law provides for

  • It does not require a new law to say that political parties are “entitled” to receive donations by cheque or digitally. They were always entitled to this and were already doing so

What was needed?

Instead we needed a new law which mandated that the parties would be “required” to receive donations by cheque or digitally.

  • Enforce present law: Similarly, the existing law requires political parties to file their income tax returns to enjoy tax exemption. Big national parties file their return months after the due date and many parties don’t file the return at all. No one gets penalized for this non-compliance. The government really did not need an amendment if it had the will to enforce the existing law
  • Cash donations: The existing limit of ₹20,000 on anonymous donation as per Section 23 of the Representation of the People Act (RPA) has been left untouched. Only a new, additional, clause that limits cash donation from one source to ₹2,000 in one year has been proposed. Moreover, a limit of Rs 2000 would merely a mean more number of fraudulent  book entries than earlier

 What was needed?

A limit on overall donations: Following the Law Commission’s recommendations, the EC had proposed that no party should be allowed to receive more than ₹20 crore or 20% of its overall donations from anonymous sources

  • Trouble with electoral bonds:  Here is how the scheme is going to work,
  • Anyone who wants to donate to a political party would be able to purchase bonds from authorized banks. This purchase will have to be in ‘white money’ against cheque and digital payments only
  • Once purchased, these bonds will be like bearer bonds and will not contain the name of the eventual beneficiary
  • These bonds shall be redeemable only in the designated account of a registered political party within a prescribed period
  • So, the donor’s bank would know about who bought how much of Electoral Bonds, but not the name of the party which received it
  • The party’s bank would know the amount deposited through Bonds, but not the identity of the donor

The problem

The Income Tax authorities and the EC would not know anything: reporting of donor, beneficiary, or even the amount of contribution has been exempted by amending the Income Tax Act Section 13A (b) and the RPA, Section 29C


Author gives the following example to make it clear that provision of electoral bonds is not going to boost transparency

Let us think of a classic quid pro quo. A government favours a business house in a mining or spectrum or oil deal to the tune of ₹5,000 crore. Both of them have a fifty-fifty deal. Under the existing arrangement, the business house would have to either declare in its balance sheet a ‘donation’ of ₹2,500 crore to the ruling party, or find that much cash to secretly hand over to the party bosses. If the payment is in white, the party will have to declare the amount and the name of the company to the Income Tax authorities and to the EC. Now, the company could simply purchase Election Bonds worth ₹2,500 crore and hand it over to the party. The company’s balance sheet will show “purchase of Election Bonds” with no name of the beneficiary, while it enjoys 100% tax deduction on that amount. The party will simply deposit the money in its account, with no obligation to report anything to the IT authorities or to the EC. It may well report an innocuous amount of, say, ₹3.8 crore as its annual reportable income!

Why would anyone give any money to a political party through cheque or digital payment and face all the hassle of disclosure when a perfect cover in the form of electoral bonds has been provided by the law?


[2]. ISRO sets the bar high

ISRO sets the bar high

The Hindu

ISRO boosted its reputation further when it successfully launched a record 104 satellites in one mission from Sriharikota by relying on its workhorse Polar Satellite Launch Vehicle rocket

What has happened?

ISRO has successfully launched 104 satellites in one go using PSLV. It accomplished the task in about 12 minutes.

What satellites were launched?

Indian satellites

  • An earth observation Cartosat-2 series satellitewhich is used for Earth observation. It will return high resolution images which will warn us against, and help tackle, natural disasters
  • Two Nano satellites: The two from India are called INS-1A and INS-1B, which carry 4 different pay loads from the Laboratory for Electro Optics Systems (LEOS) and Space Applications Centre (SAC). These will be used for conducting experiments


  • 96 were from the U.S.

Remaining countries

  • 1 each from the other five countries viz, Israel, the UAE, the Netherlands, Kazakhstan and Switzerland

 Which country held the previous record?

Till now Russia held the record of launching 37 satellites in a single mission, in 2014, while the National Aeronautics and Space Administration of the U.S. launched 29 satellites in one go in 2013.

Significance of the launch

The launch is particularly significant as ISRO now cements its position as a key player in the lucrative commercial space launch market by providing a cheaper yet highly reliable alternative

PSLV: A workhorse

The PSLV, which created launch history by placing a record 104 spacecraft in their desired orbits, has totally launched 46 Indian spacecraft, most of them Indian Remote Sensing (IRS) satellites. It also launched the Indian Moon mission Chandrayaan-1 in 2008 and is set to launch a private lunar mission for Bengaluru start-up Team Indus in late December this year

Probing other revenue streams

In the interim, ISRO must try to probe other revenue streams like Reusable Launch vehicles like Avatar

Read More: Reusable Launch vehicle System


[3]. The foul air we breathe

The foul air we breathe

The Hindu


Article talks about the recently released The State of Global Air 2017 study report conducted jointly by the Health Effects Institute and the Institute of Health Metrics and Evaluation


  • Particulate matter concentration is growing: Concentration of the most significant inhalable pollutant, fine particulate matter with a diameter of 2.5 micrometres or less (PM2.5), has been growing in India
    • Growth rate registered: The weighted national PM2.5 level estimated in the international report rose from 60 micrograms per cubic metre in 1990 (the acceptable limit) to 74 in 2015, with a steady rise since 2011

Effect of rising pollution

Premature death of an estimated 1.1 million Indians annually

Rising concentration indicates a failed policy

The rise in average annual population-weighted PM2.5 levels indicates that the Centre’s initiatives to help States reduce the burning of agricultural biomass and coal in Punjab, Uttar Pradesh, Rajasthan, Haryana and Delhi have failed.

Problem of crop residues

Amount of crop residue produced annually: 500 million tonnes

Author states that although the role of crop residues in causing pollution is well known, little is being done in this regard by the government. Steps proposed by Indian Agricultural Research Institute (IARI) to convert waste into useful products such as enriched fodder, biogas, biofuel, compost and so on have had little effect. Why? Because,

  • Lack of supply of machinery: Government has not been able to supply affordable seeder machinery in sufficient numbers to eliminate the need to remove the straw

Other helpful steps

  • Easy access to cheap solar cookers and biogas plants will also cut open burning, and help the rural economy
  • Reliable distribution mechanism is also required so that only intended beneficiaries receive the benefits

[4]. Time to Break in India

Time to Break in India

The Hindu


There is no point in hitching our bandwagon to what will soon be an obsolete patent game. We must think through alternative innovation incentives such as prizes and open source formats

What has happened?

US Chamber of Commerce has ranked India 43rd out of 45 countries on its IP index

Give the rest of the article a light read.


[5]. A few good officers

A few good officers

The Hindu


The Supreme Court verdict in the disproportionate assets case should boost the morale of all those who are investigating corrupt public servants

Give it a light read. Article is devoid of any relevant fodder points from examination point of view.



[1]. RBI signalling end to easing cycle

RBI signalling end to easing cycle

The Hindu


The indications from the recent RBI policy are that we have probably come to the end of this easing cycle

Article presents an interview with Badrinivas N.C. , Managing Director, Country Treasurer and Head – Local Markets Treasury, Citi India

Give it a cursory read


Indian Express

[1]. Happiness, beyond measure

Happiness, beyond measure


People are jumping on to the Gross National Happiness bandwagon, in an attempt to capture something that remains elusive


Bhutan, Venezuela, the United Arab Emirates (UAE) and Madhya Pradesh, All of them have a ministry/department for happiness.

GNHI is based on four pillars (political, economic, cultural and environmental) and nine domains.

Process of data aggregation in for GNH in Bhutan

GNH is built into Bhutan’s constitution, in Article 9, on Principles of State Policy

In Bhutan feedback received from GNHI surveys is factored into government policies and public expenditure priorities, reflected in central and local body plans

There were surveys in 2010 and 2015 to determine how Bhutan performed on GNHI.

But survey was based on subjective responses to questionnaires that were then aggregated.

In Venezuela

While initial idea in Venezuela seems to have been to converge anti-poverty programmes directed at disabled, homeless, poor and old-age pensioners.

Here government didn’t asked people what their priorities are.

This also illustrates why discussions on happiness that mention both Bhutan and Venezuela in the same breath are misleading.


In 2016, UAE announced a new ministry (and minister of state) for happiness.

It may be early days, but so far, all this ministry seems to have done is to train officers from federal and local government to become “chief happiness and positivity officers”.


Among India’s states, Madhya Pradesh was the first one to start a happiness department in 2016.

Criticisms of GNH

There is discretion and diversions in the approaches adopted by different governments to measure the happiness

[2]. Orbital momentum

Orbital momentum

Indian Express


ISRO has established its presence in the booming launch vehicle market. It is time to start spinning off products and services

Relevant points from this article has been clubbed in the Hindu editorial related to ISRO launch


Live Mint

[1]. The GPS is a time machine

The GPS is a time machine

Live Mint


The Global Positioning System (GPS) is not only for navigation. Modern technology depends on it for telling time.

What is GPS?

The Global Positioning System (GPS) is a satellite-based navigation system. The GPS (Global Positioning System) is a “constellation” of approximately 30 well-spaced satellites that orbit the Earth and make it possible for people with ground receivers to pinpoint their geographic location.

How does GPS work?

  • A GPS receiver calculates its position by a technique called satellite ranging, which involves measuring the distance between the GPS receiver and the GPS satellites it is tracking.
  • The Global Positioning System, or GPS, uses passive range-finding technology to pinpoint your exact position on the globe by calculating the time it takes for a pulse from its satellites to reach your receiver.


Need for GPS

  • Today, timeliness is core to everything we do.
  • Existence of a common and coordinated system of telling time.
  • Many of the complex networked technologies that we take for granted today depend on precisely synchronized time to function.
  • Most modern technologies depend on having a single precise system of telling time—that works everywhere.
  • GPS is the most accurate, perfectly synchronized timing system on the planet—that is, to boot, accessible, free of cost, from anywhere on earth.
  • Due to the accuracy of GPS technology, along with improvements in GPS technology applications, we are starting to see industries such as automotive, light air, marine navigation, surveying, mapping, environmental research, and now construction applications.


Use of GPS Technology

  • Efficient delivery of products and materials
  • Equipment maintenance
  • Getting to meetings in unfamiliar locations


GPS systems certainly are becoming more and more prevalent in their application with daily advancements in the technology. GPS is an increasingly influential product, both in our personal and business lives, and new products will continue to be developed and fine-tuned to help us do our work faster and more efficiently.


