29th March, 2018-IAS Current Affairs
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(GS2: Mobilization of resources)
Issue: The government on Wednesday issued a preliminary information memorandum (PIM) while inviting an expression of interest (EoI) from parties to sell 76% of its stake in the national carrier Air India, which owns 100% shareholding in low-cost airline Air India Express Ltd and 50% in Air India SATs, which provides airport ground handling services.
What is Divestment?
Divestment, also known as divestiture, is the opposite of an investment, and it is the process of selling an asset for financial, social or political goals. Assets that can be divested include a subsidiary, business department, real estate, equipment and other property. Divestment can be part of following either a corporate optimization strategy or political agenda, when investments are reduced and firms withdraw from a particular geographic region or industry due to political or social pressure.
The disinvestment policy in India
The policy on disinvestment has evolved considerably through President’s address to Joint Sessions of Parliament and statement of the Finance Minister’s in their Budget Speeches.
The salient features of the Policy are:
|(i)||Public Sector Undertakings are the wealth of the Nation and to ensure this wealth rests in the hands of the people, promote public ownership of CPSEs;|
|(ii)||While pursuing disinvestment through minority stake sale in listed CPSEs, the Government will retain majority shareholding, i.e. at least 51 per cent of the shareholding and management control of the Public Sector Undertakings;|
|(iii)||Strategic disinvestment by way of sale of substantial portion of Government shareholding in identified CPSEs up to 50 per cent or more, along with transfer of management control.|
Approach for Disinvestment
(a) Disinvestment through minority stake sale
On 5th November 2009, Government approved the following action plan for disinvestment in profit making government companies:
|(i)||Already listed profitable CPSEs (not meeting mandatory shareholding of 10%, which stands revised to 25%) are to be made compliant through ‘Offer for Sale’ (OFS) by Government or by the CPSEs through issue of fresh shares or a combination of both|
|(ii)||Unlisted CPSEs with no accumulated losses and having earned net profit in three preceding consecutive years are to be listed.|
|(iii)||Follow-on public offers would be considered taking into consideration the needs for capital investment of CPSE, on a case by case basis, and Government could simultaneously or independently offer a portion of its equity shareholding.|
|(iv)||All cases of disinvestment are to be decided on a case by case basis|
|(v)||The Department of Investment and Public Asset Management (DIPAM) is to identify CPSEs in consultation with respective administrative Ministries and submit proposal to Government in cases requiring Offer for Sale of Government equity|
(b) Strategic Disinvestment
|(i)||To be undertaken through a consultation process among different Ministries/Departments, including NITI Aayog.|
|(ii)||NITI Aayog to identify CPSEs for strategic disinvestment and advice on the mode of sale, percentage of shares to be sold of the CPSE and method for valuation of the CPSE.|
|(iii)||The Core Group of Secretaries on Disinvestment (CGD) to consider the recommendations of NITI Aayog to facilitate a decision by the Cabinet Committee on Economic Affairs (CCEA) on strategic disinvestment and to supervise/monitor the process of implementation.|
(c) Comprehensive management of GoI’s investment in CPSEs
|(i)||The Government recognises its investment in CPSEs as an important asset for accelerating economic growth and is committed to the efficient use of these resources to achieve optimum return.|
|(ii)||The Government will achieve these objectives by adopting a comprehensive approach for addressing critical inter-linked issues such as leveraging of assets to attract fresh investment, capital restructuring, financial restructuring, etc.|
|(iii)||Different options for optimal utilization of Government’s investment in CPSEs will be assessed to adopt suitable investment management strategies to improve investors’ confidence in the CPSEs and support their market capitalization which is essential for raising fresh investment from the capital market for their expansion and growth.|
|(iv)||Efficient management of investment in CPSEs shall be ensured through rationalization of decision making process for all related issues and seamless inter-departmental coordination in the matter.|
Department of Investment and Public Asset Management is the nodal department for disinvestment policy in India. This department is under the overall control of Ministry of Finance
‘Indus Commission Treaty’
(GS2: India and its neighborhood relations)
Issue: India and Pakistan will go ahead with talks on the Indus Waters Treaty on Thursday despite an upsurge in tensions over LoC crossfire and allegations of harassment of diplomats in Delhi and Islamabad
About Indus water treaty
- The Indus Waters Treaty was signed on September 19, 1960 by the then Prime Minister Jawaharlal Nehru and Pakistan’s President Ayub Khan.
