Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Challenges faced by lending financial institutions and the issue of stagnant credit growth in India
The article deals with the issue of credit and financial institutions in India. It also suggests the five changes needed in the lending financial institutions in India.
Financial institutions and credit in India
- India has labour and land but not enough capital.
- The case for foreign financial institutions is also simple — their technology, processes, and experience raise everybody’s game.
- India is open — foreigners own 25 per cent of public equity, 90 per cent of private equity, and Google and Walmart are UPI’s biggest volume contributors.
- India’s challenge over the last 10 years has been bank credit.
- Credit-to-GDP ratio is stuck at 50 per cent, banking concentration measured by flow has increased by 70 per cent, and bad loans exceed Rs 10 lakh crore.
Significance of lending financial institutions
- Foreign institutions are unlikely to lend when needed most and lend to small enterprise borrowers.
- Bank numbers have practically remained unchanged since 1947 despite world-leading net interest margins.
- Nationalised banks that have an eight-times higher chance of bad loan, would save Rs 35,000 crore annually with industry benchmarked productivity.
- regulators prioritise domestic stakeholders.
- The home bias for global bank lending is accelerating.
- UPI crossing 2 billion monthly transactions demonstrates how mandated interoperability, local innovation, and enlightened regulation help insurgents take on incumbents.
5 Changes required in lending financial institutions
- 1) The biggest impact lies in creating a nationalised bank holding company that replaces the Finance Ministry’s Department of Financial Services, has no access to government finances, and is governed by an independent board.
- 2) We must licence 25 new full banks over 10 years.
- 3) We must expect and empower the RBI to deal with bank challenges earlier, faster, and invasively, by reimagining post-mortems, granting listed bank capital induction flexibility and making regulation ownership agnostic.
- 4) We must explore new eyes for banking supervision that include differential deposit insurance pricing.
- 5) Finally, financial stability and innovation are not contradictory; let’s blunt regulatory barriers between banks, non-banks, and fintech.
Conclusion
The opportunities for India arising from the coming Asian century, China’s contradictions and China’s new inward focus strategy come not once in a decade but once in a generation. Let’s empower our financial services entrepreneurs to exploit this opportunity.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Issue with legal language
Context
- Recently, a PIL was filed in the Supreme Court regarding the use of legal language.
- Reacting to the plea, the Supreme Court has asked the Ministry of Law and Justice and Bar Council to respond.
Wha the PIL is about?
- The PIL (Subhash Vijayran vs Union of India) wants the legislature and executive to use plain English in drafting laws, the Bar Council to introduce plain English in law curricula and the Supreme Court to only allow concise and precise pleadings.
- He begins the synopsis to the writ petition in the following way. “The writing of most lawyers is: (1) wordy, (2) unclear, (3) pompous and (4) dull.
Way forward
- When asking the Ministry of Law and Justice and Bar Council to respond, the Chief Justice of India referred to Anthony Burgess’s book (1964) Language Made Plain.
- George Orwell set out six principles, which could be used while drafting.
- Copy editors routinely use these principles, but not the judiciary.
- The Vidhi Centre for Legal Policy produced a manual on plain language drafting in 2017.
Conclusion
The Ministry of Law and Justice make use of the opportunity provided by the PIC to come up with the set of principles to make the legal language easier for all.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: OTT
Mains level: Need for OTT media regulation
In a move that will have a far-reaching impact, the Union government has brought Over The Top (OTT) platforms, or video streaming service providers under the ambit of the Ministry of Information and Broadcasting (MIB).
Try answering this
Q.What is Over the Top (OTT) media services? Critically analyse the benefits and challenges offered by the OTT media services in India.
Background
- The MIB has found a vast swathe of unregulated content, namely news online and Over the top (OTT) platforms which had escaped any architecture of regulation.
- The print was regulated by the Press Council of India and Television, both News and Entertainment were being regulated by the Cable Networks Regulation Act (2005).
- However, the content on online, the Government felt, fell into a black hole with no oversight.
What are OTT Media?
- An over-the-top (OTT) media service is a streaming media service offered directly to viewers via the Internet.
- OTT bypasses cable, broadcast, and satellite television platforms, the companies that traditionally act as a controller or distributor of such content.
- The term is most synonymous with subscription-based video-on-demand (SVoD) services that offer access to film and television content.
