Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Current account opening restriction to deal with the NPA issue
Context
Some bank borrowers have gone to court demanding that it quash the Reserve Bank of India (RBI) circular dated August 6, 2020 on opening current accounts.
Background
- Current accounts with non-lending banks are an important channel for diversion.
- Diversion of funds is a major reason for large non-performing assets (NPAs).
- Internal diversion is for non-priority purposes and funds can also be diverted to other firms, owned or controlled by the same group, friends or relatives.
- To prevent this, the RBI mandates a No-Objection Certificate (NOC) from lending banks before opening such accounts.
- Banks should verify with CRILC, the RBI credit database, and inform lenders. Banks should also obtain a NOC from the drawee bank when an account is opened through cheques.
- Widespread non-compliance with mandated safeguards forced the RBI to bar non-lending banks from opening current accounts for large borrowers.
- Thus, if borrowing is through a cash credit or overdraft account, no bank can open a current account.
What are the current regulations?
- If a borrower has no cash credit or overdraft account, a current account can be opened subject to restrictions.
- If the bank’s exposure is less than 10% of total borrowings, debits to the account can only be for transfers to accounts with a designated bank.
- If total borrowing is ₹50 crore or more, there should be an escrow mechanism managed by one bank which alone can open a current account.
- Other lending banks can open ‘collection accounts’ from which funds will be periodically transferred to the escrow account.
- If the borrowing is between ₹5 crore and ₹50 crore, lending banks can open current accounts.
- Non-lending banks can open collection accounts.
- If borrowing is below ₹5 crore, even non-lending banks can open current accounts.
- The working capital credit should be bifurcated into loan and cash credit components at individual bank levels.
Issues with regulations
- If a borrower has an overdraft, how can there not be a current account?
- An overdraft is the right to overdraw in a current account up to a limit.
- The second issue is that the circular forecloses such operational flexibility.
- Third, why should a bank with low exposure transfer funds to another bank when it can use it to adjust other dues with it?
- Fourth, share in borrowing is not static. Crossing the threshold both ways could happen often.
- Fifth, there is a mismatch between what a borrower needs and the regulations allow.
- Support of non-lending banks through current accounts in other banks is required for large accounts.
- Sixth, transactions in an active current account enables a bank to monitor a borrower’s account, however small.
- The lack of such control was why large development financial institutions of yesteryear built up huge NPAs.
- Seventh, the regulation mandates splitting working capital into loan and cash credit components across all banks.
- Such a one-size-fits-all regulation does not factor in the purpose of the different facilities.
- A large company might avail itself of loans in Mumbai, but require current accounts with another bank in Assam where it might have a factory.
- Lack of flexibility: Rules are not flexible, do not provide for unforeseen circumstances, and can be easily circumvented.
- Use more generic terms: Regulation needs to use more generic terms. Terms such as Working Capital Term Loan might mean different things in different banks.
- Diversion of fund is risk better dealt by banks: Is it not better to leave management of exceptional risks such as diversion of funds to the banks?
- The cost of regulation: the costs of regulation be justified by the benefits.
Conclusion
When regulation ignores market practices, it lacks legitimacy, a construct from neo-institutionalist literature. When legitimacy is wanting, compliance suffers.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Food fortification
Mains level: Paper 3- food fortification to deal with anaemia
Context
To deal with the high prevalence of anaemia, the government has been pursuing the policy of food fortification with iron. This policy needs a rethink.
Rice-fortification policy
- There are high levels of anaemia in India, affecting women and children equally.
- This is despite the corrective measures like mandatory supplementation of iron tablets through Anaemia Mukt Bharat programme of pharmaceutical iron supplementation.
- To deal with the issue, the government has decided on compulsory rice fortification in safety-net feeding programmes like the ICDS, PDS and school mid-day meals.
- This was announced by the Prime Minister in his recent Independence Day address to the nation.
- The mandatory rice fortification programme is being piloted in some districts already.
