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NPA issue in India

1) Nonperforming Assets are the assets of banks which don’t

perform (i.e. don’t bring any return) are called NPAs or bad

loans.

2) Bank’s assets area the loans and advances given to customers, if

customers don’t pay either interest the loan turns into bad loan.

3) Accordingly to RBI, interest overdue for a period of more than 90

days from end of particular quarter is NPA.

4) In terms of agriculture/farm loans. NPA is under for short

duration crop agriculture loans such as paddy, jowar, bajra etc.

And if the loan is not paid for 2 crop seasons then it is NPA.

5) For long duration crops (1 crop season) from due date.

Reasons for rise in NPA

1) GDP slowdown

2) Relaxed lending norms

3) Priority sector lending NPA’s incorporation sector are far higher

than those in priority or agriculture sector.

4) Lack of Bankruptcy code in India and sluggish legal system makes

it difficult for banks to recover from both corporate and non-

corporate.

Impacts of NPA:

1) Lenders suffer lowering of profit margins.

2) Stress in baking sector causes less money available to fund other

projects, so negative impact on larger national economy.

3) Higher interest rates by the banks to maintain profit margin

4) Redirecting funds from the good projects to bad ones

5) In case of public sector banks shareholders gets bad returns so

GOI gets less money as a dividend, therefore it may impact easy

deployment of money for social and infrastructure developments

and results in social and political cost.

6) Investors do not get rightful returns

7) Balance sheet syndrome of Indian characteristics causes halting

of investment led development process.

8) NPA’s related cases add more pressure to already pending cases

with the Judiciary.

RBI ordinance 2017 to tackle bad loans or NPA’s

1) Section 35AA – RBI issues directions to banks to initiate the

insolvency process

2) Section 35AB – RBI to issue direction to banks for resolution of

stressed assets ordinance refers to insolvency and bankruptcy

code i.e. amend laws on reorganisation and insolvency resolution

of corporate firms, partnership firms in a time bound manner for

maximise value of assets.

3) RBI also amended the joint lenders forum (JLF) norms i.e.

restructuring package is approved by 50% (earlier 60%) lenders by

number and 60% of lenders by value, the other (75% earlier)

banks in JLF have to go along with it/

4) RBI amended the JLF norms to ensure speedy NPA recovery-will

advise banks to refer cases to insolvency and bankruptcy board of

India or the national company law tribunal.

Context: Pension fund regulatory a development authority

(PFRDA) takes a new initiative to increase pension coverage

in country.

PFRDA Act was passed in September, 2013.

PFRDA is regulating (NPS) national pension scheme subscribed by

employees of GOI, state government and private

institutions/organisations and un-organisation sectors.

Vision of PFRDA:

To be a mode regulator for promotion and development of an

organisation pension system to serve the old age income needs of

people on a sustainable basis.

NPS (National Pension Scheme)

1) In this scheme account holders would have choice of where

money would be invested and to withdraw amount prior to

retirement.

2) Ages of 18 and 60 on a voluntary basis.

3) Amount of pension is equally divided into two parts one is paid by

the employee and other offered by employer.

4) 3 asset chains under NPS to invest area equity, government

securities, and range of fixed income instruments.

5) Pension account can be active of an 60 to and at 70 get lump sum

amount

Need for Pension reforms:

1) India’s populations are ageing with advances in longevity and

decline fertility rates.

2) Elderly population (above 60 years) will triple by 2050 from 100

million in 2014.

3) Currently India is marked by low pension coverage and

inadequate pensions.

4) Excessive longevity results in financial problems that are as

serious premature death.

Paved with big words

Context: This article talks about reviving up infrastructure

spending is necessary but not sufficient.

Why infrastructure development is necessary?

1. For a massive country like India improvement in infrastructure is

a necessity.

2. Over the next decade an estimated 1.5 trillion is needed to

create infrastructure and overhaul and receiving infrastructure.

3. Infrastructure development will generate growth, employment

and pull people out of poverty.