- It was brokered by the World Bank.
- The treaty administers how river Indus and its tributaries that flow in both the countries will be utilized.
- According to the treaty, Beas, Ravi and Sutlej are to be governed by India, while, Indus, Chenab and Jhelum are to be taken care by Pakistan.
- However, since Indus flows from India, the country is allowed to use 20 per cent of its water for irrigation, power generation and transport purposes.
- A Permanent Indus Commission was set up as a bilateral commission to implement and manage the Treaty. The Commission solves disputes arising over water sharing.
- The Treaty also provides arbitration mechanism to solve disputes amicably.
- Though Indus originates from Tibet, China has been kept out of the Treaty. If China decides to stop or change the flow of the river, it will affect both India and Pakistan.
- Climate change is causing melting of ice in Tibetan plateau, which scientists believe will affect the river in future.
- It may be noted that both India and Pakistan are still at loggerheads over various issues since Partition, but there has been no fight over water after the Treaty was ratified.
(GS3: Indian Economy)
Issue: India’s fiscal deficit skyrocketed to 120.3 percent of the revised estimates by the end of April-February.
Reason for increase in the Fiscal Deficit
The fiscal deficit soared due to increase in expenditure and subdued revenue receipts. For the corresponding period last year, the fiscal deficit stood at Rs 5.94 lakh crore or 113 percent of the estimated limit.
The government had to face financial hardships due to implementation of Goods and Services Tax (GST). Combined with volatility in revenue and imbalanced expenditure resulted in government crossing its fiscal deficit target back in November last year.
What is Fiscal Deficit?
The difference between total revenue and total expenditure of the government is termed as fiscal deficit. It is an indication of the total borrowings needed by the government. While calculating the total revenue, borrowings are not included.
The gross fiscal deficit (GFD) is the excess of total expenditure including loans net of recovery over revenue receipts (including external grants) and non-debt capital receipts. The net fiscal deficit is the gross fiscal deficit less net lending of the Central government.
Generally fiscal deficit takes place either due to revenue deficit or a major hike in capital expenditure. Capital expenditure is incurred to create long-term assets such as factories, buildings and other development.
A deficit is usually financed through borrowing from either the central bank of the country or raising money from capital markets by issuing different instruments like treasury bills and bonds.
Pradhan MantriRojgar Protsahan Yojana (PMRPY)
(GS2: Government policies for development in various sectors)
Issue: The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval for enhancing the scope of Pradhan MantriRojgarProtsahanYojana (PMRPY). The Government of India will now contribute the Employer’s full admissible contribution for the first three years from the date of registration of the new employee for all the sectors including existing beneficiaries for their remaining period of three years.
Benefit of this move
The informal sector workers would get social safety net and there would be more job creation.
About the programme
PMRPY has been in operation since August, 2016. In this scheme, Government is paying the 8.33% contribution of Employers to the Employees’ Pension Scheme (EPS) in respect of new employees (who have joined on or after 1st April 2016) having a new Universal Account Number (UAN), with salary up to Rs. 15,000/- per month. The scheme has a dual benefit i.e. on the one hand the employers are incentivized for increasing the employment base of workers in the establishments, and on the other hand a large number of workers will find jobs in such establishments. A direct benefit is that these workers will have access to social security benefits of the organized sector
‘Electoral Bond Scheme’
(GS2: Salient features of Representation of People’s act)
Issue: Government of India has notified the Electoral Bond Scheme 2018.
About the bond scheme
As per provisions of the Scheme, Electoral Bonds may be purchased by a person, who is a citizen of India or incorporated or established in India. A person being an individual can buy Electoral Bonds, either singly or jointly with other individuals. Only the Political Parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and which secured not less than one per cent of the votes polled in the last General Election to the House of the People or the Legislative Assembly of the State, shall be eligible to receive the Electoral Bonds. The Electoral Bonds shall be encashed by an eligible Political Party only through a Bank account with the Authorized Bank.