- They are typically accessed via websites on personal computers, as well as via apps on mobile devices (such as smartphones and tablets), digital media players, or televisions with integrated Smart TV platforms.
Regulating OTT
- Currently, there is no law or autonomous body governing digital content. The recent move will give the government control over OTT platforms, which were unregulated till now.
- From time to time, the government had indicated the necessity to monitor these platforms.
- In October 2019, the government had indicated that it will issue the “negative” list of don’ts for the video streaming services like Netflix and Hotstar.
- It also wanted the platforms to come up with a self-regulatory body on the lines of the News Broadcasting Standards Authority.
Self-regulation is not sufficient
- Anticipating the government’s intervention, in January 2019, video streaming services had signed a self-regulatory code that laid down a set of guiding principles for content on these platforms.
- The code adopted by the OTTs prohibited five types of content:
- Content that deliberately and maliciously disrespects the national emblem or national flag,
- Any visual or storyline that promotes child pornography
- Any content that “maliciously” intends to outrage religious sentiments
- Content that “deliberately and maliciously” promotes or encourages terrorism and
- Any content that has been banned for exhibition or distribution by law or court
- The government had refused to support this code.
What lies ahead?
- The government had been giving enough hints from time to time that it wanted to regulate digital media but the exact nature of the regulation it wanted to bring was not clear.
- The government considers digital media and digital aggregators in the same breath but they are different things.
- It is unclear whether it is looking at licensing or entry barriers, or any other curbs in digital media.
- However, monitoring content 24×7 has its own challenges. Whether the Ministry will set up a committee involving the public to look into complaints received remains to be seen.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Viability Gap Funding
Mains level: Not Much
The government has expanded the provision of financial support by means of viability gap funding for public-private partnerships (PPPs) in infrastructure projects to include critical social sector investments in sectors such as health, education, water and waste treatment.
Note the minutes of VGF, its meaning, funding mechanism, various sectors included and its nodal ministry etc. UPSC can ask static statements based question.
What is the move?
- Now, under this scheme, private sector projects in areas like wastewater treatment, solid waste management, health, water supply and education, could get 30% of the total project cost from the Centre.
- Separately, pilot projects in health and education, with at least 50% operational cost recovery, can get as much as 40% of the total project cost from the central government.
- The Centre and States would together bear 80% of the capital cost of the project and 50% of operation and maintenance costs of such projects for the first five years.
Viability Gap Funding (VGF) Scheme
- Viability Gap Finance means a grant to support projects that are economically justified but not financially viable.
- The scheme is designed as a Plan Scheme to be administered by the Ministry of Finance and amount in the budget are made on a year-to-year basis.
- Such a grant under VGF is provided as a capital subsidy to attract the private sector players to participate in PPP projects that are otherwise financially unviable.
- Projects may not be commercially viable because of the long gestation period and small revenue flows in future.
- The VGF scheme was launched in 2004 to support projects that come under Public-Private Partnerships.
Its’ funding
- Funds for VGF will be provided from the government’s budgetary allocation. Sometimes it is also provided by the statutory authority who owns the project asset.
- If the sponsoring Ministry/State Government/ statutory entity aims to provide assistance over and above the stipulated amount under VGF, it will be restricted to a further 20% of the total project cost.
VGF grants
- VGF grants will be available only for infrastructure projects where private sector sponsors are selected through a process of competitive bidding.
- The VGF grant will be disbursed at the construction stage itself but only after the private sector developer makes the equity contribution required for the project.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: FCRA
Mains level: FCRA
The Ministry of Home Affairs (MHA) has relaxed FCRA norms for farmer, student, religious and other groups who are not directly aligned to any political party to receive foreign funds if the groups are not involved in “active politics”.
Must read:
What is Foreign Contribution (Regulation) Act, and how does it control donations?
What is the FCRA?
- The Foreign Contribution Regulation Act (FCRA), 2010 regulates foreign donations and ensures that such contributions do not adversely affect the internal security of our country.
- The Act, first enacted in 1976, was amended in the year 2010 when a slew of new measures was taken by the Union Home Ministry to regulate foreign donations. It was again amended in September this year.
- It is applicable to all associations, groups and NGOs which intend to receive foreign donations. It is mandatory for all such NGOs to register themselves under the FCRA.
- The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms.
What are the new rules?