4. Infrastructure development will benefit government ease of

doing business.

5. Infrastructure can also help improve peace and security by

enabling sustaining and enhancing societal living conditions.

6. Developing renewable energy sector will help in mitigating

climate change.

Challenges to develop infrastructure projects:

1. Projects are launched without adequate ground preparation

regarding the land requirement and project costs.

2. Lack of co-operation at the state level which is a big hurdle since

land acquisition is the state’s business.

3. Informality and corruption in infrastructure project delivery and

lack of performance pressure.

4. Environmental clearance delays, protest by the displaced

population and hurdles due to local politics.

5. Lack of private sector funding, in some case tendering process is

incomplete or the terms and conditions are unclear.

Efforts made by the Government:

1. With initiatives such as “hosing for all” and “Smart cities” the

government is working on reducing the bottle necks that impede

growth in the infrastructure sector.

2. The latest budgetary for infrastructure spending has been

increased to 3.96lakh crores for project including housing,

railways, ports and irrigation.

3. Under UD AY (Ujwal Discom Assurance Yojana) the government

has taken steps to improve operational and financial parameters

of discoms.

4. The national highways authority of India (NHAI) launched masala

in May 2017, for raising capital for funding the infrastructure

projects in India.

5. National infrastructure investment fund (NIIF) with an initial

corpus of 40,000 crore rupees.

6. The modernization of Indian railways has been one of the top

priorities of the central government.

Way forward:

1. Improving the institutional capacity to implement infrastructure

projects efficiency in crucial.

2. Greater transparency and accountability structures are of

fundamental importance to reduce wastage in infrastructure

companies.

3. Regulatory measures are essential to avoid delays at each stage

from project approval to awarding the contract to its

implementation.

4. Strengthening of public private partnership (PPP) route, as it has

been able to deliver world class infrastructure in sectors such as

airports.

5. Ensure a robust regulatory environmental for domestic and

international funding of infrastructure by introducing an

independent PPP regulator in India.

6. In 2015, the Kelkar committee suggested overhauling of the PPP

frame work in India through measures such as funding through

hybrid models and adoption as international best practices.

Big vision, Hazy detail

Tillerson in his visit to 7 countries has given relations in the next

100 years.

Tillerson emphasis India’s role on two issues.

1) In Afghanistan as part of US new South Asia policy but did not

mention how to tackle Pakistan but US did not bar India from

doing legitimate trade with Iran at time when US maintain its

policy of isolating Iran.

2) In the Indo-Pacific region, as part of US plans to both US and

India spoke about building an alternative moves in South China

Sea.

India did not give clear commitment about joint patrols to ensure

freedom of navigation in SCS and about agreements the Indian

and US military must conclude to deepen cooperation.

Word of caution:

a) Till the timer US troops are present in Afghanistan it is difficult

to US to completely disengage from Pakistan.

b) While maritime relationship with the US is desirable geographic

proximity to China make close alliance with US difficult for India.

c) Withdrawal of US from its commitments in Asia, Europe and UN

questions the reliability of US as a partner.

All the roads that leads to Kabul

Mr. Tillerson chided Pakistan for not doing enough against

terrorists and warned that if Pakistan does not abandon state

sponsorship of terrorism then the regional equations will only

isolate Islamabad.

In a remarkable move in his recent visit to India, Afghan

president Ashraf Ghani suggested that Afghanistan would restrict

Pakistan access to central Asia of it is not given access to India

through CPEC project, he rejected Pakistan claim that India is

using Afghanistan to destabilise Pakistan.

He emphasised that peace efforts in Afghanistan should be

“Afghan-led” and “Afghan controlled” there by rejecting Pakistan

efforts in brokering peace in Afghanistan.

Afghanistan has participated in 6th quadrilateral coordination

group meeting along with US, China and Pakistan in an attempt

to revive stalled peace talks with Taliban.

India’s agenda is to build the capacity of the Afghanistan state as

well as of Afghan security forces so that they can fight their own

battles.