It may be noted that Electoral Bonds shall be valid for fifteen days from the date of issue and no payment shall be made to any payee Political Party if the Electoral Bond is deposited after expiry of the validity period. The Electoral Bond deposited by an eligible Political Party in its account shall be credited on the same day.
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
(GS2: Welfare schemes for the vulnerable sections of the population)
Issue: Government has launched the ‘Pradhan Mantri Vaya Vandana Yojana (PMVVY)’ to provide social security during old age and to protect elderly persons aged 60 years and above against a future fall in their interest income due to uncertain market conditions. The scheme enables old age income security for senior citizens through provision of assured pension/return linked to the subscription amount based on government guarantee to Life Insurance Corporation of India (LIC).
About the scheme
The scheme provides an assured return of 8% per annum for 10 years. The differential return, i.e. the difference between return generated by LIC and the assured return of 8% per annum would be borne by Government of India as subsidy on an annual basis.
The scheme is implemented by Ministry of Finance
‘Rashtriya Rail Sanraksha Kosh’ (RRSK)
Issue: A fund namely ‘Rashtriya Rail Sanraksha Kosh’ (RRSK) has been created in 2017-18 with a corpus of ₹1 lakh crore over a period of five years for critical safety related works. Accordingly, a provision of ₹20,000 crore has been made in Budget Estimates and Revised Estimate, 2017-2018 out of ‘Rashtriya Rail Sanraksha Kosh’ to fund essential works for ensuring safety.
Objective of the fund
Safety is accorded the highest priority by Indian Railways and all possible steps are undertaken on a continual basis including upgradation of technology to aid safe running of trains. These include replacement of over-aged assets, elimination of unmanned level crossings, adoption of suitable technologies for upgradation and maintenance of track, rolling stock, signalling and interlocking systems, safety drives, greater emphasis on training of officials and inspections at regular intervals to monitor and educate staff for observance of safe practices.
As a safety culture a well established safety management systems is existing which identifies Safety hazards and unsafe practices in the railway operation so that corrective action can be initiated much before occurrence of a disaster. Instructions have been issued from time to time to inculcate safety habits amongst all railway employees.
‘National Skill Development Fund’
(GS2: Issues related to human resources)
Issue: The Union Cabinet chaired by Prime Minister Shri Narendra Modi has given its approval for restructuring of National Skill Development Fund (NSDF) and National Skill Development Corporation (NSDC) to strengthen governance, implementation and monitoring framework.
About NSDF and NSDC
NSDC and NSDF were set up by the Ministry of Finance and registered in July, 2008 and January, 2009 respectively for implementing coordinated action for skill development. NSDF trust was incorporated to act as a receptacle for financial contributions from Governmental sources, bilateral/multilateral and other agencies. Its main objective is to enhance, stimulate and develop the skills of Indian youth force by various sector specific programmes.
NSDF entered into an Investment Management Agreement (IMA) with NSDC for utilization of its corpus to meet the desired objectives of National Skill Development Mission and encourage skill development in the country. Provision of supervisory role of NSDF over NSDC’s functions is also included in the IMA between NSDC and NSDF.
Under-nutrition and obesity
(GS2: Issues related to health)
Issue: Giant corporates selling processed foods are not only raising under-nutrition but also over-nutrition, or obesity, in a country that is seen as the hub of stunted and under-nourished children, say experts.
Findings of the report
While under-nutrition is closely associated with communicable diseases like TB, malaria, pneumonia and diarrhea, over-nutrition leads to non-communicable diseases like diabetes, hypertension, cardiac disease, strokes and certain cancers.
Further, there is a growing evidence linking under-nutrition in childhood with increased risk of obesity and non-communicable diseases in later life. New research links anaemia in early life with obesity in later life.
The unregulated penetration of food and beverage companies and the aggressive marketing of processed and ultra processed foods have begun to severely compound the problem