7th June, 2018-IAS Current Affairs
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‘Sugar Bailout package’ (GS3: Indian agriculture)
Issue: The Union Cabinet on Wednesday approved the bailout package of Rs 8,500 crore to sugar industry to ensure the cash-starved mills clear cane dues of Rs 22,000 crore. This includes Rs 4,500 crore soft loans for building ethanol production capacity and creating a 3 million tonne stockpile to soak up excess supply.
Need for a bailout package
A bailout package has been worked out as sugar mills’ financial health has worsened due to sharp fall in prices following a record sugar production of over 31.6 million tonnes so far in the 2017-18 marketing year
Sugarcane belongs to bamboo family of plants and is indigenous to India. It is the main source of sugar, gur and khandsari. About two-thirds of the total sugarcane produced in India is consumed for making gur and khandsari and only one third of it goes to sugar factories. It also provides raw material for manufacturing alcohol.
Bagasse, the crushed cane residue, can be more beneficially used for manufacturing paper instead of using it as fuel in the mills.
It is a long duration crop and requires 10 to 15 and even 18 months to mature, depending upon the geographical conditions. It requires hot and humid climate with average temperature of 21°-27°C and 75-150 cm rainfall
In the latter half, temperature above 20°C combined with open sky helps in acquiring juice and its thickening. Too heavy rainfall results in low sugar content and deficiency in rainfall produces fibrous crop. Irrigation is required in areas receiving lesser rainfall than the prescribed limit. Short cool dry winter season during ripening and harvesting is ideal.
India has the largest area under sugarcane cultivation in the world and she is the world’s second largest producer of sugarcane next only to Brazil.
On the basis of study of conditions of growth for sugarcane as mentioned in the above paragraphs, , following three distinct belts of sugarcane cultivation can be identified.
(i) The Satluj-Ganga plain from Punjab to Bihar containing 51 per cent of the total area and 60 per cent of the country’s total production.
(ii) The black soil belt from Maharashtra to Tamil Nadu along the eastern slopes of the Western Ghats.
(iii) Coastal Andhra and the Krishna Valley.
Uttar Pradesh is the largest producer of sugarcane in India
‘Affordable Housing’ (GS2: Government policies and programmes for development in various sectors)
Issue: The affordable housing segment will get a boost with RBI on Wednesday raising the loan limits under priority sector lending (PSL), and the government deciding to use surplus land of sick PSUs for construction of such dwelling units.
The President has promulgated an ordinance recognizing home-buyers as financial creditors, thus giving them greater say in insolvency of defaulting builders.
What is PSL?
PSL was recommended by Dr. K S Krishna Murthy committee in 1972.
Priority sector lending is a set of rules/directives given by RBI to banks in India, which states that out of total lending by banks, 40% of loans should be given to priority sector (Agriculture, MSME, weaker sections, renewable energy, education and housing).
Priority Sector includes the following categories:
(ii) Micro, Small and Medium Enterprises
(iii) Export Credit
(vi) Social Infrastructure
(vii) Renewable Energy
Priority Sector Lending Certificates (PSLCs) are a mechanism to enable banks to achieve the priority sector lending target and sub-targets by purchase of these instruments in the event of shortfall. This also incentivizes surplus banks as it allows them to sell their excess achievement over targets thereby enhancing lending to the categories under priority sector. Under the PSLC mechanism, the seller sells fulfillment of priority sector obligation and the buyer buys the obligation with no transfer of risk or loan assets.
‘Monetary Policy’ (GS3: Indian Economy)
Issue: The six-member monetary policy committee (MPC) on Wednesday unanimously voted for a rate hike, citing the fear of inflation, partly flared by the recent spike in crude oil prices.
Key takeaways from the policy announcement
- It sees major upside risk to the inflation path as crude prices rose 12%
- Says volatile crude oil prices adds uncertainty to its inflation outlook
- RBI expects boost to investments from swift resolution under the Insolvency & Bankruptcy Code
- Geo-political risks, financial market volatility, trade protectionism to impact domestic growth
- Adherence to budgetary targets by the Centre and states will ease upside risks to the inflation outlook
- All members of the monetary policy committee voted for a 0.25% rate hike
What is REPO?
Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation.
In the event of inflation, central banks increase repo rate as this acts as a disincentive for banks to borrow from the central bank. This ultimately reduces the money supply in the economy and thus helps in arresting inflation.
‘Baba Kalyani Committee’ (Facts that could be asked in prelims)
Issue: Government of India has constituted a group of eminent persons to study the Special Economic Zones (SEZ) Policy of India under the chairmanship of Baba Kalyani
Mandate of the committee
The group will evaluate the SEZ policy, suggest measures to cater to the needs of exporters in the present economic scenario and make the SEZ policy WTO compatible, suggest course correction in SEZ policy, make comparative analysis of the SEZ scheme and dovetail the SEZ policy with other similar schemes.