India can no longer be treated as a marginal player in Afghanistan

and should further its interest and regional security.

Conclusion:

The new South Asia policy is a turn around which sees India as a

solution to Afghan imbroglio instead of seeing India as a part of

problem.

India- France

Context: The French minister for the Armed forces is

visiting India.

The defence ministry of India and ministry of armed forces are

discussed on regional and infrastructural development of mutual

interests.

They are also discussed on upcoming event of Varuna 2018.

Varuna – 2017 Indo-French joint naval exercise:

1) Initiated in 2001.

2) The naval exercise Varuna aims to develop interoperability

between the navies of the two countries by sharing experiences.

3) They are held as part of a long standing periodic and sustained

bilateral cooperation with India for many years.

4) This exercise was also a concern illusion of the importance that

France and India = both powers in the Indian Ocean rim-attach to

maritime security.

5) Both countries are agreed to strongly support projects for

defence manufacturing under the “Make in India” initiative as

well as promote defence technology and R&D cooperation.

The Gown and the Bench

Context: The Supreme Court has laid down guidelines for

designating lawyers in the Supreme Court and high court as senior

advocates.

What in Constitution for appointments of Judges?

Judges of the Supreme Court and high court are appointed by the

President under Article 124(2) and 217 of the constitution.

The President is required to hold constitutions with such of the

judges of the Supreme Court and of the high courts as he may

deem necessary.

What are the issues?

1) The government is of the view that the “reason in writing” is

necessary for the transparency and to ensure there is no

favouritism.

2) The parliamentary standing committee on law and justice

apprehends that the government may reject any name duly

approved by the Supreme Court collegium under the view of

those national security and larger interest.

3) This would tantamount to give veto power to the government

which is not the mandate of the constitution.

4) There is no public knowledge of how and when a collegium meets

and how it takes its decisions.

5) Lawyers too are usually in the dark on whether their names have

been considered for elevation as a judge.

Efforts made by the Government:

1) The NDA government has tried twice unsuccessfully both times to

replace the collegium system with national judicial appointment

commission (NJAC).

2) In 1998-2003 the government had appointed justice M.N. Venkata

Chaliah commission to opinion whether there was need to change

the collegium system.

3) The commission favoured change and prescribed an NJAC

consisting of CJI and two senior most judges, the law minister by

the President in consultation with the CJI.

4) Last year, 5-judge constitution bench declared as

unconstitutional the constitutional amendment that to create the

NJAC.

Way forward:

The secretary should not be dragged in to the investigation of

complaints therefore the institutional mechanism and selection

criteria should substitute the existing collegium system.

Establishment of permanent committee and permanent

secretariat to address the issue of providing transparency in

appointments is needed of the hour.

Public Finance Management System (PFMS)

Context: Union minister said mandatory use of public

finance management system should be made for

implementation of central sector schemes.

What is Public Finance management System?

PFMS is an electronic fund tracking mechanism companies

collates and makes available in real time information regarding al

government schemes.

Besides it will significantly provide government real time

information on resource availability and utilization across

schemes.

It also allows government expenditure to adopt a just in time

(JIT) approach, with payment made only when they are needed.

Use of PFMS:

Once the PFMS implementation on full scale then it will help

union government to save a significant amount on interest costs.

It will allow the government to monitor and access the more than

Rs.1lakh crore of idle funds with it under various heads.

Due to the monitoring of funds through PFMS, one can know the

actual status of utilization of funds by the multiple implementing

agencies of the central and the state government.

The ultimate purpose of implementing any scheme is to ensure

that the benefits must reach tot the last mile.

The implementation of central sector schemes done through

direct benefit transfer (DBT) mechanism.

There will not be much paper work and it would go a long way in

monitoring and tracking of any unnecessary parking of funds by

implementing agencies.

PFMS will soon progress towards a government wide integrated

financial management system (GIFMIS) as a comprehensive,

payment receipt and accounting system.