- The new rule says- the organisations specified under clauses (v) and (vi) of sub-rule (1) shall be considered to be of political nature, if they participate in active politics or party politics, as the case may be.
- The 2011 rules on said clauses dealt with “guidelines for the declaration of an organisation to be of a political nature, not being a political party”.
- It said that the Central government could specify an organisation as that of political nature based on six criteria.
Defining ‘Political group’
- Clause V of Rule 3 (FCRA 2011) qualified a political group as, “organisations of farmers, workers, students, youths based on caste, community, religion, language or otherwise, which is not directly aligned to any political party, but whose objectives or activities, include steps towards advancement of political interests of such groups.
- The activities include: habitually engagement in or employ common methods of political action like rasta roko, jail bharo, rail roko, bandh or hartal in support of public causes.
Why such a move?
- As per the FCRA, members of legislatures, political parties, government officials, judges and media persons are prohibited from receiving any foreign contribution.
- The new rules make new FCRA registrations more stringent.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Sarna Religion
Mains level: Tribal culture and its conservation
The Jharkhand government convened a special Assembly session to pass a resolution to recognise Sarna religion and include it as a separate code in the Census of 2021.
The Sarna Religion
- The followers of Sarna faith believe pray to nature.
- The holy grail of the faith is “Jal (water), Jungle (forest), Zameen (land)” and its followers pray to the trees and hills while believing in protecting the forest areas.
- Jharkhand has 32 tribal groups of which eight are from Particularly Vulnerable Tribal Groups.
- While many follow Hindu religion, some have converted to Christianity — this has become one of the planks of demanding a separate code “to save religious identity”— as various tribal organisations put it.
A sacred grove is any grove of trees that are of special religious importance to a particular culture. Can you link this concept with the traditional practice of Sarna Tribals?
Why need Sarna Code?
- It is believed that 50 lakhs tribal in the entire country put their religion as ‘Sarna’ in the 2011 census, although it was not a code.
- The resolution will seek a special column for followers of the Sarna religion in the Census, 2021. At present, they are not classified as a separate entity.
Politics around the code
- Many of the tribals who follow this faith have later converted to Christianity—the state has more than 4% Christians most of whom are tribals.
- Some who still follow the Sarna faith believe the converted tribals are taking the benefits of reservation as a minority as well as the benefits are given to Schedule Tribes.
- They also believe that benefits should be given specifically to them and not those who have converted.
What sense does a separate code make?
- The protection of their language and history is an important aspect of tribals.
- Between 1871 and 1951, the tribals had a different code. However, it was changed around 1961-62.
- Experts argue that when today the entire world is focusing on reducing pollution and protecting the environment, it is prudent that Sarna becomes a religious code as the soul of this religion is to protect nature and the environment.
Back2Basics: Census of India
- The decennial Census of India has been conducted 15 times, as of 2011.
- While it has been undertaken every 10 years, beginning in 1872 under British Viceroy Lord Mayo, the first complete census was taken in 1881.
- Post-1949, it has been conducted by the Registrar General and Census Commissioner of India under the Ministry of Home Affairs, Government of India.
- All the censuses since 1951 were conducted under the 1948 Census of India Act.
- The last census was held in 2011, whilst the next will be held in 2021.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Gujarat Maritime Cluster
Mains level: Need for a Maritime Cluster in India
The Gujarat Maritime Cluster coming up in the GIFT (Gujarat International Finance Tec-City) City at Gandhinagar will be a dedicated system to address logistics of ports and seaways.
Try answering this:
Q.What do you mean by Central Business Districts? How it is different from a Special Economic Zone (SEZ)?
What is a Maritime Cluster?
- The concept of the maritime cluster is new to India, but these clusters have been driving some of the most competitive ports of the world like Rotterdam, Singapore, Hong Kong, Oslo, Shanghai, and London.
- Simply put, a maritime cluster is an agglomeration of firms, institutions, and businesses in the maritime sector that are geographically located close to each other.
Gujarat Maritime Cluster
- While the project was conceptualized back in 2007, it received in-principle approval from the state government only in 2015.
- The Gujarat Maritime Board (GMB), a nodal agency of the Gujarat government, has been trying to develop such a cluster at GIFT City in the state capital Gandhinagar.
- This cluster will initially consist of Gujarat-based shipping lines, freight forwarders, shipping agents, bunker suppliers, stevedores, and shipbrokers with chartering requirements.