9 PM Daily NEWS Brief

9 PM Daily Current Affairs Brief – 9 February

Front Page / NATIONAL

[1]. In a first, SC issues contempt notice against HC Judge Karnan

[2]. Centre to install 150 quake sensors in Uttarakhand


[1]. Growing insecurity in Afghanistan

[2]. Getting back home, safely 


[1]. RBI opts for flexibility to ‘move in either direction’

[2]. Credit Policy: Is it a hit, miss or well left?

[3]. India to pitch global services accord to WTO chief Azevedo

[4]. Digital payment costs are a hindrance

Indian Express

[1]. Salt to the wound

Live Mint

[1]. RBI signals end of rate cut cycle

Front Page / NATIONAL

[1]. In a first, SC issues contempt notice against HC Judge Karnan

In a first, SC issues contempt notice against HC Judge Karnan

The Hindu


Bench directs him to forthwith refrain from undertaking any judicial or administrative work and return all his official files to the Calcutta HC Registry

What has happened?

A seven-judge Bench of the seniormost judges of the Supreme Court, in an unprecedented move, issued contempt of court notice against sitting Calcutta HC judge C.S. Karnan for impeding justice administration and bringing discredit to the judicial institution of the country by writing scurrilous (making scandalous claims) letters about sitting and retired judges

  • The Bench has directed Justice Karnan to forthwith refrain from undertaking any judicial or administrative work and return all his official files to the Calcutta HC Registry.

Show-cause notice

The Bench, led by Chief Justice of India J.S. Khehar, ordered Justice Karnan to appear in person before it on February 13 to show cause to the court why contempt proceedings should not be taken against him.

Constitutional power

Supreme Court as the apex judiciary is empowered under Articles 129 read with its extraordinary powers under Article 142 (2) to punish a member of the High Court and subordinate judiciary for contempt.

Article 129: The Supreme Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself

Article 142: Enforcement of decrees and orders of Supreme Court and unless as to discovery, etc

  1. The Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed or orders so made shall be enforceable throughout the territory of India in such manner as may be prescribed by or under any law made by Parliament and, until provision in that behalf is so made, in such manner as the President may by order prescribe
  2. Subject to the provisions of any law made in this behalf by Parliament, the Supreme Court shall, as respects the whole of the territory of India, have all and every power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents, or the investigation or punishment of any contempt of itself


[2]. Centre to install 150 quake sensors in Uttarakhand

Centre to install 150 quake sensors in Uttarakhand

The Hindu


India is looking to have more than six times the number of earthquake sensors in Uttarakhand to better understand the geology of the region and the evolution of Himalayan earthquakes

What has happened?

The National Centre for Seismology has got the approvalfor a project to install 100-150 seismometers in the Garhwal-Kumaon region [the key region in the Himalayas and known to be seismically active] for testing purposes and to better understand the geology of the region and the evolution of Himalayan earthquakes.

  • Cost: Though funds were still not available, the entire project would unlikely exceed ₹10 crore

Present situation

Currently, there are only about 20 stations, maintained by different research agencies that track earthquake activity

Garhwal-Kumaon region

This region is known to be seismically active because it lies at the junction of two tectonic plates — the Himalayan and the Eurasian Plate — pushing against each other

  • Major quakes in the region include the 1991 Uttarkashi quake of magnitude 6.8 that killed 700. It was followed by a quake of similar intensity that hit Chamoli in 1991 and killed 100.


On 6th Feb 2017, Rudraprayag district of Uttarakhand registered a 5.8 magnitude earthquake. Though it didn’t cause damage, seismologists say its magnitude was “significant,” and residents in several parts of north India felt the tremors. The latest development can be seen in this context.




[1]. Growing insecurity in Afghanistan

Growing insecurity in Afghanistan

The Hindu


The blast near the Supreme Court premises in Kabul that left at least 20 people dead, underscores the growing insecurity in Afghanistan

Article highlights the increasing frequency of attacks by Taliban in Afghanistan, its gradual consolidation as a strong insurgent force and the consequent inability of the elected government to stand against it

Author suggests

To turn its fortunes around in the 15-year-old civil war,

  • Afghanistan needs to strengthen the administration: Mr. Ghani should initiate the administrative reforms he had promised and put up a stronger, united fight against terrorist groups
  • Seek out help: Kabul should seek more help and a higher level of commitment from other countries, including the U.S., in combating terror


[2]. Getting back home, safely 

Getting back home, safely

The Hindu


Despite extensive experience in conducting evacuation operations of its citizens abroad, India still needs to institutionalize best practices

Issue: Capacity building in conducting evacuation operations

A stark improvement

In the first few paragraphs, author cites the extraordinary evacuation conducted in April 2015 under Operation Raahat& compares it with the shoddy evacuation scenario of 850 Indian nationals during civil war in South Yemen in 1986, describing how far we have come

 Significance of capacity building

The increasing size and complexity of the diaspora requires the government to expand capacity and improve procedures.

  • Size of diaspora: More than 11 million Indians now reside abroad and 20 million travel internationally every year
  • Political instability:As political instability rattles the West Asian region, which hosts more than seven million Indians, the government can no longer rely on heroic efforts by individual officials or quick-fix solutions

What needs to be done?

  • Learning from the experience: The government will need to build on its rich experience in conducting more than 30 evacuation operations since the 1950s.
    • Policy-oriented research: By supporting policy-oriented research at universities and think tanks to document the memory of senior officials, the government would also facilitate the transmission of their expertise to younger officials
  • Avoiding a jugaad: The government must avoid the jugaad approach. Every evacuation case is unique, given the specific nature and location of the crisis, but this should not preclude an analytical attempt to formulate a blueprint that lists core tasks for all operations
    • Preparing a manual: An inter-ministerial committee should prepare a manual with guidelines that establish a clear chain of command and division of competencies; identify regional support bases, assembly points and routes for evacuation; develop country-specific warden systems to communicate with expatriates; and establish evacuation priority and embarkation criteria

 Embarkation: Itis the process of loading a passenger ship or an airplane with passengers or military personnel, related to and overlapping with individual boarding on aircraft and ships

  • Training India’s diplomats: India’s diplomatic cadre must be given specific training to operate in hostile environments
    • To achieve this, the government could instruct the police or army to train Indian Foreign Service probationers to operate in war zones; conduct frequent evacuation simulations and emergency drills; and create rapid reaction teams of Indian security personnel to be deployed to protect diplomatic staff and installations abroad
  • Working closely with countries having a sizeable expatriate population: The success of future operations will also rely on New Delhi’s willingness to work together with friendly governments. India will have to invest in cooperative frameworks that facilitate coordination among countries that have large expatriate populations in West Asia, in particular Nepal, Bangladesh and Sri Lanka, and among leading powers with evacuation capacity in the Indian Ocean region.
  • Assigning a greater role to army: The government will have to assign a greater role to its armed forces, in particular by strengthening the Navy and Air Force’s capacity to operate in tandem with civilian authorities
    • Developing a NEO doctrine: It should, for example, direct the military to develop a non-combatant evacuation (NEO) doctrine, designate the Integrated Defence Staff as the nodal organisation to improve inter-services and civil-military coordination, direct the services to conduct more multilateral NEO exercises, and adapt military modernization plans to increase capacity for out-of-area deployment and evacuation.

Using technology

  • Inter-ministerial coordinating mechanism: To minimize redundancies, the government must institutionalize a permanent inter-ministerial coordinating mechanism for emergency evacuations, incentivise inter-agency cross-posting of officials dealing with diaspora affairs, and encourage State governments to create regional contingency plans.


  • Establishing a permanent civil reserve fleet: To avoid cost inflation and delays, the government must establish a permanent civil reserve air fleet that pools aircraft from all Indian airlines based on pre-established requisition and reimbursement procedures.
  • Monitoring the diaspora: The government will have to invest in new technologies to better monitor the diaspora’s profile and mobility. This can be achieved by
    • Encouraging more diplomatic missions to provide online consular registration forms
    • Developing an online registration system for overseas travelers
    • Utilizing social media
    • By making the Aadhaar card compulsory to facilitate biometric identity verification and reduce identity fraud during evacuation

 Managing public opinion during crisis: The government must expand efforts to manage public opinion and be able to conduct a quiet diplomacy that is crucial to safely extricate Overseas Indians from conflict zones. To reduce domestic pressures,

    • It should embed media representatives more frequently in such missions
    • Reassure the diaspora by ensuring that high-level political representatives are personally engaged
    • Avoid raising expectations by clearly distinguishing Indian citizens from people of Indian origin


Author concludes by stating that India has extensive experience in conducting evacuation operations, but to secure the lives and assets of Indians abroad, the government must avoid an ad hoc approach and seek to institutionalize best practices, improvecoordination and capabilities, both diplomatic and military



[1]. RBI opts for flexibility to ‘move in either direction’

RBI opts for flexibility to ‘move in either direction’

The Hindu


Bond yields climb after debt market participants are surprised by central bank’s shift to ‘neutral’ monetary stance

What has happened?

The Monetary Policy Committee of the Reserve Bank of India (RBI) has decided to keep the key policy rate, the repo rate, unchanged at 6.25% citing uncertainties caused by demonetisation

Rest of the article covers general points. You can give it a go-through


[2]. Credit Policy: Is it a hit, miss or well left?

Credit Policy: Is it a hit, miss or well left?