The department of expenditure and comptroller general of

accounts (CAG) are implementers of this initiative in a time

bound manner.

Through PFMS the government is taking forward the ground

breaking initiative of DBT with collateral benefits of plugging

leakages and eliminating ghost beneficiaries.

The ambit of PFMS coverage includes central sectors and

centrally sponsored schemes as well as other expenditures

including the finance commission grants.

Arctic Sea Ice Waning

Context: Arctic Sea Ice waning faster than predicted, says

study, salty snow found to effect satellite measurements.

What is Sea Ice?

Sea ice is frozen Ocean water. It forms, grows and melts in the

ocean.

Icebergs, glaciers and Ice shelves float in the Ocean but originate

on land.

Sea Ice is typically covered with snow.

When waves buffer the freezing ocean surface sea ice take on a

variety of textures.

Why is Arctic Sea Ice important?

Arctic Sea Ice keeps the polar region cool.

It moderates the global climate.

Sea Ice has a bright surface.

In summer when sea ice melts, it exposes the dark ocean surface.

It does not reflect the sunlight, it absorbs the sunlight.

The Ocean heats up and Arctic temperature rises.

Issue:

The change of climate on earth has affected the sea ice.

The thickness and extent of summer sea ice in the Arctic has

decline.

The loss of sea has accelerate the global warming

It has affected the earth system including global ocean

circulation people and animals.

Way forward:

Many steps can be taken to bring change for good living and not

harming the environment.

Reducing of pollution by not cutting plants and trees by growing

saplings.

Awareness and education among people.

Working of cleanliness in unity.

1984 Riots

Context: Supreme Court panel to assess 241 cases of 1984

anti-Sikh riots.

Court was informed in March that 199 cases were closed as the

trial had gone cold; Additional solicitor general submits on

Wednesday that 42 cases were further closed, charge sheets field

in 12 and probe is pending in five.

1984 Anti-Sikh Riots:

The 1984 anti-Sikh riots, also known as the 1984 Sikhs Massacre

and the 1984 genocide of Sikhs, was a series of programs against

Sikhs in India by anti-Sikh mobs in response to the assassination

of Indira Gandhi by her Sikh bodyguards.

Due to the order of Indira Gandhi, India Army launches its

offensive against Sikh militants at the golden temple in Amritsar

under the code name “Operation Blue Star”.

The army was successful in draining out the militants from the

Sikhs sacred place, but this event angered the Sikh people and

their sentiments got hurt.

To average these osteons bodyguards of Mrs Gandhi killed her at

her own house.

Later the angry congress workers and supporters allegedly began

their brutal actions of killing innocent Sikh people in the country;

Delhi was the most affected area during anti-Sikh riots.

Union government appointed so many commissions to enquire

about the guilty people and to find out their masterminds, but

nothing concrete came out of such commissions.

The kith’s and kilns of the victims of anti-Sikh riots are still

waiting to get the justice after 30 years of the incident.

International Conference on Green Initiative and Railway

Electrification:

Objectives:

Evaluation of existing policies and risk factors, suggest

improvements and explore future opportunities.

Strategy for successful implementation.

Comparison with other counter and bench marking.

Solution for energy efficiency and increasing use of renewable

energy.

Provide a platform to learn and share experiences of

international and national experts and industry leaders on

electrification.

To promote and popularize “Make in India” initiative a new

Indian railways.

Electrification of Railway tracks:

At present only 40% of railway network is electrified.

There is need to increase the electrification of railway tracks.

Increase in the pace of electrification will reduce its fuel bill by

Rs.10000Cr.

Harnessing renewable energy on Indian railway to reduce energy

and carbon footprint.

Production energy efficient high horse power locomotives.

Are they Counter China

It’s about cooperation and capacity Japanese projects are

everywhere in India to ensure maritime is a common interest to

bring people together for common intensive.

Is Japan concerned about its maritime?

Yes, may be concerned about South China counter string of

people.

