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Current Events 2 May 2016

 

News

2 MAY 2016 

GS III:  ECONOMY-FTA

Commerce Minister complains of ‘sledging’ in trade talks

Sledging — or verbally bullying the opposition to obtain an advantage — happens not just in cricket but also in negotiations on Free Trade Agreements (FTA), Commerce Minister Nirmala Sitharaman said .

Ms. Sitharaman said the delays were instead due to India’s partner countries opposing its ‘ambitious offers’ in services and investment.

Talks are under way for FTAs with Australia, European Union, as well as for the Regional Comprehensive Economic Partnership or RCEP among 16 Asia-Pacific nations, including India.

Owing to its strength in services trade, India has been pitching for removal of restrictions on temporary movement of skilled workers in all these FTAs, on a reciprocal basis. 

Support from China 

This proposal, for instance, had even got China’s support in the RCEP talks, official sources said. However, it had been turned down in separate FTA talks by Australia, the EU and some RCEP members as they feared that Indian workers would displace the locals. 

Instead, countries such as Australia and the EU want India to eliminate tariffs even on sensitive items in agriculture (eg: wheat) and industry (automobiles) as part of the respective FTAs. 

During the recent 12th round of RCEP negotiations in Australia, India objected to attempts by some countries to project it (India) as a “laggard”, the sources said. 

India also pointed out that it had made better offers than the other RCEP members on temporary movement of skilled workers and investment. 

Though India asked other RCEP members to make matching offers, they did not do so, the sources said. 

'India will not yield to pressures' 

Commerce Minister Nirmala Sitharaman  said countries such as Australia and the EU want India to eliminate tariffs even on sensitive items in agriculture (eg: wheat) and industry (automobiles) as part of the proposed Free Trade Agreements. However. Ms. Sitharaman said, “India will not yield” to such pressures.

Ms. Sitharaman said the “huge trade-distorting” agricultural subsidies of rich nations had not yet been properly discussed at the World Trade Organisation. She also referred to subsidies “given by China to its industry” and said this was hurting Indian manufacturers in sectors including steel. 

Competitive devaluations 

In the backdrop of competitive devaluations of currency by several countries including China to boost their exports, she cited the persisting contraction in India’s exports and said she personally felt the Indian currency needs to be devalued a bit. However, she added that it was up to the RBI to take a final call. 

Owing to its strength in services trade, India had been pitching for removal of restrictions on temporary movement of skilled workers in all the proposed FTAs, on a reciprocal basis.

India also cited the foreign investment reforms made by it and contrasted it with investment restrictions even in certain developed nations who are RCEP members to prove that it (India) was not “defensive” in its approach. Following this, all RCEP members agreed not to disclose specifics of the negotiations to the media to ensure that the negotiations progressed peacefully, they said. 

Trade with New Zealand

 New Zealand’s perception was that in their experience, more investments were made where FTAs were signed. However, India was focussed on bilateral trade.  

GS III:  SECURITY

Two more foreign donors on watch list 

The Ministry of Home Affairs has put two international evangelist groups under the “prior permission category.” After this, the donors can no longer directly send money to NGOs in India, and will require clearance from the MHA. 

A senior official told that the U.S.-based Compassion International and Family Federation for World Peace and Unification, South Korea were put on the “watch list” on March 28 after “adverse reports” from security agencies. 

There are 18 foreign donors under the government’s scanner right now. Of these, eight were put under the prior-permission category during the UPA government and the other 10 since the NDA government came to power. U.S.-based Ford Foundation, which was also put under this category in 2015, was taken off the list in March this year.

Top donor

According to data available with the MHA, Compassion International was the top foreign donor in 2012-13 when it donated Rs. 183.83 crore to NGOs in India. 

According to the donor’s website, it began its operation in 1968 when the Child Sponsorship Program was started. It says that its “church partners are in close proximity to schools so children are able to spend a good amount of time at their child development centers.” 

According to The Family Federation for World Peace and Unification’s website the group’s mission is “to equip individuals with the knowledge needed to develop a personal relationship with God and with each other based on that premise.” 

GS II:  GOVERNMENT SCHEME

Modi  launches LPG scheme for poor women

Prime Minister Narendra Modi launched the Pradhan Mantri Ujjwala Yojana, which aims to provide five crore LPG connections to women in Below Poverty Line (BPL) households over the next three financial years, at a cost of Rs. 8,000 crore. 