The Hindu


For the already available beneficial impact of liquidity on cost of funds, RBI’s stance of no cut would have seemed harder on the economy

Highlights of the bimonthly policy

  • Accommodative to neutral: The tweaking of stance to “neutral” is this policy’s headline and is being seen as reducing the chances of a future rate cut
  • RBI’s formula: The other interesting highlight is RBI’s formula for transmission of policy rate to banks which lays stress on bank NPA resolution, recapitalization of banks and making small savings rates responsive to Government market borrowing rates


Author states that on the liquidity front, India has witnessed a sea of liquidity at banks courtesy DeMo, taking the excess liquidity in the system to a staggering 2 lac crappx


[3]. India to pitch global services accord to WTO chief Azevedo

India to pitch global services accord to WTO chief Azevedo

The Hindu


India will make a presentation to World Trade Organisation (WTO) Director General Roberto Azevedo and India Inc. on New Delhi’s proposal for a global pact to boost services trade

Trade Facilitation in Services (TFS) Agreement

The proposed Trade Facilitation in Services (TFS) Agreement at the WTO-level aims to ease norms including those relating to movement of foreign skilled workers/professionals across borders for short-term work

Objectives of TFS

  • Portability of social security contributions: Ensuring portability of social security contributions
  • Ensuring non-restrictive fees: Making sure fees or charges for immigration or visas are reasonable, transparent, and non-restrictive (or impairing the supply of services) in nature
  • Creation of a single window mechanism for foreign investment approvals
  • Cross-border insurance coverage: Ensure cross-border insurance coverage to boost medical tourism, publication of measures impacting services trade and timely availability of relevant information in all the WTO official languages as well as free flow of data/information for cross-border supply of services


Government will specify that the proposed services pact is similar to the Trade Facilitation Agreement (TFA) in Goods adopted by the WTO Members in 2014 to ease customs norms for boosting global goods trade.

  • The proposed TFS pact is also about ‘facilitation’ – that is “making market access ‘effective’ and commercially meaningful and not about ‘new’ (or greater) market access.”

Barriers to services

World Bank data shows the growing share of services in the world economy, however, global trade flows in services remain subject to numerous border and behind-the-border barriers.

Read More: TFA


[4]. Digital payment costs are a hindrance

Digital payment costs are a hindrance

The Hindu


Article lists the views of the TRAI chief that he expressed during the India Digital summit hosted by the Internet and Mobile Association of India


  • The surge in digital payments in the country, driven largely by short-term incentives, will become sustainable if the costs of making such payments are addressed
  • No cost for cash: Everyone can provide incentives in the short run and see a rise and once those incentives go, they will decline. What is important from a citizen’s perspective is that cash doesn’t have any costs. If I have ₹100 in my pocket, I get ₹100 worth of goods. But if I have to pay somebody ₹1 or ₹2 for paying the same digitally, it’s not fair
  • Issue of cost: Digital financial transactions are not sustainable unless you address the issues of cost, convenience and confidence
  • Referring to the merchant discount rate (MDR) levied on transactions done through credit and debit cards, TRAI chief said there is no relationship between the charges and the ‘work done’ to justify them.
    • Drawing a parallel with the telecom sector, the regulator drew attention to ‘the work done principle’ used to determine how much one operator pays another as termination charges.
  • Building confidence: While people are getting more comfortable with digital payments, the TRAI chief said it is important to build confidence in the systems and ensure that all relevant software is tested for cyber-security and other security risks.
  • Reduced charges: The regulator has reduced the charges of USSD (Unstructured Supplementary Service Data)-based payments made on mobile phones.

Indian Express

[1]. Salt to the wound

Salt to the wound

Indian Express


Government could have undone the damage of demonetisation through the budget. The opportunity has been missed in deference to the whims of global finance

 In the first few paragraphs, author has conveyed the sentiment that the Union Budget could have partially undone the damage inflicted by demonetization but it has failed to do so

Damage by demonetization

Author states the damage that has been done by demonetization move of the government

  • Contraction in aggregate demand
  • Slowdown of overall growth
  • Impact on the informal sector

Contractionary budget: An opportunity lost

Author states that by boosting demand in the economy through larger government expenditure, budget could have provided some relief but instead it took following step,

  • Rate of Growth halved: The rate of growth of total government expenditure has been halved, from about 12 per cent between 2015-16 and 2016-17 (RE) to just 6 per cent b/w 2016-17 (RE) to 2017-18 (BE). As a proportion of GDP, total expenditure is slated to fall between 2016-17 and 2017-18.

 Author’s contention

Union Budget could have given a spur to the economy by utilizing the deposits lying idle with the banks, as credit demand from borrowers has not picked up. Government should have issued fresh securities to the banks and used the money for spending but it would have contributed to the fiscal deficit (as govt needs to pay interest for the money borrowed from the banks in lieu of securities) and hence government didn’t do so

  • Donald Trump is busy imposing trade restrictions, and hence snatching employment through a “beggar-my-neighbour” policy from other countries, including India.
  • Countering Trump: Our country should be countering Trump’s protectionism and preventing job losses by imposing trade restrictions of its own, and in the shadow of such restrictions, increasing the domestic market through larger fiscal deficits, backed by requisite capital controls


Live Mint

[1]. RBI signals end of rate cut cycle

RBI signals end of rate cut cycle

Live Mint


RBI has restored its credibility by emphasising its determination to bring down inflation closer to 4% and focus on macroeconomic stability

Issue: RBI keeps the repo rate unchanged in the 6th Bimonthly policy review

Right decision

As per author, RBI, emphasizing its determination to bring down inflation closer to 4% on a durable basis and focus on macroeconomic stability, has restored its credibility, which many felt the Indian central bank was losing


Since January 2015, the RBI has cut its policy rate by 175 basis points to 6.25%.

Ground for a rate cut

Author states that the biggest push for yet another rate cut at this point has been a sharp drop in retail inflation. It dropped to 3.41% in December from 3.63% in the previous month—its lowest since November 2014

Why RBI stuck to the previous policy rate?

  • Deflation: The drop in inflation has been primarily driven by deflation in the prices of vegetables and pulses and excluding food and fuel, inflation remained at 4.9% for four months at a stretch, since September
  • Crude prices: Among others, a rise in international crude prices has contributed to this. The MPC did not want to take any chances

Give the rest of the article a go-through



9 PM Daily NEWS Brief

9 PM Daily Current Affairs Brief – January 18

  • Front Page / NATIONAL [The Hindu]
  1. SC orders inspection of pollution check Centres
  2. Britain to leave EU’s single market: Theresa May
  3. SC asks govt. to file status report on Ganga rejuvenation
  4. India becomes Associate member of CERN
  • Editorial/OPINION [The Hindu]
  1. In the nick of time
  2. Voting in a season of discontent
  3. The real meaning of independence for RBI
  4. An Afghan agenda for Trump
  • ECONOMY [The Hindu]
  1. Finance Ministry suspends Dec. 21 tax circular on indirect transfers
  2. Industry seeks foreign partners for trade pact
  • Indian Express
  1. Permission To Prosecute
  2. Cities at crossroads
  • Live Mint
  1. Tough times ahead for India in Afghanistan
  2. What is the optimal policy response to demonetisation?

Front Page / NATIONAL [The Hindu]

[1] SC orders inspection of pollution check Centres

The Hindu



Highlighting the urgency to find immediate solutions to curb air pollution rather than mull over possible solutions, the Supreme Court has asked the Environment Pollution Control Authority to inspect over 900 Pollution Under Certificate stations across Delhi



The bench was hearing a suggestion that pollution certificates should be linked to vehicle insurance


Centre’s submission

Centre submitted that even the functioning of several of the pollution checking stations in Delhi were suspect

  • Consultations with stakeholders were on to ban pet coke and furnace oil as industrial fuel in Delhi-National Capital Region.


Show cause notices

Centre submitted that 962 stations in the national Capital, 174 have been issued show cause notice for irregularities. These pollution centres check at least 5,000 vehicles a month

  • Of the 962 centres, 75 have been suspended, 14 cancelled and warning notices were issued to 78


Status report

  • Bench asked the centre to furnish a status report regarding the show cause notices issued to the PUC centres
  • The court has asked for a status report on the proposal to ban pet coke and furnace oil by the next court hearing on February 6


[2] Britain to leave EU’s single market: Theresa May

The Hindu



British Prime Minister Theresa May has made it clear- the U.K. will make a clean break from the European Union and leave its single market of some 500 million people


Article provides us with view of British PM in the aftermath of BREXIT and how things could shape up.

Give it a light read



[3] SC asks govt. to file status report on Ganga rejuvenation

The Hindu



Almost two years after the Supreme Court voiced scepticism about the government’s self-proclaimed promise to clean up the Ganga river, the apex court has sought a fresh status report from the Centre on what it was doing to revive the holy river



Bench has directed the government to file a report on the construction and functioning of sewage treatment plants alongside the river, which runs through five States.

  • The court wants the report by 24th Jan 17



The report has been sought on a 32-year-old pending public interest litigation petition filed by environmental lawyer, M.C. Mehta


Scepticism by SC
In 2014, the Supreme Court voiced its scepticism about the various efforts over the decades to return the Ganga to its pristine self, once even saying that it “does not expect Ganga to be cleaned up even after 200 years.”

  • NGT, the last hope: In 2014, the Supreme Court said that its “last hope” rested on the National Green Tribunal (NGT) and referred the task of monitoring industrial units along the Ganga to the NGT.
  • The apex court had even empowered the tribunal to cut off water and power connections if the units are found to be polluting the river.


IIT’s consortium

  • Roadmap to rejuvenate Ganga: In January 2015, the government had informed the Supreme Court that a consortium of IITs was preparing a road map to rejuvenate the river.
    • Setting up sewage treatment plants: It informed that a proposal is on track to have a total of 80 sewage treatment plants (STPs) which would process, in a day, 368 million litres of water flowing into the river in the five river basin States
    • Detailed report submitted: In March 2015, the government submitted a detailed report prepared by the IITs for the revival of the river to its former “wholesome” self


Ganga River Basin Management Plan (GRBMP)

The Ganga River Basin Management Plan (GRBMP) 2015 drafted by the IIT consortium had pointed to several problems, from rapid urbanisation to over-grazing, which has led to the slow destruction of the river



[4] India becomes Associate member of CERN

The Hindu



India became an Associate member of CERNwith the Indian government completing its internal approval procedures in respect of the agreement it had signed with CERN on November 21, 2016


What does it mean?

Following benefits will accrue to India as an associate member of CERN,

  • Access to data: India will have full access to all data generated at CERN. As there are many experiments in CERN, there will be plenty of information available. When we were not an Associate member, India could data only from those experiments where we were participating
  • Participation in experiments: India will be able to participate in all experiments. India may have to pay additional charges for participating in the experiments. Moreover, India can choose the experiments where it wants to participate
  • Bidding opportunities will give Make in India a boost: Whenever any CERN facilities get upgraded and go through maintenance, it will provide opportunities for Indian industries to participate.
    • Indian industry will be entitled to bid for CERN contracts, which will allow it to work in areas of advanced technology. So the “Make in India” will get a boost due to CERN.
  • Eligible for staff appointments: Indian scientists will become eligible for staff appointments, it will enhance the participation of young scientists and engineers in operation and maintenance of various CERN projects. “Indian scientists and engineers working in CERN will learn how to operate and maintain the facilities. So when they return it will be useful for India


Does India need to pay any fees?