Now we look at diamond.

Now possibility of connectivity.

But it’s proactive to identify to counter China.

XI-Jinping more aggressive:

He outlined Chinese dream, 2021, 2049 to see a prosperous

nation.

To be in Gwadar which is detrimental to India?

India-USA is in maritime domain now thinks about joint

operations.

Is China concerned about all these?

Chinese want to take advantage of cold ‘peace’.

We need to have unique policy.

India should safeguard its concern or be a part of those nations?

We should engage with all powers as those countries are

democracies if there is larger common good we can collaborate

with China also India should explain its foreign policy to domestic

audience.

Employment Crisis

Reasons of Unemployment

1) In the recent past the number of educated youth has increased

from 58% to 85%, so more number of youth are joining the labor

market.

2) Economic growth is not commensurate with the number youth

joining the labour market.

3) Major part of employment in India is either in the unorganized

sector or MSME sector. These sectors have released their

employees in a large number due to cash crunch post

demonetization.

What can be done?

1) Government should concentrate on improving MSME cluster

development through schemes like AMRUT, Smart cities etc.

2) Government should need to install conference among private

investors to invest more as private sector is the major

employment generator.

3) There is need to expand job market.

4) Though economy is slowing, the exports and IIP data has shown

improvement which shows that manufacturing has picked up, the

same should be reflected in agriculture sector has nearly 2/3rd

depend on it.

5) New areas for sending exports like Latin America, Africa needs to

be explored to create more jobs domestically.

6) Government needs to think about providing packages for labor

intensive sector like wood, leather, food processing, textiles,

garments; these five sectors constitute around 50% jobs in the

manufacturing.

7) Jobs in the government sector are not growing in the past 20

years, Hence government should provide more government jobs

in the field of doctors, teachers, judges, police

Quotas in private sector?

We cannot allow private sector to function with constitution. It

should be allowed to functions on its own to sustain in the open

market.

Instead of debating reservation in private sectors the young in

the reserved category should be encouraged to get educated as

so many jobs in the reserved category go unfilled.

International conference on consumer protection

Context: Prime Minister Narendra Modi inaugurated international

conference on consumer protection for East, South and Southern

Asian countries.

Conference highlights:

1) It is for the first time international conference on consumer

protection is being organized by India for countries by India for

countries of the region.

2) The two day conference is based on theme ‘Empowering

consumers in new markets’ against the backdrop of the new UN

guidelines on consumer protection calling for greater

international cooperation.

3) And it will provide a platform to discuss and deliberate up on

different aspects of consumer protection.

4) It is aimed at shared learning and will explore a way forward for

enhanced regional cooperation on the subject.

5) A total of 22 countries from East, South and South East Asia,

which account for a major of the global consumers and share

common challenges and experiences are participating.

The Consumer protection Bill, 2015

Highlights of the Bill:

The bill replaces the consumer protection Act, 1986, the bill

enforce consumer rights and provides a mechanism for

redressed of complaints regarding defects in goods and

deficiency in services.

Consumer dispute redressed commission will be setup at the

district state and national level for adjudicating consumer

complaints.

This bill establishes a consumer protection authority to

investigate;

1) Consumer complaints

2) Issue safety notices for goods and services

3) Against misleading advertisement

The bill will be changes as per new BIS Act.

Provisions of the bill:

The new bill includes the establishment of an executive agency

the central consumer protection authority (CCPA) which will

protect and enforce the rights of consumers.

The new bill includes strengthen provisions to tackle

misleading advertisement.

As well as to fix liability on endorsers and celebrities.

The new bill contains an enabling provision for consumers to

file complaints electronically.

The bill has a provision for product liability and provides

enough powers to the regulatory authority to recall products

and cancel license if a consumer complaint affects more than

one individual.

Provision aimed at simplifying the consumer dispute solution

process includes.

1) Enhancing the pecuniary jurisdiction of the consumer

grievance redress agencies.

2) Powers to state and district commission to review their order.