The scheme, launched at Ballia in Uttar Pradesh, is to be partially funded from the savings accruing to the government from LPG users who gave up their subsidy as part of the Give It Up programme. 

Finance Minister Arun Jaitley had, in his Budget speech in February, announced a provision of Rs. 2,000 crore this financial year to provide LPG connections to 1.5 crore women from BPL households. 

The new users who receive LPG connections under the scheme will not have to pay the security deposit, while the Rs. 1,600 administrative costs, cost of pressure regulator booklet and safety hose will be borne by the government. 

Consumers will have the option to purchase gas stove and refills on EMI. 

Expansion plans 

The Prime Minister said nearly 10,000 new distributorships and infrastructure expansion plans were in the works to cater to the increased demand arising out of the new connections

The households will be selected using the socio-economic and caste census data. 

Currently, India has 16.64 crore active LPG consumers with a requirement of about 21 million tonnes per annum. 

Stating that LPG coverage is being increased, he said there are serious health hazards associated with cooking based on fossil fuels. 

According to World Health Organisation estimates, about 5 lakh deaths occur in India alone due to unclean cooking fuels. Experts say having an open fire in the kitchen is like burning 400 cigarettes an hour. 

Providing LPG connections to BPL households will ensure universal coverage of cooking gas in the country and this will empower women and protect their health, he said. 

Demand for LPG to double 

India’s demand for LPG is expected to see a double-digit growth over the coming years, the government said in a release. Towards this, several steps have been taken to increase infrastructure in order to meet the demand. 

Apart from those who voluntarily gave up their LPG connections, those earning Rs. 10 lakh or more a year have been deemed ineligible for the subsidy. 

The recently-released income tax data shows that there were 13.3 lakh individuals who declared an income above Rs. 10 lakh a year in assessment year 2012-13. Using that number, back-of-the-envelope calculations show removing the LPG subsidy from these people would save the government Rs. 173 crore a year.  

GS II: POLITY- JUDICIARY

A National Court of Appeal? Aye. 

The primary role of the Supreme Court is to determine substantial questions of law relating to the Constitution or otherwise of general importance. Apart from disputes between the States, and some Public Interest Litigations, other cases come in appeal from the High Courts and Tribunals. The Chief Justice has initiated introspection on the need for a National Court of Appeal. At the heart of this appeal lies a fundamental question of substantial importance: Is the Supreme Court doing what it is meant to do? And if not, where lies the fault and where the remedy? 

How the Supreme Court works

Every week, the court spends three days in final hearings of cases, a sedate process where arguments are presented at length. Two other days are meant for admission of fresh cases called Special Leave Petitions (SLPs); in an inverse picture, total bedlam takes over the court. Each Bench of two judges has before it 60 to 70 cases, each with its mass accumulation of bulky case papers gathered over years of litigation in the courts below. The hearing of each case lasts for a couple of minutes or less before the judges decide whether to admit or dismiss it, the latter being the fate of the overwhelming majority. Owing to time and volume constraints, the judges read these papers before the hearing date. A substantial portion of four days of the country’s senior-most judges thus goes in just deciding which cases should join the appeals docket of the Supreme Court. The judges have to pick the cases from an eclectic bunch which prominently includes bail applications, eviction of tenants, dishonoured cheques, employment disputes, child custody, criminal offences — important to the parties no doubt, but not raising the important questions of law meant for the Supreme Court. Being tasked with the filtering process is a waste of the time, experience and wisdom of a Supreme Court judge. It prevents full consideration of the substantive cases before these judges; it reduces the quality of judgments which need to be drafted, crafted, refined and embellished to mark the definitive and lasting pronouncements of law expected from a Supreme Court. And it provides no space for wider reading, for pause and reflection.


Paucity of Constitution Benches

This is illustrated by the current relative paucity of Constitution Benches. These are formed by grouping five or more judges to decide major questions of law. In the 1960s, the court did much of its lawmaking through such Benches; over the years, as the mass of SLPs and ordinary appeals mounted, that number has dwindled to a fractional percentage. These numbers tell a tale which is worrisome; the cases unique to the court are not getting heard, including issues of religious freedom, rights of minorities, the right to privacy, governance, and validity of statutes. Another concern arises when cases of importance are dealt with by just a couple of judges, for lack of Constitution Benches. Examples include the decision on consensual sex between adults of the same gender, and the scope of the Information Technology Act. Larger Benches bring more judicial thinking to an issue, a balancing of different points of view and greater authority to the ruling of the court. Another key concern is that of access to justice. A vastly disproportionate percentage of appeals to the Supreme Court come from Delhi and its neighbouring States; for those beyond, the court seems out of reach. While litigiousness should be curbed, distance ought not to be the deterrent. 