India has to pay about Rs. 40 crore a year as an Associate member. According to him, it is a small fee compared to the huge scientific and commercial benefits that India will stand to gain.


India & CERN: Over 50 years together

India has been actively involved in CERN’s scientific activities for over 50 years

  • Substantial contributions to LHC: Indian physicists, engineers and technicians have made substantial contributions to the construction of the LHC accelerator and to the ALICE and CMS experiments, as well as to accelerator R&D projects
  • Several agreements signed: In 1991, India and CERN signed a Cooperation Agreement, setting priorities for scientific and technical cooperation. India and CERN have signed several other protocols since then
    • TIFR & CERN: India’s involvement in CERN began in the 1960s with researchers from the Tata Institute of Fundamental Research, Mumbai participating in experiments at CERN
    • In the 1990s scientists from Raja Ramanna Centre for Advanced Technology, Indore too got involved in CERN experiment
    • Researchers from TIFR, Raja Ramanna Centre for Advanced Technology and other institutes built components for an accelerator (LEP) and detectors (L3, WA93 and WA89)
    • Observer status: India was granted Observer status to the CERN Council in 2002


CERN convention: The CERN convention was signed in 1953 by the 12 founding states. Currently, CERN has 22 member states. Besides India, Turkey, Pakistan, Ukraine are Associate members and Serbia and Cyprus are associate members in the pre-stage to membership


Editorial/OPINION [The Hindu]

[1] In the nick of time

The Hindu


Goods and Services Tax (GST) Council has made some breakthroughs on outstanding negotiables that were holding up the introduction of the indirect tax regime.


Article details about the resolution of key issues pertaining to GST between centre & States.


Note: Please refer to the brief dated 17th Jan 17 for the relevant news.


Addressing concerns of industry

It is an opportune time to address some of the concerns raised by another key stakeholder — industry

  • Need around six months’ time: Firms have indicated they would need about six months to gear up for the new tax regime once the laws, rules and all the minutiae of implementation, including the rates for different products and services, are known.
  • Clarity required:More clarity and finesse are also needed on the harsh penal provisions, including the power to arrest, proposed in the draft GST law (that lists out 21 offences) and the creation of an anti-profiteering authority that can act against firms that fail to pass on benefits of tax rate cuts to consumers
  • Preventing the return of Inspector Raj: While it is important to protect the consumer, a clear rule-based framework is necessary to ensure that one of the biggest gains envisaged from GST — an exponential change in ease of doing business — isn’t shadowed by fears of a return to inspector raj



Author concludes by saying that government should try and address all the gaps and shortcomings of the GST before fully implementing it, even if it results in a delay of few more weeks



[2] Voting in a season of discontent

The Hindu



Election pundits are busy interpreting how the state of affairs in Manipur will play out in the March election.


Main issue dealt with in this article: How the ongoing Manipur economic blockade might affect the polls that are due to be conducted in March?


Give it a light read.


[3] The real meaning of independence for RBI

The Hindu



The demonetisation decision has led several observers to express concern about the autonomy and institutional integrity of the Reserve Bank of India (RBI)


Issue: Autonomy of RBI


Not a republic

Author sets the tone for the article by stating that people raising questions about the autonomy of RBI being compromised when it surrendered to government’s will on demonetization, forget that RBI is not a self-governing republic



Author states that a cursory reading of the RBI Act (Section 7 on Management) lays out things quite clearly.

  • Part (1) of Section 7 states: “The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest”
  • Parts (2) and (3) spell out the roles for the Central Board and Governor.
  • Order of precedence: There is a clear ‘seniority’ principle with (1) taking precedence over (2) which takes precedence over (3)


Author’s contention

The decision to demonetize high-denomination currency was taken by the government in public interest after consultation with RBI.

  • Doing its duty: The RBI Board did its duty by ratifying/recommending the action and it was then left to the Governor and his officers to implement the decision. Surely, the RBI could not take a policy decision as major as demonetisation unilaterally. Nor indeed could it turn it down unilaterally


The exact role of a central bank

Function 1: Ensuring a low and stable inflation

Author states that it is critical to understand what autonomy and institutional integrity mean for a central bank like the RBI. The RBI, like most central banks, consists of technocrats and bureaucrats who are unelected and not directly accountable to the people. In a democracy, the final responsibility of all policy decisions must lie with the elected representatives of the people, either the government or Parliament or both.

  • Demand for central bank’s independence: The notion of central bank independence first gained traction in the advanced economies when it was noticed that elected governments often chose to disregard price stability in favour of growth, especially in the run-up to elections resulting in adverse effects on the economy
  • Central goal of a central bank:The central goal of central bank independence was to ensure low and stable inflation via the autonomous conduct of monetary policy. It is important to note that is not the central bank’s discretion to decide what the targeted rate of inflation ought to be (or indeed what the optimum rate of growth should be); that remains the job of the elected government. But once that target is laid down, the central bank must ensure that it meets those targets with complete operational autonomy


Situation in India

  • RBI decided the rate in India: In India, until the monetary policy framework and an inflation target were spelt out in 2016, it was the RBI which decided what a reasonable rate of inflation should be
  • Too much power: It was the RBI Governor — just one person — who had complete control over monetary policy goals and decisions. That was vesting too much independence in an unelected official
  • The proper way:The proper way to conduct monetary policy is via explicit goals laid out by the elected government which are then executed by a group of experts — a Monetary Policy Committee — rather than one individual, without any interference from the government


Function 2: Managing Debt


Author states that the RBI is the government’s debt manager.

  • A separate agency: It has been proposed that this function should be handed over to an independent debt management agency, a contention resisted by RBI
  • Not an assault on RBI’s independence: The separation of debt management from the RBI is not an assault on the RBI’s independence by the government. Instead, it is to remove the conflict of interest that exists in the RBI’s functions of setting interest rates, and management of the government’s debt. The latter could influence the former when it ought not to. The RBI’s independence to carry out its primary mandate, the efficient conduct of monetary policy, will only be enhanced by separating the debt management function.


Function 3: Regulation of Banking system

The third major role played by the RBI is in the regulation of the banking system.

  • Author states that like any other regulatory agency, RBI must be allowed to function independently in this regard without any government interference. Moreover, there has been no evidence to suggest that the government has interfered in any way
  • Separate roles: Government is the owner of Public Sector Banks (PSBs) which control nearly 70 per cent of lendingwhile RBI is the regulator. Both the domains are independent of each other



Author concludes by stating that there has not been any assault on the RBI’s autonomy. The government, when it exercises its right as sovereign, whether to set an inflation target or to demonetise high-value currency, is acting well within the norms of the law and the spirit of democracy. Any attempt by unelected officials to obstruct would only be abuse of their autonomy.



[4] An Afghan agenda for Trump

The Hindu



The U.S. President-elect must address Pakistan’s treacherous role in Afghanistan at full tilt.


Give it a go-through once




ECONOMY [The Hindu]

[1] Finance Ministry suspends Dec. 21 tax circular on indirect transfers

The Hindu



In a bid to soothe the nerves of foreign portfolio investors spooked by a fresh tax burden on indirect transfers mooted by the Central Board of Direct Taxes last month, the Finance Ministry on Tuesday put the tax department missive in abeyance until further notice


The circular

The tax department circular issued on December 21 clarified that all foreign portfolio investors (FPIs) with more than 50% of their assets in India and owning over 5 % stake in any listed entities would incur tax under India’s indirect transfer provisions



The stakeholders have presented their concerns stating that the circular does not address the issue of possible multiple taxation of the same income


[2] Industry seeks foreign partners for trade pact

The Hindu



India’s top industry bodies are attempting to build a coalition with counterparts in other nations with similar interests to give a fillip to the country’s proposal for a Trade Facilitation in Services (TFS) Agreement at the World Trade Organisation (WTO)-level

The proposed TFS aims to

  • Make it easier for professionals and skilled workers to move across borders for short-term work, as well as ensure portability of their social security contributions.


Global seminar

Two leading industry bodies — CII and FICCI — will hold a global seminar in Delhi and Mumbai on the topic in Feb 2017


Importance of coalition building

The importance of coalition building has been acknowledged by the WTO when it stated that, “coalitions give developing countries a stronger voice in negotiations. The resulting agreements mean that all countries, including the most powerful, have to play by the rules


Indian Express

[1] Permission To Prosecute

Indian Express



Diverse SC judgments leave a loophole to stifle investigations against public servants


Author’s contention

Author states that the conflicting views of the Supreme Court on the precondition of “sanction” for prosecution of a public servant under Section 19 of the Prevention of Corruption (PC) Act, 1988 have created a legal loophole which could be exploited by unscrupulous public servants to stifle a criminal investigation


What does the Section 19 state?

Section 19 of the PC Act states:

“No court shall take cognizance of an offence… alleged to have been committed by a public servant except with the previous sanction.”


Balancing competing interests

The provision aims to balance two competing interests

  • One is the need to ensure that an honest public servant is not hounded in the performance of his or her duties by frivolous complaints
  • The other is that investigation into an allegation of crime isn’t choked at the threshold due to the power wielded by a public servant


Bar on cognizance till sanction is imposed

Section 19 imposes a bar on the court to take “cognizance” of an offence till sanction is obtained from the government.

  • The bar is against the court to take cognizance for the purposes of trial
  • There is no prohibition either under the PC Act or the Criminal Procedure Code (CrPC) to start an investigation by lodging an FIR or through a court-initiated investigation under Section 156(3) CrPC


Anil Kumar vs. M.K. Aiyappa (2013) judgement

Author states that a two-judge bench in Anil Kumar vs. M.K. Aiyappa (2013) 10 SCC 705 appears to have unsettled the law on this subject.