India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia’s first EPZ set up in Kandla in 1965. With a view to overcome the shortcomings experienced on account of the multiplicity of controls and clearances; absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000. The main objectives of the SEZ Act are:
- generation of additional economic activity
- promotion of exports of goods and services
- promotion of investment from domestic and foreign sources
- creation of employment opportunities
- development of infrastructure facilities
The SEZ Rules provide for:
- ” Simplified procedures for development, operation, and maintenance of the Special Economic Zones and for setting up units and conducting business in SEZs;
- Single window clearance for setting up of an SEZ;
- Single window clearance for setting up a unit in a Special Economic Zone;
- Single Window clearance on matters relating to Central as well as State Governments;
- Simplified compliance procedures and documentation with an emphasis on self certification
Ministry of Commerce and Industry is the nodal agency for SEZ policy in India
‘Insolvency and bankruptcy amendment 2018’ (GS2: Government policies and programmes and issues arising out of their design and implementation)
Issue: The President gave assent to promulgate the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018.
About the ordinance
The Ordinance provides significant relief to home buyers by recognizing their status as financial creditors. This would give them due representation in the Committee of Creditors and make them an integral part of the decision making process. It will also enable home buyers to invoke Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016 against errant developers. Another major beneficiary would be Micro, Small and Medium Sector Enterprises (MSME), which form the backbone of the Indian economy as the biggest employer, next only to the agriculture sector. Recognizing the importance of MSME Sector in terms of employment generation and economic growth, the Ordinance empowers the Government to provide them with a special dispensation under the Code.
What is an Ordinance?
Under the Constitution, the power to make laws rests with the legislature. However, in cases when Parliament is not in session, and ‘immediate action’ is needed, the President can issue an ordinance. An ordinance is a law, and could introduce legislative changes.
The most important power of the president is perhaps to promulgate ordinances under Art 123. The promulgation of an ordinance is not necessarily connected with an ’emergency’ but issued by the president in case he is convinced that it is not possible to have the parliament enact on same subject immediately and the circumstance render it necessary for him to take “immediate action” [Art 123(1)].
However such an ordinance must receive parliamentary approval within six weeks of the next session of the parliament, otherwise it shall become invalid. Since the ordinance-making power is to be exercised by the president on the ‘aid and advise’ of the council of ministers [Art 74], the power is often misused.
Under Article 123: Power of President to promulgate Ordinances during recess of Parliament
(1) If at any time, except when both Houses of Parliament are in session, the President is satisfied that circumstances exist which render it necessary for him to take immediate action, he may promulgate such Ordinance as the circumstances appear to him to require
(2) An Ordinance promulgated under this article shall have the same force and effect as an Act of Parliament, but every such Ordinance
(a) shall be laid before both House of Parliament and shall cease to operate at the expiration of six weeks from the reassemble of Parliament, or, if before the expiration of that period resolutions disapproving it are passed by both Houses, upon the passing of the second of those resolutions; and
(b) may be withdrawn at any time by the President, where the Houses of Parliament are summoned to reassemble on different dates, the period of six weeks shall be reckoned from the later of those dates for the purposes of this clause
(3) If and so far as an Ordinance under this article makes any provision which Parliament would not under this Constitution be competent to enact, it shall be void.
The Supreme Court has clarified that the legislative power to issue ordinances is ‘in the nature of an emergency power’ given to the executive only ‘to meet an emergent situation’.
‘IND-INDO CORPAT’ (GS2: Bilateral Relations)
Issue: The 31st edition of the India – Indonesia Coordinated Patrol (IND-INDO CORPAT) began from 06 to 09 Jun 18
Aim of this exercise
The visit of the Indian Naval Ship seeks to underscore India’s peaceful presence and solidarity with friendly countries towards ensuring good order in the maritime domain and to strengthen existing bonds between India and Indonesia.
‘Maternal Mortality Rate’ (GS2: Issues related to Health)
Issue: India registered a significant decline in Maternal Mortality Ratio. According to the just released SRS bulletin (2016), India has shown impressive gains in reduction of Maternal Mortality with 22% reduction in since 2013.
What the report says?
Nearly one thousand fewer women now die of pregnancy related complications each month in India. Maternal Mortality Ratio of India has declined from 167 in 2011-2013 to 130 in 2014-2016. The decline has been most significant in EAG States and Assam from 246 to 188. Among the Southern States, the decline has been from 93 to 77 and in the Other States from 115 to 93.
Amongst the States, Uttar Pradesh with 30% decline has topped the chart in the reduction of Maternal Deaths. Three states have already met the SDG target for MMR of 70 per 100,000. These are Kerala, Maharashtra and Tamil Nadu, while Andhra Pradesh and Telangana are within striking distance.