- Food fortification is considered attractive as it requires no behavioural modification by the beneficiary.
Why iron fortification policy needs re-examination?
1) Over-estimation of anaemia burden
- High WHO cutoff for Hg levels: WHO haemoglobin cut-offs are used to diagnose anaemia in India.
- There is a growing global consensus that these may be too high.
- A recent Lancet paper suggested a lower haemoglobin cut-off level to diagnose anaemia in Indian children.
- Using this will actually reduce the anaemia burden by two-thirds.
- Capillary Vs venous blood sample: Haemoglobin level can be falsely low when a capillary blood sample (taken by finger-prick) is used for measurement, instead of the more reliable venous blood sample (taken with a syringe from an arm vein). The anaemia burden in India is estimated from capillary blood, which inflates the anaemia burden substantially.
- If the recommended venous blood sample is used, it would halve this burden.
- There is, thus, a significant overestimation of anaemia burden.
2) Other nutrients and protein intake
- A MoHFW national survey (Comprehensive National Nutrition Survey) of Indian children showed that iron deficiency was related to less than half the anaemia cases.
- Many other nutrients and adequate protein intake are also important, for which a good diverse diet is required.
3) Iron requirement over-estimated
- The idea for iron fortification comes from the premise that a normal Indian diet cannot possibly meet an individual’s daily iron requirement.
- This is wrong thinking, and is based on older iron requirements (as per National Institute of Nutrition [NIN] 2010), which were much too high.
- The latest corrected iron requirements (NIN 2020) are 30-40 per cent lower.
- The iron density of the Indian vegetarian diet, about 9 mg/1000 kCal, can thus meet most requirements.
4) Challenges in rice fortification
- Rice fortification is very complex.
- It requires a fortified rice “kernel” or grain that is composed of rice flour paste, along with the required concentration of micronutrients and binders, extruded into a grain that exactly matches the shape of the rice it is intended to fortify.
- The problem lies in making “matching” kernels for each rice cultivar that is distributed in the food safety-net programmes from year to year and state to state.
- If it does not match, the instinct of a home cook will be to pick out and discard the odd grains, thereby defeating the purpose of fortification.
Risks involved
- Ingesting fortified salt (two teaspoons, 10 g/day) or rice (quarter kilo/day) will deliver an additional 10 mg iron/day each to the diet.
- When the iron intake exceeds 40 mg/day, the risk of toxicity goes up.
- The unabsorbed iron that remains in the gut can wreak havoc among the beneficial bacteria in the large intestine.
- Iron causes oxidative stress, and more seriously, is implicated in diabetes and cancer risk. Men will also be more at risk.
Way forward
- We just need to absorb the existing dietary iron better and complement this with all the other nutrients that are required, by eating a diverse diet (with fruits and vegetables, for example), and improving our environment.
- Indeed, it is well-known that the benefits derived from the nutrients in whole foods are greater than the sum of their parts.
Conclusion
We need to rethink our reductionist strategies if we are to deliver food and nutrition security to our people.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: National Mission on Oilseeds and Oil Palm
Mains level: Paper 3- Oil palm cultivation in India
Context
On August 15, Prime Minister Narendra Modi announced a support of Rs 11,000 crore to incentivise oil palm production.
National Mission on Edible Oils and Oil Palm (NMEO-OP)
- Under NMEO-OP, the government intends to bring an additional 6.5 lakh hectares under oil palm cultivation.
- The agro-business industry has said the move will help its growth and reduce the country’s dependence on palm oil imports, especially from Indonesia and Malaysia.
- Indonesia has emerged as a significant palm oil hub in the last decade and has overtaken Malaysia.
- The two countries produce 80 per cent of global oil palm.
- Indonesia exports more than 80 per cent of its production.
Reducing the import dependence
- India imported 18.41 million tonnes of vegetable oil in 2018.