  • The court held that Section 19, PC Act applies at the threshold itself and an application under Section 156(3) CrPC for investigation is not maintainable without obtaining prior sanction of the competent authority
  • This has recently been followed by the Supreme Court in L. Narayana Swamy vs State (2016) 9 SCC 598


Opposite view

Author states that while the Aiyappa judgement takes the view that,

  • even an investigation cannot be ordered under Section 156(3) CrPC without sanction, larger benches of the apex court have taken a diametrically opposite view. What is that view?
  • The SC rightly take the view that any investigation into a crime cannot be stifled at the threshold itself by giving power to the executive to scuttle it through sanction


R.R. Chari vs. State 1951

In R.R. Chari vs. State 1951 (3 judges), the court held that there was no requirement of sanction for ordering an investigation under Section 156(3) CrPC


State of Rajasthan vs Raj Kumar (1998)

In State of Rajasthan vs Raj Kumar (1998), it was held that there was no requirement for sanction before filing a chargesheet under Section 173 CrPC


Subramanian Swami vs Union of India (2014)

A bench of five judges of the apex court in Subramanian Swami vsUnion of India (2014) held that

  • Section 6A of the Delhi Special Police Establishment Act, which had required prior sanction for investigation into crimes by high-ranking public servants, was unconstitutional
  • Investigation cannot be subverted: investigation is central to the criminal justice system and cannot be subverted by imposing a restriction on the police at the threshold itself
  • Status is irrelevant: If there is an accusation of bribery, graft, illegal gratification or criminal misconduct against a public servant”, the status of the offender is not relevant


Author argues

At this point author argues that,

  • If the abovementioned is the stated legal position, then there is no rationale as to why a court should be excluded from directing an investigation under Section 156(3) CrPC without sanction but the practical consequences of Aiyappa and Narayana Swamy result in prohibiting even the issuance of a direction for investigation by a court under Section 156(3) CrPC



Author points out that the precondition of “sanction” could give a possible tool to the executive to evade a potential investigation

  • A high-ranked public servant could influence the police not to set criminal law in motion by registering an FIR. And the hands of the court would be tied.


High Courts start to disregard Aiyappa judgement

Author states that several high courts have started to openly disregard Aiyappa

  • Maneesh vs State: The Kerala High Court in Maneesh vs State held the judgment inAiyappa was not binding on it
  • C. Shiv Kumar vs State: More interestingly, the very judge of the High Court of Karnataka who penned down the Aiyappa judgment, which was upheld by the Supreme Court, has in a subsequent judgment in N.C. Shiv Kumar vs State held that his judgment ignored “settled principles established by earlier judgments of the apex court rendered by larger benches”.



Author concludes by stating that it is need of the hour that SC render an authoritative pronouncement and correct the apparent anomalies in the state of the law on sanction.



[2] Cities at crossroads

Indian Express



Article focusses on what is known about waste-to-energy plants


3 essential ingredients

Author states that a credible municipal solid waste management solution should have 3 essential elements,

  • Segregation: Segregation of biodegradable or wet waste from dry waste at source
  • Employing Bio-methanation plants: : Once segregation is achieved, municipal governments can use wet waste to produce compost and biogas in bio-methanation plants
  • Waste-to-energy plants: Dry waste, after removing recyclable elements, should go to waste-to-energy plants: This will reduce the volume of waste that remains to be sent to landfills


Technologies used by Waste-to-energy plants (W2EP)

Author states that a number of waste-to-energy plants are coming up in urban India, using

  • Incineration
  • Refuse Derived Fuel (RDF)-based combustion or conversion technologies such as pyrolysis and gasification


Note: Incineration-based waste-to-energy plants rely on mass burning of municipal solid waste, which involves complete combustion of miscellaneous waste materials into ash. The latter is also true of RDF combustion-based plants


The confusion & questions

Author points out that following questions and apprehensions have been voiced in public domain,

  • Damaging impact: Any potential damaging impact of waste-to-energy plants on the environment, the quality of air in particular, and consequently, on public health
  • Financial feasibility: Whether these plants are financially viable


Need for high quality emission filters

Depending on what is being combusted (and this is a huge challenge to determine with municipal solid waste), the gases generated during combustion of waste may contain dioxins and furans, which are toxic and can be lethal.

  • Emission control: These plants therefore need to put in place emission control filters of a very high standard to check the release of harmful gases into the atmosphere. There is a need for continuous monitoring of emissions and sharing information openly, if public apprehensions are to be put at rest


Global situation wrt incineration based plants

  • Singapore: Singapore uses incineration with due environmental precautions in managing its municipal solid waste after recycling 60 per cent of its waste (among the highest rates in the world)
  • Japan: Japan and a number of European countries also rely on incineration, with due precaution, as they try to minimize the waste that needs to go to landfills
  • United States: The United States had a long free run with incineration plants, but thanks to the environmental movement, there has been a significant tightening of regulations with respect to emissions since the 1970s. The abundance of land in the US led to greater recourse to landfills. But incineration plants are making a comeback and with these, so is the need for vigilance on emissions


Cleaner technologies

Author states that the innovations in waste-to-energy technologies worldwide have been focusing on new technologies which can deliver cleaner emissions but are considerably more expensive, like

  • Pyrolysis
  • Gasification
  • Plasma gasification


How abovementioned technologies work?

These technologies involve,

  • Heating solid waste at very high temperatures: Heating of solid waste at very high temperatures in an oxygen-controlled environment, such that the thermal reactions produce synthesis gas (or syngas)
  • Advantage of Syngas: It has the advantage that it can be burned directly or transported through pipelines and/or tankers for use in electricity generation, refining, chemical and fertiliser industries
  • Expensive: While syngas can be converted into a clean energy source, the technologies are expensive


Examples from India

A waste-to-energy plant based on pyrolysis-gasification technology was set up in Pune in 2012, but it has failed to deliver after repeated trials. Why it failed? It failed due to,

  • High cost of cleaning syngas
  • Number of technical snagsincluding the fact that it had overestimated the calorific value of the waste and underestimated the moisture content. The company now produces RDF using 300 tonnes of dry municipal waste per day — less than half of what was intended in the design of the original plant.


Failure of Pollution control boards

Author states that pollution control boards set up by the government of India and state governments were expected to provide technical assistance and keep a check on the emissions/environmental footprints of waste-to-energy plants but they have not kept pace with the rapidly evolving technology in the field of pollution control and were not able to check routine defaulters


NGT offers a ray of hope

  • NGT was set up: Recognising the need for a more empowered body that could enforce adherence to environmental regulations, the National Green Tribunal was set up in 2010, as an independent judicial body under an act by the Parliament of India
  • Nudging the action out of boards: As a judicial body in charge of supervisory jurisdiction over all environmental matters, NGT has, in many cases, nudged the pollution control authorities and State Pollution Control Boards/Municipalities to act
  • It has been putting the weight of legal compensation and enforcement behind its rulings.


Hopefully, NGT will receive full support from the Central Pollution Control Board in its quest for scientific evaluations of the environmental impact of waste-to-energy plants


Need of subsidy

Author points out that the level of subsidy required to make W2EP financially viable presents another set of problems

  • Significant capital required: These plants involve significant capital investment
  • Cost is higher: The cost of energy produced is higher than from the grid, unless there are government subsidies


Why subsidy should be given for W2EP?

  • Resource recovery: They help in resource recovery by generating electricity from waste
  • Cost savings: They help in saving cost of transportation to a landfill
  • Making electricity produced competitive: Meagre benefits from municipal bodiessuch as land for free or at token amounts plus a tipping fee for each tonne of waste processed doesn’t make the electricity produced from W2EP competitive to conventional sources


Author suggests

A transparent method must be found to determine the maximum subsidy feasible through competitive bidding


Conclusion: W2EP not a solution to our energy problem

Author concludes by stating that it is important to emphasise that electricity generation from waste is not the most efficient way of generating electricity. It is a way of resource recovery from municipal solid waste and should be considered as a by-product of waste management. Enthusiasts sometimes speak of waste-to-energy as a solution to our energy problem — this is not correct. However, if implemented to global emission standards, it could be a pathway to scientific and sustainable disposal of municipal solid waste, given the scarcity of urban land in the country, while also generating some much needed electricity



Live Mint

[1] Tough times ahead for India in Afghanistan

Live Mint



Pakistan has managed to sell the flawed theory that the Taliban can be used to fight the Islamic State


Give it a light read



[2] What is the optimal policy response to demonetisation?

Live Mint



A positive demand shock is not the optimal response to a negative supply shock as it will only exacerbate price pressures


Demonetization has already been covered in ample detail.


Give it a go-through once



Mains Marathon

Answered: Mains Marathon – UPSC Mains Current Affairs Questions – January 17

9 PM Daily NEWS Brief

9 PM Daily Brief – 20th December 2016

  • Front Page / NATIONAL [The Hindu]

  1. RBI sets one-time limit for big deposits of old notes
  2. NIA charges JeM chief for Pathankot airbase attack
  3. Justice Khehar becomes 44th CJI
  • Editorial/OPINION [The Hindu]

  1. Grappling with water disputes
  • ECONOMY [The Hindu]

  1. I-T Act change to help small firms move to e-payment
  • Indian Express

  1. Bill of Rights
  2. First economic satyagraha
  • Live Mint

  1. Landing a leapfrog

Click here to Download 9 PM Daily Brief PDF (20th Dec. 2016)

Front Page / NATIONAL [The Hindu]

[1] RBI sets one-time limit for big deposits of old notes

The Hindu


Explanation will be sought for any cash deposit of over Rs. 5,000

What has happened?

In a circular issued on 19th Dec 2016, the central bank said that

  • Individuals can deposit the old Rs. 500 and Rs. 1,000 denomination currency notes, totaling more than Rs. 5,000 only once till December 30 and that too, if they provided satisfactory reasons as to why these deposits had not been made earlier
  • Even if the value of a single deposit totaled less than Rs. 5,000, and the tenderer had cumulatively exceeded Rs. 5,000 in multiple deposits, they would be subjected to the same procedure
  • Non-KYC compliant accounts: For accounts that are not fully KYC-compliant, the value of deposits using such notes would be restricted to Rs. 50,000
  • Exceptions: The restrictions were not applicable to contributions under the Taxation and Investment Regime for the Pradhan MantriGaribKalyan Yojana, 2016

Explanation on record

The RBI said the explanation provided by the depositor should be kept on record to facilitate an audit trail at a later stage. Banks have been asked to flag the deposits in their systems so that no more deposits were allowed for that account.

Currency deposited till date

According to the latest RBI data, Rs. 12.44 lakh crore of old notes had been deposited back into the banking system, as of December 10. The total value of the old Rs. 500 and Rs. 1,000 currency notes in circulation, as on November 8, was Rs. 15.44 lakh crore.