‘Groundwater recharge plan’ (GS3: Conservation of Environment)
Issue: To address concerns about depleting groundwater reserves in India, the government has joined hands with the World Bank to execute a ₹6,000-crore scheme called the Atal Bhujal Yojana (ABHY).
About the programme
- The Atal Bhujal Yojana aims to improve ground water management in priority areas in the country through community participation
- The priority areas identified under the scheme fall in Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh, which represent about 25% of the total number of over-exploited, critical and semi-critical blocks in terms of ground water in India.
‘Iran and Nuclear activities’ (GS2: Policies of developed countries and its impact on India)
Issue: Iran said on Wednesday that it was in “preparatory works” to restart nuclear activities in the event of the failure of the 2015 accord.
The preparatory works refers to steps to boost uranium enrichment capacity by producing new centrifuges
Also, France, Britain, Germany and the EU on Wednesday sent the U.S. a joint official request for their companies to be exempt from punitive measures resulting from fresh U.S. sanctions.
Impact of any sanction on Iran that could also affect India-Iran ties
- Experts say reinstating sanctions could see global oil prices rise by as much as $5 per barrel.
- Investments in infrastructure such as Chabhahar port will be affected
- Other transport connectivity projects with Iran will also be affected
- Any sanctions to the detriment of Iran carries with it the possibility of rise in tensions among the middle east countries, such tensions are counter-productive to India vis-à-vis number of Indians working in this country
‘Co-operative banks as Small finance banks’ (GS3: Indian Economy)
Issue: The Reserve Bank of India has decided to allow urban co-operative banks (UCB) to convert into small finance banks (SFB), a move aimed at bringing these entities into mainstream banking.
Reason for such an announcement
UCBs had been facing financial trouble till a few years ago, prompting the RBI to stop issuing fresh licences. But their performance has improved recently while their numbers have come down due to mergers and closures. UCBs currently face regulation by both the RBI and the respective State governments. By turning into SFBs, they will be regulated only by the RBI.
‘Gene Mapping’ (GS3: Science and Technology)
Issue: Scientists seeking new ways to fight drug-resistant superbugs have mapped the genomes of more than 3,000 bacteria,
The samples from Fleming — the British scientist credited with discovering the first antibiotic, penicillin, in 1928 — were among more than 5,500 bugs at Britain’s National Collection of Type Cultures (NCTC).
Need for gene mapping
Specialists estimate that around 70% of bacteria are already resistant to at least one antibiotic that is commonly used to treat them. This has made the evolution of “superbugs” that can evade one or multiple drugs one of the biggest threats facing medicine today. Among the most serious risks are tuberculosis — which infects more than 10.4 million people a year and killed 1.7 million in 2016 alone — and gonorrhoea, a sexually transmitted disease that infects 78 million people a year and which the WHO says is becoming almost untreatable.
What is Gene Mapping?
A genome map is the graphical description of the location of genes and DNA markers on the genome of an organism.
‘Defence Acquisition Council’ (GS3: Indigenization of Technology)
Issue: The defence acquisition council (DAC), chaired by defence minister Nirmala Sitharaman, has given its nod for the purchase of hardware worth more than Rs5,500 crore, including 12 radars for the Indian Air Force
Pursuing the goal of indigenization and self-reliance in the field of Defence Procurements, the DAC approved procurement of 12 High Power Radars for the Indian Air Force under ‘Buy (Indian) category,”
The radars will provide long range medium and high altitude radar cover with the capability to detect and track high speed targets following parabolic trajectories. Technologically superior, the radars will have the capability to scan three hundred and sixty degrees without mechanical rotation of antenna and will operate on 24 x 7 basis with minimal maintenance requirement
‘Water Conservation under MGNREGA’ (GS2: Government policies and programmes for development in various sectors)
Issue: Water conservation efforts under the rural employment guarantee scheme has benefitted more than 140 lakh hectares of agricultural land in the past three years
A survey by the government-funded Institute of Economic Growth found “improvements in productivity, acreage, incomes and water table,” in a number of states since the programme was introduced in 2015. About 150,000 farm ponds were constructed under the scheme to ensure storage of rain water and improved irrigation in rural India
Revival of water bodies and the construction of new ponds were included under the Mahatma Gandhi National Rural Employment Guarantee Scheme. Water conservation was added to the scheme after two consecutive years of poor monsoon rains in 2014-15 and 2015-16.
‘Presumptive taxation scheme’ (GS3: Mobilization of Resources)
Issue: Presumptive taxation scheme (PTS) allows you to calculate your tax on an estimated income or profit.
What is PTS?
The scheme can be used by businesses having a total turnover of less than Rs2 crore and eligible professionals with gross receipts of less than Rs50 lakh in a financial year. Those who adopt PTS to file their returns are not required to maintain books of accounts.