- The National Mission on Oilseeds and Oil Palm are part of the government’s efforts to reduce the dependence on vegetable oil production.
- The Yellow Revolution of the 1990s led to a rise in oilseeds production.
- Though there has been a continuous increase in the production of diverse oilseeds — groundnut, rapeseed and mustard, soybean — that has not matched the increasing demand.
- Most of these oilseeds are grown in rain-fed agriculture areas of Gujarat, Andhra Pradesh, Haryana, Karnataka, Rajasthan, Madhya Pradesh, Tamil Nadu and Uttar Pradesh.
Issues with oil palm cultivation in India
- Impact on biodiversity: Studies on agrarian change in Southeast Asia have shown that increasing oil palm plantations is a major reason for the region’s declining biodiversity.
- The Northeast is recognised as the home of around 850 bird species, it is also home to citrus fruits, it is rich in medicinal plants and harbours rare plants and herbs.
- Above all, it has 51 types of forests.
- Studies conducted by the government have also highlighted the Northeast’s rich biodiversity.
- The palm oil policy could destroy this richness of the region.
- To preserve the environment and biodiversity, Indonesia and Sri Lanka have already started putting restrictions on palm tree plantation.
- Water pollution: Along with adversely impacting the country’s biodiversity, it has led to increasing water pollution.
- Climate change: The decreasing forest cover has significant implications with respect to increasing carbon emission levels and contributing to climate change.
- Against the notion of self-reliance: Such initiatives are also against the notion of community self-reliance:
- The initial state support for such a crop results in a major and quick shift in the existing cropping pattern that are not always in sync with the agro-ecological conditions and food requirements of the region.
- Against commitment to sustainable agriculture: The policy also contradicts the government’s commitments under the National Mission for Sustainable Agriculture.
- The mission aims at “Making agriculture more productive, sustainable, remunerative and climate resilient by promoting location specific integrated/composite farming systems.”
- The palm oil mission, instead, aims at achieving complete transformation of the farming system of Northeast India.
- Studies also show that in case of variations in global palm oil prices, households dependent on palm oil cultivation become vulnerable.
Consider the question “India depend on import for its vegetable oil requirements to a larger extent. What are the steps taken by the government to reduce the dependence? Can oil palm cultivation in India be a solution?”
Conclusion
Similar environmental and political outcomes cannot be ruled out in India. Apart from the possible hazardous impacts in Northeast India, such trends could have negative implications on farmer incomes, health, and food security in other parts of the country in the long run.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Arctic Council
Mains level: Geopolitics of the Arctic
It is tempting to view the current geopolitics of the Arctic through the lenses of the ‘great power competition’ and inevitable conflict of interests.
Current geopolitical scenario in the Arctic: US-Russia Spat
- It is mainly viewed as the growing tensions between North Atlantic Treaty Organization (NATO) allies and Russia.
- By the end of the Cold War, the geopolitical tensions and security concerns in the Arctic were almost forgotten.
- The perceived ‘harmony’ was broken in 2007, when the Russian explorers planted their flag on the seabed 4,200m (13,779ft) below the North Pole to articulate Moscow’s claims in the Arctic.
- This move was certainly viewed as provocative by other Arctic State.
- The regional tension increased after the Russia-Ukraine conflict in 2014.
- Consequently, relations between the U.S. and Russia reached their lowest point again.
Note: Five Arctic littoral states — Canada, Denmark (Greenland), Norway, Russia and the USA (Alaska) — and three other Arctic nations — Finland, Sweden and Iceland — form the Arctic Council (estd. 1996).
Try mapping them.
Caution: India became an Observer in the Arctic Council for the first time in 2013. And, India isn’t a full-time observer.
China’s vested interests in Arctic
- China, for example, with its self-proclaimed status of a ‘near Arctic state’, has been actively engaged in various projects across the region.
- The importance of the Arctic region for China mostly stems from its energy security issues and the need to diversify shipping lanes.
Why China focuses on Arctic?