[2] NIA charges JeM chief for Pathankot airbase attack

The Hindu


The National Investigation Agency (NIA) on Monday filed a charge sheet against Jaish-e-Mohammad chief Masood Azhar, his brother Abdul RaufAsghar and two others, ShahidLatif and Kashif Jan, all based in Pakistan, for plotting and executing a fidayeen (suicide) attack at the Pathankot airbase.

Charge sheet says

  • There were only four terrorists at the airbase and the presence of any other terrorist could not be established till date. It, however, said investigations in this regard would continue.
  • JeM had been plotting the strike since April 2014 as it was “easy to attack the Air Force station as there were forests surrounding it.”
  • The terrorists had an alternative plan to attack a police station if the Pathankot operation failed.
  • The NIA has named 115 witnesses, including six protected witnesses and two men from Pakistan who helped identify the slain terrorists.
  • The agency has also named a Federal Bureau of Investigation (FBI) agent and a trial attorney of the U.S. Department of Justice as witnesses.

[3] Justice Khehar becomes 44th CJI

 The Hindu


The President on Monday appointed Justice Jagdish Singh Khehar as the 44th Chief Justice of India from January 4, 2017.


The incumbent (presently holding office) Chief Justice T.S. Thakur had on December 6 communicated his recommendation to the government to appoint Justice Khehar. Chief Justice Thakur retires on January 3 after a tenure of a year

About Justice Khehar

  • First CJI from Sikh community: Justice Khehar, who led the Constitution Bench which scrapped the government’s National Judicial Appointments Commission law, will be the first Chief Justice from the Sikh community
  • President’s rule in Arunachal Pradesh: Justice Khehar headed the Bench which had set aside the imposition of President’s Rule in Arunachal Pradesh in January this year.
  • Sahara case: He was a part of the Bench which sent Sahara chief Subrata Roy to jail while hearing the matter relating to the refund of money invested by people in his two companies.
  • Equal pay for equal work: Justice Khehar led a Bench which recently gave a significant verdict holding that the principal of ‘equal pay for equal work’ has to be made applicable to daily wagers, casual and contractual staff
  • NJAC: He led the Constitution Bench which scrapped the government’s National Judicial Appointments Commission law.

Editorial/OPINION [The Hindu]

[1] Grappling with water disputes

 The Hindu


A permanent tribunal to adjudicate river water disputes between States will undoubtedly be a vast improvement over the present system of setting up ad hoc tribunals.

Issue: inter-state water disputes

What has happened?

Centre has decided to set up a permanent tribunal to adjudicate water disputes between states.

  • You can read more on that decision here

Author’s view

Given the number of ongoing inter-State disputes and those likely to arise in future, it may be difficult for a single institution with a former Supreme Court judge as its chairperson to give its ruling within three years.

Finality of the award: SC in a landmark judgment has said that it has unfettered power to hear an appeal arising from a river water dispute tribunal under Article 136 of the Constitution. So, the award finally given by the tribunal might not provide the finality to the dispute, as its decision can be appealed against in the SC

Needless litigation: The idea of a Dispute Resolution Committee, an expert body that will seek to resolve inter-State differences before a tribunal is approached, will prove to be another disincentive for needless litigation.

Confusing aspect: A confusing aspect is that benches of the permanent tribunal are going to be created to look into disputes as and when they arise.It is not clear in what way these temporary benches would be different from the present tribunals.

Positive feature of the move

  • Permanent expert data collection forum: There will be an expert agency to collect data on rainfall, irrigation and surface water flows. This acquires importance because party-States have a tendency to fiercely question data provided by the other side. A permanent forum having reliable data in its hands sounds like an ideal mechanism to apportion water.


Author concludes by saying that water disputes have humanitarian dimensions including agrarian problems worsened by drought and monsoon failures. Institutional mechanisms should be backed by political will to make them work.

ECONOMY [The Hindu]

[1] I-T Act change to help small firms move to e-payment

The Hindu


The Centre will amend the Income Tax Act in Budget 2017 to reduce the rate of deemed profit from 8 to 6% for small firms with a turnover of less than Rs.2 crore who receive their payments electronically.

Issue: Promoting digital payments

Rationale behind this move

With the recent demonetization move and the ensuing focus on the move towards a less-cash economy, government wants to incentivise small traders/businesses to proactively accept payments by digital means

What experts have to say?

Operational difficulties: While this should encourage the adoption of electronic payments, it could lead to some operational difficulties for companies that conduct their business both electronically and in cash, according to experts.

Existing provision of IT Act

  • Profit is deemed to be 8% of the turnover: Under the existing provisions of section 44AD of the Income-tax Act, 1961, in case of certain assessees (i.e. an individual, HUF or a partnership firm other than LLP) carrying on any business (other than transportation, agency, brokerage and commission) and having a turnover of Rs.2 crore or less, the profit is deemed to be eight per cent of the total turnover
    • If a business has a turnover of less than Rs.2 crore, it is not required to maintain books of account. In such cases, the Income Tax Department takes into account a deemed profit of eight per cent for tax purposes. The tax is computed on this eight per cent. This change does not apply to service providers

Change in the provision

  • Reducing the rate to 6%: Under the proposed change it has been decided to reduce the existing rate of deemed profit of 8% under section 44AD of the Act to 6% in respect of the amount of total turnover or gross receipts received through banking channel/digital means for the financial year 2016-17
    • Applicable to electronic transactions: The reduction in the rate of deemed profit would apply only to the revenue generated from electronic transactions with the rate remaining unchanged for revenue from cash receipts.

Positives of the move

  • Facilitate a move towards digital payment system
  • It will incentivise businesses to disclose their true income &will also reduce the compliance costs for some small businesses

Legislative amendment in 2017

The legislative amendment to make the required changes to the Income Tax Act will be carried out through the Finance Bill 2017.

Indian Express

[1] Bill of Rights

Indian Express


New disabilities bill draws on the language of justice, improves on the current act.

Issue: Passage of Disabilities bill

What has happened?

Parliament has passed the Disabilities Bill

Note: Bill has been covered in detail in the brief dated 15th Dec 2016&16th Dec 2016

Issues with the Bill

Certification: Certification is a major issue for the vast majority of the disabled people. A disability certificate is a basic document for any entitlement. Even for registering a complaint under the Persons with Disabilities Act, a person requires a disability certificate.

  • The 2015-16 annual report of the Department of Empowerment of Persons with Disabilities reveals that only 49.5 per cent of the disabled population identified by the 2011 census, have been issued certificates as of August 31, 2015
  • The condition above was when 7 conditions for disability were recognised. The present Bill increases that to 21.
  • Positive point wrt certification: Certificate issued at location say Bihar will now be valid in Delhi. Earlier this was not the case

 Dilutions made to the 1995 act

  1. Penal provisions reduced: Lack of penal provisions for non-compliance of the 1995 act gave violators a free rein. The current legislation seeks to address this. Though the provision for a jail term has been, through an amendment, reduced to a fine of up to Rs 10,000 for the first violation and not “less than fifty thousand rupees but which may extend to five lakh” for subsequent contraventions, the fines should be deterrents
  2. Reservation in employment: The original bill provided for 5% reservation, that has now been reduced to 4%
    • Government has assured that the provision with regard to reservation in employment will be ensured in the Act against the total number of vacancies in the cadre strength and not against identified posts.
  3. National and state commissions: The provision for national and state commissions for persons with disabilities has also been discarded.
  4. Clause 3(3): This clause states that “No person with disability shall be discriminated on the ground of disability, unless it is shown that the impugned act or omission is appropriate to achieve a legitimate aim.
    • It was feared that this clause will give unfettered power to the implementing agencies to discriminate against persons with disabilities, on the pretext of serving a “legitimate aim”. In response to amendments moved the minister for social justice and empowerment has assured that provisions will be made to ensure that this clause is not misused.

Strengths of the Bill

  • Private entities have now been brought within the purview of the definition of “establishment”
  • There are specific provisions for women and children with disabilities


Despite its inadequacies, the current legislation is a big advance over the 1995 Act and brings in the rights based perspective. However, the battle for its implementation has to begin in earnest.

[2] First economic satyagraha

 Indian Express


The demonetization drive aims to cleanse the ills of neoliberalism.

Give it a go through once.

Live Mint

[1] Landing a leapfrog

Live Mint


Building a sustainable less-cash society will require more than the shove of demonetization

In the first few paragraphs author has cited to the aftermath of the Vardah cyclone wherein digital payments were refused, ATMs stopped working as telecommunication networks were damaged.

Cash: A robust medium

The lesson that can be learnt from above example is that cash is a robust transaction medium. It doesn’t need an institutional infrastructure that is a fundamental requirement of the digital payment system. Digital financial services are as resilient as the physical infrastructure upon which they are built

Ease of use

Author points towards the ease of usage of the cash wherein a customer can reach inside his pocket and hand out the required amount to the shopkeeper. Any digital transaction mechanism would need to duplicate this ease of transaction if we are to go cash less or even less cash in the near future

More than just demonetization

Author states that building a sustainable less-cash society will require more than the shove of demonetization. It will depend upon,

  • An unprecedented speed of infrastructure development
  • Skilful regulation of a new industry
  • Concerted efforts to build and maintain trust in invisible cash

Challenges involved

Author points out at future challenges in the way of reaping the benefits of demonetization move,

  • Addressing the limitations of the network infrastructure: The fragility and everyday limitations of the underlying information network infrastructure need to be addressed like vulnerabilities to natural disasters. Tower-sharing, for example, concentrates disruption risk in a single place. Network topology—the arrangement of nodes and connecting lines—determines the effect of a particular cut on outages. Balancing the above concerns by providing adequate incentives to build a resilient infrastructure is a significant policy challenge
  • Ensuring competitiveness of payment industry: We need to ensure that the payments industry remains competitive enough to promote close attention to user needs, and responsible enough to invest aggressively in security that the market only demands when it’s too late. Policy is moving fast on this front—the Watal committee was given a year from August 2016, but submitted its report earlier this month
  • Trust: Evidence shows that levels of trust in the banking system is a major factor. Distrust can be triggered by a history of economic crises, social experience of exclusion and discrimination, or even just unreliable access to banks and savings. Trust is also hard to build and easy to destroy.
    • Probability of fraud is high: The odds of a major breach or fraud in some part of the payments industry are high, given the rapid growth on top of legal and physical infrastructure that is still under development
    • Few incentives to report: The political and commercial climate around digital payment also creates few incentives to report and thus enable learning from smaller escalating attacks. Establishing a credibly private and open-minded forum for reporting small breaches would be an important step in maintaining defencesif it has not already been done


Rising to these challenges will require collaboration and open communication, two social practices in short supply. India has committed to a leapfrog, and has already taken off on the trajectory. It’s up to us now to land well.