- In the second stage, the cluster would attempt to bring Indian ship owners, ship operators, Indian charterers and technical consultants scattered in cities like Mumbai, Chennai, and Delhi to Gujarat.
- Thereafter it would target to attract global players in the maritime sphere.
Need for a maritime cluster
- This project will try to bring back businesses that have migrated over the years to foreign locations due to the absence of the right ecosystem in the country.
- Gujarat has a lot of ports and handles 40 per cent of the country’s cargo, but it does not target the entire value chain.
- Since we didn’t have the ecosystem, a lot of Indian companies have moved to foreign locations. For instance, Adani Group has the biggest port in Gujarat, but for their chartering needs, they are based out of Dubai.
Back2Basics: GIFT City, Gandhinagar
- GIFT city is India’s first operational smart city and international financial services centre (much like a modern IT park).
- The idea for GIFT was conceived during the Vibrant Gujarat Global Investor Summit 2007 and the initial planning was done by East China Architectural Design & Research Institute (ECADI).
- Currently approximately 225 units/companies are operational with more than 12000 professionals employed in the City.
- The entire city is based on concept of FTTX (Fibre to the home / office).The fiber optic is laid in fault tolerant ring architecture so as to ensure maximum uptime of services.
- Every building in GIFT City is an intelligent building. There is piped supply of cooking gas. India’s first city-level DCS (district cooling system) is also operational at GIFT City.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Crew-1 Mission
Mains level: Manned mission to space
SpaceX’s Crew Dragon spacecraft will lift off carrying a crew of four people to the International Space Station (ISS) on a six-month-long mission.
What is the Crew-1 Mission?
- The mission is part of NASA’s Commercial Crew Program, whose objective is to make access to space easier in terms of its cost.
- This will carry four astronauts on NASA missions, maintaining a space station crew of seven to maximize time dedicated to scientific research on the orbiting laboratory.
- With this, the cargo and crew can be easily transported to and from the ISS, enabling greater scientific research.
- At the ISS, the crew will join the members of Expedition 64, the space station crew currently in residence at the ISS.
Mission goals
- The goals of the mission are the same as that of Expedition 1 that lifted off 20 years ago.
- NASA has called both of these ISS missions “historic”.
- At the ISS, the Crew-1 team will join members of Expedition 64 and conduct microgravity studies and deliver new science hardware to ISS.
- Once in orbit, NASA astronauts will collect samples to provide data to scientists back on Earth so that they can continue to study how dietary changes affect his body.
- The crew will also study the effects of dietary improvements on immune function and the gut microbiome and how those improvements can help crews adapt to spaceflight.
The term micro-g environment is more or less synonymous with the terms weightlessness and zero-g, but with an emphasis on the fact that g-forces are never exactly zero—just very small.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: PLI scheme and various sectors
Mains level: Moves for Atmanirbhar Bharat
The Union Cabinet has unveiled the Production-Linked Incentive (PLI) Scheme to encourage domestic manufacturing investments in ten key sectors.
PLI Scheme
- The PLI scheme aims to boost domestic manufacturing and cut down on imports by providing cash incentives on incremental sales from products manufactured in the country.
- Besides inviting foreign companies to set shop in India, the scheme aims to encourage local companies to set up or expand, existing manufacturing units.
UPSC can directly as the sectors included in the PLI scheme. Earlier it was only meant for Electronics manufacturing (particulary mobile phones).
What was the earlier PLI Scheme?
- As a part of the National Policy on Electronics, the IT ministry had notified the PLI scheme on April 1 this year.
- The scheme will, on one hand, attract big foreign investment in the sector, while also encouraging domestic mobile phone makers to expand their units and presence in India.
- It would give incentives of 4-6 per cent to electronics companies which manufacture mobile phones and other electronic components.
- A/c to the scheme, companies that make mobile phones which sell for Rs 15,000 or more will get an incentive of up to 6 per cent on incremental sales of all such mobile phones made in India.
- In the same category, companies which are owned by Indian nationals and make such mobile phones, the incentive has been kept at Rs 200 crore for the next four years.
10 new sectors added
The ten sectors have been identified on the basis of their potential to create jobs and make India self-reliant, include:
- Food processing
- Telecom
- Electronics
- Textiles
- Speciality steel
- Automobiles and auto components
- Solar photo-voltaic modules and
- White goods such as air conditioners and LEDs
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