Daily Current Affairs – 25/09/2017

National News:-

1. PM Modi to launch ‘Power for all’ scheme:-

  • Prime Minister Narendra Modi will launch ‘Power for all’ scheme today to mark the birth anniversary of Pandit Deendayal Upadhyaya. Official sources said that the scheme will be named ‘Saubhagya’ and will provide subsidy on equipment like transformers, meters and wires.
  • The scheme is expected to cover all rural families after expected electrification of all villages by December end this year. The scheme was listed on the agenda of Cabinet meeting held earlier last week.
  • Centre has asked states to prepare electrification projects which would be discussed and approved for release of funds under the scheme. The government has been working hard to electrify all villages in the country and wants to achieve 24X7 power for all by 2019.
  • Prime Minister will also formally inaugurate ONGC’s new corporate office that was renamed Pandit Deendayal Upadhyaya Urja Bhawan, from Rajiv Gandhi Urja Bhawan.
  • The green-building built at a cost of Rs. 600 crore was completed a year ago. Mr Modi will also unveil a statue of Pandit Deendayal Upadhyaya.

2. HC asks Delhi, neighbouring states to implement ban on burning of crop residue:-


Direction from Delhi High Court:-

  • Court has directed the states of Punjab, Haryana, Uttar Pradesh, Rajasthan, and the NCR of Delhi.
  • To implement notifications and directions issued under the Air Pollution Act to ban burning of crop residues.
  • The Court recognised the need for companies and industries to comply with their corporate social responsibility towards curbing air pollution.
  • The Court directed that orders must be issued to these entities to collect crop residue from fields of farmers by providing them money as consideration for lifting the agricultural residue.

It is Suo Motu Action by the HC:-

  • In response to alarming air pollution levels in the NCR, the Delhi HC had taken up the matter suo motu (on its own motion) in August this year.

3. Start-up funding crawls: 20 months, Rs 70 crore:-

  • The article shows the inability of implementing the FFS scheme, by the government. Government needs to counter the issue.

Fund-of-Funds for start-ups (FFS) is showing slow progress:-

  • FFS was launched in line with the Start-up India Action Plan of the Government
    It is a Rs 10,000-crore Fund.
  • The fund under the plan has made slow progress with only about Rs 70 crore having been disbursed to start-ups until the beginning of this month.

Aim of launching the fund:-

  • The Fund was launched with aim to invest in local venture capital funds.
  • It has made commitments to 62 start-ups.
  • All these 62 start-ups were backed by Alternative Investment Funds (AIFs) where state-owned SIDBI (Small Industries Development Bank of India) acted as a limited partner.
  • An AIF is any fund established or incorporated in India that is a privately pooled investment vehicle, which collects funds from investors(Indian or foreign) for investing it in accordance with a defined investment policy for the benefit of its investors.

4. Tax trauma — On GST Network:-


Context:-

  • Glitches in the GST regime are increasing the anxiety among Indian businesses.

What are the issues?

  • GST Network, is struggling to keep pace with the millions of invoices and returns being filed electronically by businesses across the country.
  • It is clear that the network had not been fully tested for chinks before July
    Implication of these stumbles for 85 lakh taxpayers now registered for GST.
  • For Exporters, because of delayed timelines for filing GST returns, no refunds can be expected before mid-November on input taxes paid in advance and the integrated GST levied on goods they imported.
  • ₹65,000 crore of working capital will get blocked, cramping their ability to ramp up capacity and raw material procurement in time for festive season orders from around the world.
  • A ministerial group formed by the GST Council to resolve the GSTN’s glitches gave an assurance that 80% of the problems would be fixed by the end of October.
  • Several revisions in deadlines, tax and cess rates, rules, clarifications and tweaks later, the GST regime is turning out to be neither simple nor friendly for taxpayers.

5. Compensate cow violence victims, punish violators: SC to states:-

Context:-

  • Taking serious note of violence in the name of saving cows, the Supreme Court passed a slew of measures and asked states to appoint a senior police officer in every district as a nodal officer.

What SC Order says?

  • SC said that states were under obligation to compensate victims of violence by cow vigilante groups even without any judicial order.
  • Law and order has to have primacy and anyone violating it must be dealt with sternly.
    States must frame schemes to compensate victims of crime, including those of cow vigilantism as envisaged by the Code of Criminal Procedure.
  • It also asked states and Union Territories to comply with its September 6 order to appoint nodal officers by October 31 to deal with cow vigilantism.

Suggestions:-

  • States has to appoint a senior police officer in every district as a nodal officer.

The senior police officer shall take prompt action and will ensure vigilante groups and such people are prosecuted with promptitude

  • Nodal officers have to ensure that cow vigilantes did not become a law unto themselves.

6. SC on Nirbhaya Fund: Put system in place:-


Context:-

  • The Nirbhaya fund was announced by the Centre in 2013 after the December 16, 2012 gang rape and murder case in Delhi.
  • It is meant to support initiatives of the government and NGOs working towards protecting the dignity and ensuring women’s safety.

Issues with its implementation:-

  • The Supreme Court has expressed displeasure over disbursal of Nirbhaya Fund as there is absence of clarity on how victims will be compensated, who is responsible for paying the compensation and at what stage it has to be paid.
  • Also, there is no uniformity in disbursal of funds to the victims, in states such as Goa, the amount is Rs 10 lakh while in some other states, it is only Rs 1lakh.
  • The Centre had transferred Rs 200 crore under the Nirbhaya scheme to each state but there is no clarity whether this was a one-time transfer or annual procedure.
  • The court also referred to the multiplicity of agencies involved — Home, Women and Child Development, and Finance ministries and said there is no clarity on who was involved.
  • The bench was also unhappy with the Centre’s affidavit and pointed out several instances where state-wise details of the number of such victims and the amount of compensation given to them were not given properly.