- Transport routes from China to Europe through the Arctic are not only much shorter but also free from the challenges associated with the Malacca Strait and South China Sea.
- In the latter case, China will continue facing a backlash from many Association of Southeast Asian Nations (ASEAN) members, supported by US forces and Quad.
Impact of Climate change on Arctic
- The Arctic is warming nearly twice as fast as the rest of the planet with consecutive record-breaking warm years since 2014.
- The Arctic is likely to begin experiencing ice-free summers within the next decade, with summers likely to be completely free of sea ice by mid-century.
Conclusion
- Given the significance of the region, the Arctic will continue to draw increased attention.
- Hence, countries should refrain from mutual provocations, excessive militarisation, and quid pro quo tactics.
- All Arctic actors should have a long-term vision and strategic goals as compared to immediate short-term gains.
- Instead of creating a potential battleground that is reminiscent of the Cold War, the parties concerned should utilise their expertise and create the required synergy to achieve shared goals.
- Climate change and its dramatic consequences must be a catalyst for Arctic cooperation.
Back2Basics: Arctic Council
- It is an advisory body that promotes cooperation among member nations and indigenous groups as per the Ottawa Declaration of 1996.
- Its focus is on sustainable development and environmental protection of the Arctic.
- The Arctic Council consists of the eight Arctic States: Canada, the Kingdom of Denmark (including Greenland and the Faroe Islands), Finland, Iceland, Norway, Russia, Sweden and the United States.
- In 2013, six Observers joined the Arctic Council, including China, Japan, India, Italy, South Korea, and Singapore, bringing their total number to 13.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Volanic eruptions in news
Mains level: Volcanic landforms
Geologists have detected a swarm of earthquakes at Hawaii’s Kilauea volcano, though it was not erupting.
Kilauea Volcano
- Kilauea is about 200 miles south of Honolulu, on the Big Island of Hawaii.
- It is one of the world’s most active volcanoes, having erupted 34 times since 1952. In Hawaiian tradition, Kilauea is home to the volcano goddess Pele.
- From 1983 to 2018, it erupted almost continuously, in some cases sending streams of lava that covered farms and homes.
- At the end of this decades-long eruption, Kilauea spewed lava from vents in a residential neighborhood on its eastern flank and destroyed more than 700 homes.
- In December, Kilauea erupted at the crater, creating a lake with enough lava to fill 10 Hoover dams. That eruption ended in May.
Do not skip answering this PYQ:
Consider the following statements:
- The Barren Island volcano is an active volcano located in the Indian Territory.
- Barren Island lies about 140 km east of Great Nicobar.
- The last time the Barren Island volcano erupted was in 1991 and it has remained inactive since then.
Which of the statements given above is/are correct? (CSP 2014)
(a) 1 only
(b) 2 and 3 only
(c) 3 only
(d) 1 and 3 only
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Back2Basics: Volcanic Landforms
- Note the intrinsic and extrinsic types of volcanic landforms
- A volcano has 3 main characteristics
- Cone shaped mountain
- Formed by rock or ash thrown from the inside of the earth
- At times, opening or depression at top
- The three main types of volcanos are:
- Cinder cone Volcano: The cinder cones are small volcanoes with steep sides. Even though they are small, these are the ones you probably hear about. They are very explosive and made of ash and rock. Most of the cinder cones are small and less than 500 meters high. A famous cinder cone is Sunset Crater Volcano in Arizona.
- Shield Volcanoes: A shield is a low and broad volcano that usually has a very wide crater (a dent in the Earth’s surface). It is formed from thin layers of lava after consistent low-grade eruptions. The largest volcano in the world is a shield volcano. It is located in Hawaii.