Read More: A less cash roadmap


Daily Editorials for UPSC IAS Exam Preparation

Daily Editorial – Understanding RBI’s Policy Post Demonetization


  • Understanding RBI’s Policy Post Demonetization

  1. Decision taken by RBI
  2. Factors behind RBI’s decision:-
  3. Withdrawing 100 percent CRR requirement
  4. Key terms explained
  5. CRR and its effects
  6. Monetary Policy Committee

Click here to Download Daily Editorial PDF (9th Dec. 2016)

Decision taken by RBI

Opposite to the expectations, recently RBI has kept the interest rates unchanged in the fifth bimonthly monetary policy statement, despite the challenges posed by demonetization.

RBI has also cut the projected Gross Value Added (GVA) growth for 2016-17 by 50 basis points to 7.1 per cent.

RBI has withdrawn the 100 per cent cash reserve ratio requirement that was imposed end of last month.

The central bank said the decision to keep the rates unchanged was unanimously taken by all the six members of the monetary policy committee (MPC).

Factors behind RBI’s decision

Keeping the policy rate unchanged

RBI cited certain factors which can endanger its price stability goals, like:-

  • Imminent tightening of U.S. monetary policy
  • Rise in oil prices combined with rupee depreciation
  • Unstable domestic inflation trends
  • Donald Trump’s win has ignited a homeward-bound flight of capital from emerging markets
  • It has buoyed the dollar at the expense of other currencies.

Cut in GVA projection

  • Unexpected loss of momentum, particularly in industrial activity,in the second quarter due to demonetization.
  • Demonetization likely to have the biggest impact on cash-intensive sectors.

Withdrawing 100 percent CRR requirement

The central bank said the decision to withdraw 100 per cent CRR requirement was taken as the government had announced Rs 6 lakh crore of bonds, issued under market stabilization scheme, to clean up excess liquidity.

Key terms explained

Repo rate

What is Repo Rate?

The repo rate is the interest rate at which the RBI lends to banks for short term.It is a secured nature of borrowing similar to a loan against fixed deposits availed by individuals during emergencies.

How does it effect?

If the central bank hikes its repo rate, it becomes costly for banks to borrow money from RBI so they in turn hike the loan interest rates at which customers borrow money from them to compensate for the hike in repo rate.

Lower the interest rate, higher is the supply of money in the economy and greater purchasing power of individuals. This will result in increase in the price of Goods, since there is more demand and less supply of the goods.

What was expected?

  • A cut in the repo rate would have ideally brought down banks’ borrowing costs, eventually leading to lower loan rates for companies and individuals.
  • It was expected to offset any damage to economic growth and private investment.
  • But RBI has kept the rate unchanged to achieve its long term goal of keeping the inflation in control.

CRR and its effects

  • Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank.
  • Banks do not earn any interest over these deposits with RBI.
  • Banks cannot lend this portion of money to corporates or individual borrowers.
  • Thus if the CRR rates are increased, It suck the liquidity from the market, leading to lesser money for loans to corporates and increase in the rate of interest over them.
  • While decrease in the CRR requirement results in the excess liquidity with the banks for lending purposes.
  • Post demonetization, RBI has asked banks to maintain an incremental cash reserve ratio (CRR) of 100% against the deposits they are receiving.
  • But in the very recent announcement, RBI has withdrawn this decision. That is expected to set off the effects of keeping policy rates unchanged.

Monetary Policy Committee

  • The Monetary Policy Committee (MPC) is a committee of the Reserve Bank of India, headed by its Governor.
  • It was set up by amending the RBI Act after the government and RBI agreed to task RBI with the responsibility for price stability and inflation targeting.
  • MPC will have six members. Three each will be nominated by the government.
  • RBI and each member will have one vote. While the majority voice of the committee will be final in deciding the interest rates and the RBI will have to accept the verdict.
  • The Monetary Policy Committee is entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target level.
  • The MPC will ensure that decisions on interest rates are made through debate by a panel of experts.
9 PM Daily NEWS Brief

9 PM Daily Brief – 8th December 2016

  • Front Page / NATIONAL(The Hindu)

  1. RBI keeps base rate unchanged
  2. SC seeks Parliamentary panel report on Lokpal amendments
  • Editorial/OPINION(The Hindu)

  1. The Reserve Bank of India’s big surprise
  2. Demonetisation is for the long run
  • ECONOMY(The Hindu)

  1. Rural India hit most by cash crunch
  2. Notes withdrawal will not impact RBI balance sheet’
  • Indian Express

  1. The colour of polls
  2. Let the numbers speak
  • Live Mint

  1. India’s gains from lower oil prices at risk
  2. Regulating digital payment industry

Front Page / NATIONAL(The Hindu)

[1] RBI keeps base rate unchanged

 The Hindu


Lowers the Gross Value Added growth projection for 2016-17 to 7.1 per cent from 7.6 per cent.

What is Gross Value Added growth?

It is the measure of the value of goods and services produced in an area, industry or sector of an economy.

  • In national accounts GVA is output minus intermediate consumption

What has happened?

In the 5th bimonthly monetary policy review,

  • Policy rate unchanged: RBI decided to hold the policy rate at 6.25 per cent citing uncertainties emanating from both domestic and global developments
  • CRR requirement removed: RBI has withdrawn the 100 per cent cash reserve ratio requirement that was imposed end of November. The central bank said the decision to withdraw 100 per cent CRR requirement was taken as the government had announced Rs 6 lakh crore of bonds, issued under market stabilization scheme, to clean up excess liquidity

What is Market Stabilization Scheme (MSS)?

The MSS scheme was launched in April 2004 to strengthen the RBI’s ability to conduct exchange rate and monetary management. The bills/bonds issued under MSS have all the attributes of the existing treasury bills and dated securities. These securities will be issued by way of auctions to be conducted by the RBI. The timing of issuance, amount and tenure of such securities will be decided by the RBI.

The securities issued under the MSS scheme are matched by an equivalent cash balance held by the government with the RBI. As a result, their issuance has a negligible impact on the fiscal deficit of the government.

Read more: MSS

[3] SC seeks Parliamentary panel report on Lokpal amendments

 The Hindu


The Supreme Court on Wednesday directed the government to place on record a Parliamentary Standing Committee report suggesting amendments to the Lokpal law

SC is pushing for this reform

One of the amendments the Supreme Court has pushed for is to

  • Make the leader of the single largest opposition party in the House a part of the high-profile Search Committee to appoint the Lokpal in case there is no recognised Leader of the Opposition in the Lok Sabha. Currently, the 16th Lok Sabha has no recognised Leader of the Opposition (LoP)


SC was hearing the petition filed by NGO Common Cause seeking implementation of Lokpal law.

  • The Lokpal and Lokayuktas Act has not seen the light of day since it was made law in 2013. Subsequent amendments to the Act are hanging in limbo

Future hearing

A Bench led by Chief Justice of India T.S. Thakur asked the government to detail the changes required to make the Lokpal office functional. It scheduled the petition for hearing on December 14.

Note: This news is in continuation of the news published earlier in the Hindu on 24th November. We have covered that news in Brief dated 24th November 2016. Please go through the previous article first, to better appreciate current news article.

Editorial/OPINION(The Hindu)

 [1] The Reserve Bank of India’s big surprise

 The Hindu


The Reserve Bank of India has surprised markets by opting to keep benchmark interest rates unchanged and cutting the outlook for full-year growth in the wake of last month’s decision to withdraw legal tender status to high denomination currency notes.

News: In the 5th bimonthly monetary policy review, RBI has kept interest rate unchanged

Reasons cited by RBI for doing so are,

  • The imminent tightening of U.S. monetary policy: There are expectations that US Federal Reserve will raise interest rates
  • The rise in oil prices
  • Domestic inflation trends

[2] Demonetisation is for the long run:

 The Hindu


Author, an officer on special duty at NITI Aayog, tries to build a case for visualizing the benefits of demonetisation in the long run rather than focusing on short term adversarial impact.

Terms used: –

Crony Capitalism: It is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, or other forms of state interventionism.

In the first few paragraphs author has stated that the critics of demonetisation are absolutely right about the adverse short-term impact of the policy but the real impact of demonetisation must be weighed in the medium/long term

Stamping out cronyism

Author states that 25 years of liberalisation of Indian economy have resulted in far greater benefits than 4 and a half decades of socialism but with gradual opening of the markets, a problem was also introduced, that of crony capitalism.

Public perception: For demonetization

Author states that,

  • Public will see any pro-market move or policy as pro-crony unless government is firm on its agenda of weeding out crony capitalism from the economy. Hence, author states, the popularity of the demonetization move amongst public despite the hardships being faced is due to the fact that the move is perceived as a decisive act against those who made their money unscrupulously and then chose to hide it

 Making a case for free market

  • Before making a case for free market, our politicians have to show that they can effectively curb crony capitalism
  • Free markets and capitalism will get mass public support if everyone is on a level playing field and when the rich/well off pay their taxes which can then be used to invest in those left behind so that they too have an opportunity to rise

Way ahead

Author states that it is only a rule-based capitalism without crony capitalists that combined with a clean government can transform India


Author concludes on a positive note by stating that demonetization might not alter the behavior of entire dishonest community out there but it will certainly nudge a part of it in the right direction. Moreover, it will further bridge the trust deficit that prevails between the government and the governed.