We can thus restore the Supreme Court to what the Constitution envisaged, and what an apex court should be — to decide the weighty issues under the Constitution and other laws, with appropriate judge strength, and give the judges the time and opportunity to do their best in the cases which matter most to all of us. It is somewhat surprising that the Centre’s first response to the plea seeking setting up of a National Court of Appeal was that this is a “fruitless endeavour”. Perhaps the Law Ministry and its legal team may like to consult the Bar Associations of all the States; it may find that the predominant voices do not share this barrenness of view.-

GS III: ECONOMY 

‘Overall economic slowdown’ to blame for bad loans: Rajan

Asked to explain the “real causes” of ballooning bad loans at public sector banks, the Reserve Bank of India (RBI) Governor Raghuram Rajan has put the blame on “overall economic downturn,” among other reasons, in his submission to a key Parliamentary panel.

Congress leader K. V. Thomas-led Public Accounts Committee (PAC), whose term ended on Saturday, has examined Mr. Rajan’s response but can ask the RBI Governor to appear before it in future once it is reconstituted, sources said.

Various public sector banks may also be asked to appear before the panel again to explain their position.

The Parliamentary panel had suo motu decided to examine the non-performing assets of the public sector banks, which touched Rs.3.61 lakh crore at the end of December 2015. The state-owned companies had first refused to appear before PAC, but agreed later and made their submission. During the examination of bad loan recovery process of the banks, the PAC found that in a number of cases the same bankers were trying to retrieve the bad loans who had earlier sanctioned the loans.

In its questionnaire for the RBI Governor, the panel observed that private sector banks and foreign banks do not have as much NPAs as the Public Sector Banks. This was despite the constraints under which the entire banking sector operates being the same, except for the Priority Sector Lending (PSL) requirements.

Noting that Private Sector Banks and Foreign Banks have 2.2 per cent non-performing assets whereas the Public Sector Banks have 5.98 per cent NPAs, the PAC felt “it is hard to believe that the difference is only due to the PSL”.

The PAC Chairman also sought to know the “real causes for the present spurt in NPAs and stressed assets” and whether these are really different from those listed by the Narsimham Committee that went into the NPA issue in 1998.

In his reply, Mr. Rajan said, “While some of the reasons for recent spurt in NPAs could be subset of those indicated by Narasimham Committee, the level of stressed assets are seen in the context of overall economic downturn”.

Mr. Rajan listed six primary reasons for a spurt in stressed assets that have been observed in recent times. These included domestic and global economic slowdown, delays in statutory and other approvals especially for projects under implementation and aggressive lending practices during upturn as evidenced from high corporate leverage.

Other reasons cited by Mr. Rajan were laxity in credit risk appraisal and loan monitoring in banks and lack of appraising skills for projects that need specialised skills resulting in acceptance of inflated cost and aggressive projections.

Besides, he also listed wilful default, loan frauds and corruption in some cases among the key reasons.

Recalling that the gross NPAs ratio had steadily declined from 15.7 per cent in 1996-97 to 2.36 per cent in 2010-11, Mr. Rajan said that the asset quality of the Indian banking system had again come under stress in the last couple of years, as a consequence of global and domestic economic slowdown.

Mr. Rajan also informed the panel about seven key methods evolved by way of recent regulatory measures by RBI to tackle the problem of NPA.

The Committee, however, felt that the six reasons cited by Mr. Rajan were not “mutually exclusive”.

“The parliamentary panel wanted to know how much of non-performing assets and stressed assets are attributable to genuine business/commercial risk and those which are not.

Mr. Rajan said that during the course of an internal study conducted to assess the causative factors of NPAs in April last year, primarily qualitative information on causes of non-performing assets in banks were sought from the responses received from banks, the main reasons with broad categorisation of ‘economy-wide factors, borrower-level reasons and bank level inadequacies’ came to the fore.

GS III: MONEY LAUNDERING

Arms scandals : an inglorious record




 



 

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