- Composite volcanoes: They are the tallest type of volcano. They look very impressive but do usually have quiet and slow lava flows. They sometimes have small eruptions that cause ash and rock to go flying. One of the most famous volcanoes in the world is a composite volcano. It is Mount Fuji in Japan.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Kolkata City
Mains level: Urban development of colonial period
A 2003 judgment by the Calcutta High Court generates discussion of the city’s age, its date of founding, and Job Charnock, whom many credits for having “found” the city of Calcutta.
Calcutta: Who founded the city?
Nobody.
- A place then called Kalikatah was an important religious centre due to the existence of the Kali temple in the adjacent village of Kalighat.
- The first literary reference to the site is found in Bipradas Pipilai’s magnum opus Manasa Mangala which dates back to 1495.
- Abul Fazl’s Ain-I-Akbari dating 1596 also mentions the place.
- The Sabarna Roy Choudhury family was granted the Jagirdari of Kalikatah by Emperor Jehangir in 1608.
Who was Job Charnock?
- Job Charnock (1630–1693) was an English administrator with the East India Company.
- He was once regarded as the founder of the city of Kolkata (formerly Calcutta).
- However, this view is challenged, and in 2003 the Calcutta High Court declared that he ought not to be regarded as the founder.
- Charnock was entrusted with procuring the Company’s saltpetre and appointed to the centre of the trade, Patna in Bihar in1659.
Beginning of Urbanization
- The establishment of the Government House in 1767 and the Lottery Commission in 1817 were the other important developments in the city’s history that gave its urban landscape more defined contours.
- This commission was entirely responsible for the setting up of the city’s roads, streets and lanes.
- Some markers of urban settlements include planned roads, water supply and transport.
- The establishment of these in the early 19th century was responsible for making Calcutta the great city that it eventually became.
Significance of Kolkata
One of the most significant developments that gave the city a semblance of urban formation occurred in 1756 when the Nawab of Bengal Siraj ud-Daulah lay siege to Calcutta.
- This was in retaliation for the British East India Company engaging in unauthorized development of the structure that is now known as Fort William.
- The East India Company was defeated in a decisive battle, making them realise the vulnerability of the fort.
- Post 1757 the fort was remade and fortified with enhanced protection, the construction was exceptionally well done.
- It was really this attack on Fort William, a bastion of the British and other Europeans living there, that changed the map of Calcutta.
- The Europeans who used to primarily lived inside the fort—the European merchants, the administrators etc—started moving out.
- They knew that if there was an attack, there was infrastructure to save them. That was European Calcutta, what we call ‘White Town’.
Hey! We won’t let you move away without answering this PYQ:
Wellesley established the Fort William College at Calcutta because (CSP 2020):
(a) He was asked by the board of directors at London to do so
(b) He wanted to revive interest in oriental learning in India
(c) He wanted to provide William Carey and his associates with employment
(d) He wanted to train British civilians for administrative purposes in India.
Post your answers here:
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: SUJALAM Campaign
Mains level: Not Much
The Ministry of Jal Shakti began ‘SUJALAM’, a ‘100 days campaign’ to create more and more ODF Plus villages by undertaking wastewater management at the village level.
SUJALAM Campaign
The key activities that will be organized in the villages under this campaign include:
- Organizing Community consultations, Khuli Baithaks and Gram Sabha meetings to analyze the current situation
- Pass resolution to maintain ODF sustainability and achieve a needed number of soak pits to manage the greywater
- Develop a 100 days’ plan to undertake sustainability and soak pit construction-related activities
- Construct a requisite number of soak pits
- Retrofit toilets where needed through IEC and community mobilization and
- Ensure all newly emerging Households in the village have access to toilets
Objectives of the campaign
- The effort of the campaign would be directed towards achieving the ODF plus status for villages across the country in an accelerated manner in a short time.
- The campaign will not only build desired infrastructure soak pit for management of greywater in villages but will also aid in sustainable management of water bodies.
- The disposal of wastewater and clogging of water bodies in the villages or on the outskirts of the villages remain one of the major problems.
- The Campaign would help in the management of the wastewater and in turn, would help to revive the water bodies.
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