ECONOMY(The Hindu)

[1] Rural India hit most by cash crunch

 The Hindu


Article throws a light on the hardships faced by rural banks as they allege that Public sector banks are favoring their own branches in the urban sector vis-à-vis cash supply

Tough times for Rural banks

  • Regional Rural Banks (RRBs) with 25 crore accounts across the country received just about Rs.8000 crore of fresh currency from November 10 to November 30 which works out to a little less than Rs.350 per account holder

Steps taken to ease the situation

  • On November 21, Finance Minister asked bankers to set aside Rs.35,000 crore for rural India by December 30 to provide credit to farmers for the Rabi crop season
  • RBI advisory: RBI had also advised banks to ensure adequate cash supply for all RRBs, rural branches of commercial banks and branches located in Agricultural produce market committees (APMCs) to enable smooth procurement
  • Buying seeds with old notes: The Centre acceded to the rural bank unions’ demands to allow farmers to buy seeds with old Rs.500 notes and is also considering a demand to raise the credit limit under Kisan credit cards in a bid to compress cash demand for now.

[2] Notes withdrawal will not impact RBI balance sheet’

 The Hindu


The currency note withdrawal will have no impact on the balance sheet of the Reserve Bank of India (RBI), asserted Governor Urjit Patel.


There has been speculation that RBI could gain following the demonetisation exercise with its liabilities shrinking, as the black money in the system was not expected to be deposited in bank accounts. Every year, RBI transfers its surplus to the government.

  • It had been widely speculated that with the windfall gain, RBI could pay a special dividend to the Government. Reports have also suggested that the RBI Act may have to be amended if the Government wanted such a dividend.

Read More: Impact of demonetization on RBI’s Balance sheet, No bonanza for the government from cash destruction

Indian Express

[1] The colour of polls

 Indian Express


PM’s move against black money prepares the ground for reforms of electoral finance.

Issue: Electoral reform

Few positive developments having a bearing on electoral reform

Curbing illicit electoral finance

It is a known thing in Indian electoral scene that political parties use money to bribe voters.

  • Earlier, it used to be just a few days before the elections, but ever since the Election Commission of India (ECI) put together expenditure control mechanisms in 2010, followed by a crackdown on unaccounted money as soon as the model code comes into play, political parties changed their strategy and advanced the activity by a few weeks. Since elections to five state assemblies are round the corner, this is the time when the money would have been moving
  • Some experts argue that demonetization was effectively targeted at this money flow and when government withdrew the legal tender on November 8 it turned this money into junk

Remove Exemption

Author points out that one of the subsidiary effect of demonetization has been the move towards digital payment mechanisms. Every citizen is being told to move to e-wallet and e-banking systems.

  • In such a scenario, the exemption allowed to political parties wherein the donations below Rs 20000 are not required to be paid “by-cheque only” should also be done away with as this is the root cause of 80 per cent of illegal political funding which all political parties show as cash donations.

PM’s directive

Author points out that the 3rd positive development has been PM’s directive to his party legislators to disclose all their bank transactions since November 8

Benami Act

Another positive development has been the passing of an Act to curb benami property deals

Law ministry rejects ECI’s proposal

In the context of these developments, one report came as a shock. This was the law ministry rejecting the ECI’s proposal to give it permanent legal powers to cancel polls on credible evidence of the use of black money.

ECI’s efforts to curb black money

Apart from repeatedly writing to government suggesting electoral reforms,

  • ECI set up an expenditure monitoring division in 2010

Suggested reforms

Author suggests electoral reforms,

  1. Ceiling for electoral expense: Prescribe a ceiling for political parties’ expenditure, like that for the candidates
  2. State funding: Consider state funding of political parties (not elections) with independent audit and a complete ban on private donations
  3. Bring political parties under RTI: Enforce internal democracy and transparency in the working of the political parties. Bring them under the RTI
  4. National Election Fund: Set up an independent national election fund where all tax-free donations could be made. It could be operated by the ECI or any other independent body
  5. Legally empowering ECI: Accept the ECI’s proposal to legally empower it to cancel elections where credible evidence of abuse of money has been found
  6. Decriminalization of politics: Debar persons against whom cases of heinous offences are pending in courts from contesting elections
  7. De-registering political parties: Empower the ECI to de-register those political parties which have not contested any election for 10 years and yet benefited from tax exemptions
  8. Making paid news an electoral offence: Make paid news an electoral offence with two years’ imprisonment by declaring it a “corrupt practice” (Sec 100 RP Act) and “undue influence” (Sec 123(2))

New Delhi Declaration

In December 2015, the ECI had organised a conference of SAARC countries in collaboration with the International Institute of Democracy and Electoral Assistance-IDEA on the scourge of money power in elections.

  • Resolution: The conference adopted a historic New Delhi Declaration laying down the guiding principles of transparency of electoral finance

Member countries of the region and IDEA are trying to get this declaration widely accepted. India, considered a gold standard of elections, has a moral responsibility to lead from the front.

[2] Let the numbers speak

 Indian Express


The discussion on the fall in employment after the November 8 demonetisation relies on anecdotal evidence.

In the first two paragraphs author states that policymaking in India suffers from the lack of credible data

  • Policy for 2016 can’t be devised on the basis of a census or survey conducted in 2011-12

Author points out that there are only two surveys at present that can be considered respectable meaning surveys that have a proper sample design and that are spread over all states

  • CMIE in collaboration with the BSE
  • PRICE (People Research of India’s Consumer Economy)

PRICE survey

Author cites data from the survey PRICE did in August 2016interviewing more than 300,000 households. It also did a survey in 2014. Consequently author compares the data from two surveys.

Note: Some of the data cited can be utilized for exam purpose but remembering all of it not possible and not required too.

CMIE surveys

  • Consumer sentiment
  • Unemployment

Unemployment rate: No impact of demonetization

Only anecdotal evidence is being cited to ascribe everything after November 8th to demonetization but that is not the case. Author cites unemployment rate to prove his point.

  • All-India unemployment rate: Author states that the unemployment rate last updated on November 30th is around 5.69 per cent. This rate was 9.84 per cent on August 31, 8.97 per cent on September 30, 6.34 per cent on October 31
  • Rural unemployment rate: Author points out that rural unemployment rate has decreased like the all-India unemployment
  • Urban unemployment rate: For urban, the unemployment rate had declined to 6.89 per cent on October 31; it then rose to 7.05 per cent on November 30.

Hence, till the end of November, this indicator doesn’t reveal a great loss in jobs, either rural or urban


Author concludes by saying that any claim made should be backed by data and not by anecdotes as has been done after Nov 8


Live Mint

[1] India’s gains from lower oil prices at risk

 Live Mint


In this article author talks about the impact of the rise in crude oil price after the OPEC deal on Indian economy

Author begins his article by stating that as public discourse right now is focussed on impact of demonetization move of the government, there is another matter which India should be concerned about, i.e. risk posed by prospective increase in crude oil prices in the coming months.

Why bother?

Because crude oil price increase will severely impact the inflation target of RBI, increase government spending and reduce private consumption

Why an increase in crude oil prices?

Prices have already spiked after the Organization of the Petroleum Exporting Countries (OPEC) on 30 November decided to cut production for the first time in eight years.

  • OPEC will reduce output by about 1.2 million barrels per day from January 2017
  • Non-OPEC members, including Russia, are expected to cut production by another 600,000 barrels per day

High prices not sustainable

Many analysts believe that high oil prices are not sustainable because of the following reasons,

  1. Weakened global demand: Global demand continues to remain weak and growth is unlikely to accelerate in the near term
  2. Shale gas will become attractive: At higher levels, US shale oil production, which suffered because of lower prices, will once again become attractive
  3. Monitoring of Non-OPEC oil producing countries is difficult: OPEC members have a tendency to cheat in order to take advantage of higher prices. Even if OPEC is able to keep a watch on the production levels of its members, it will be difficult to track a non-member country like Russia.

India benefited from low oil prices

Author states that India benefited due to lower prices as it depends on imports to cover over 75% of its requirement. Low prices were beneficial in following ways,

  • Helped contain Current Account Deficit
  • Helped lower inflation
  • Increased government revenues (Govt sensing an opportunity imposed higher taxes on petroleum products) which narrowed down fiscal deficit

An increase in oil price will reverse the gains India made earlier.

 Effects of price rise

If oil prices rise,

  • Government may have to roll back a part of the tax hike on petroleum products which will affect its revenues
  • Private consumption could also get affected because of higher fuel bills
  • Widening of CAD: Higher oil prices will also widen the current account deficit (CAD) while the rupee has been under pressure because of a strengthening dollar
  • Profit erosion: Companies that benefited from lower oil prices may also see lowering of profits as passing higher input cost to the consumer could be difficult at this stage

Read More: OPEC deal, after two years, why an OPEC deal now? 

[2] Regulating digital payment industry

Live Mint


The payments terrain should expand and be enabled by regulations to accommodate new kinds of participants in the system

Author states that in the light of recent demonetization move and the subsequent push for digital banking means that the digital transaction regulatory framework requires a comprehensive legal framework assessment.

Present situation

At present, RBI is the sole regulator for the payments industry space and derives its power to oversee the payments industry from the Payment and Settlement Systems Act (2007) and its accompanying regulations (2008). Several circulars and guidelines have been issued for the regulator to govern prepaid instruments, intermediaries and the payment system operator.

Steps taken by RBI

  • Exemption from KYC hurdles: RBI has exempted e-wallets & mobile banking from KYC compliance for transactions under Rs20000
  • Two factor authentication: RBI has relaxed the security measure of requiring two-factor authorization to only when one loads money from other banking instruments

 What is 2-factor authentication?

Two-factor authentication is a security process in which the user provides two means of identification from separate categories of credentials; one is typically a physical token, such as a card, and the other is typically something memorized, such as a security code

Example: A common example of two-factor authentication is a bank card: the card itself is the physical item and the personal identification number (PIN) is the data that goes with it.

Benefits: Including two elements makes it more difficult for someone to access the user’s bank account because they would have to have the physical item in their possession and also know the PIN.

Steps that RBI should take

  • Singling out important payment systems: Author states that RBI should single out critical payment systems so that in the event of a failure the shock is not transmitted further to the entire financial spectrum
  • Customer protection/guarantee fund: RBI should also set up a customer protection/guarantee fund so that of the largest participant in the payment industry fails, the end customer is protected. This will reduce needless litigation by customers to get their grievances redressed
  • Self-certification: The system participant should be encouraged to submit a self-certification assessing and disclosing the technical risks it faces at an enterprise level that can expand into systemic risks


Author concludes by saying that evolution of payment systems is taking place and regulatory framework should also evolve simultaneously to accommodate these changes

 Read More: RBI relaxes 2-factor authentication norms, Payment Systems