7. Three year Action Agenda NITI Aayog:-


Context:-

  • Last month, the NITI Aayog released the Three Year Action Agenda (TYAA, a roadmap for reforming the various sectors of the economy.
  • But it does not recognise the role of trade policy in agriculture, and is silent on money-guzzling food and fertiliser subsidies.

The TYAA basically talks of action pertaining to:-

  • Increasing productivity of land and water
  • Reforming agri-markets on the lines of e-NAM
  • Reforming tenancy laws
  • Relief measures during natural disasters.

However TYAA does not talk about:-

  • Prioritising policy actions
  • Role of trade policy in agriculture
  • Reforming the massive system of food and fertiliser subsidies.

Urgent action is needed on five fronts:-
1.Improve the profitability of cultivation by “getting markets right”,

  • Attempts to reform the APMC markets, and Agricultural Produce and Livestock Marketing Act, 2017, have not achieved much success.
  • e-NAM scheme, has not succeeded in its endeavour so far.

Solution:-

  • Open up exports of all agri-products, without any restrictions
  • Allow private trade to build global value chains, keeping the Essential Commodities Act in abeyance.

2.It needs to invest in water,

  • The Pradhan Mantri Krishi Sinchayee Yojana is mandated to complete 99 irrigation projects by 2019
  • NABARD, with Rs 40,000 crore as Long-Term Irrigation Fund, is to help states in completing these projects
  • But open canal systems with flood irrigation don’t give high water-use efficiency.Solution
  • Accord higher priority to micro-irrigation (drip and sprinklers);
  • Israel and the US could be good examples to follow.

3.Direct Benefit Transfer (DBT) of food and fertiliser subsidies can release resources for investments,

  • Rs 30,000 to Rs 50,000 crores can be saved through DBT, which can be invested in water resources and upgrading marketing infrastructure.

4.It should ensure that the new Pradhan Mantri Fasal Bima Yojana (PMFBY) delivers compensation to farmers in time,

  • These lacunae can be fixed through modern technology and better governance

5.It should free up land lease markets,

  • China allows land lease for 30 years so that corporate bodies can work with farmers, bringing in their best expertise, inputs and investments.

International News:-

1. India Vs Japan: Bullet Train Project:-


Context:

  • This article appears in the background of recent launch of high speed bullet train project between Mumbai-Ahmedabad.

Why the project is not big bang reform for all but a big bang bullet for few?
Shinkansen Technology:-

  • Japan introduced its high-speed Shinkansen line between Tokyo and Osaka in 1964 with top speed of 210 km/hr which has now reached 350 km/hr.
  • Ten more countries have also developed high speed train networks like France, Germany, Italy, Spain, South Korea, Turkey and with China having the biggest network of high speed trains.
  • But none of them are using Shinkensen technology, so is shinkensen technology the best? No technical evaluation comparing other available systems seems to have been done.

Transfer of Technology:-

  • Shinkensen technology was offered to China by Japan, but the deal stuck on the issue of transfer of technology.
  • The government has been mentioning about how raw materials, labourers, services for the project will be sourced from India but there has been no mention of transfer of technology.
  • The issue is how Indian engineering going to leap forward if there will be no transfer of technology? And if there was no technology evaluation also, was there any validity report? Yes, it was there but the officialdom has refused to share the report even in response to RTI applications.

2. Over 100 nations back India-China plan on farm subsidies before WTO meet:-


Support to India and China in the WTO:-

  • More than 100 countries have backed a joint proposal by China and India for eliminating the most trade-distorting farm subsidies of $160 billion
  • This huge subsidy is given in countries like the US, the European Union, Japan, Canada, Norway, and Switzerland
  • This proposal was given in the World Trade Organization’s 11th trade ministerial summit,
    In their proposal, India and China said it is a prerequisite to address “the imbalance in the existing AoA (Agreement on Agriculture).
  • In AoA only some members (the US, the EU, Japan, Canada, Switzerland, Norway and a few developing countries) have access to bound AMS(Aggregate Measurement of Support).
  • AMS are entitlements to provide billions of dollars for most trade-distorting subsidies, which allows them much “more policy space”

India’s notice on public stock-holding (PSH):-

  • India has served notice to its the European Union, Australia, Argentina, Brazil, Paraguay and Pakistan.
  • Because India will not offer any further concessions for market access or enter into trade-offs in the negotiations for a permanent solution on PSH programmes.

Economic News:-

1. Unlike 2008-09, govt’s ‘stimulus’ plan may face FPI hurdle this time:-


Context:

  • Due to slowing down of economy, government is finding ways to counter the problem.
  • Giving fiscal stimulus may help countering slow growth rate. The article explains how it may not be fruitful as it was in 2008-09.

Fiscal Stimulus and foreign portfolio investors (FPI):-

  • Unlike 2008-09, when UPA regime unleashed a fiscal stimulus in response to a global financial slowdown, it may be not possible for the current government to spend more to boost the economy.
  • The primary reason for this is the sizable holdings by FPI in Indian debt, which wasn’t a significant restraining factor.
  • In 2008, FPIs held a mere $5.59 billion in Indian debt.But in 2017, their outstanding net investment in government securities and corporate bonds was $72.76 billion Sources of disruption of FPI flows into Indian debt now.
  • The first is the prospect of global interest rates hardening, especially with the US Fed expected to further raise interest rates.
  • On the first source, government has no control.
  • The second is if the government or the RBI were to embark on a fiscal and monetary stimulus, that is seen to undermine macroeconomic stability.

What is Foreign Portfolio Investment (FPI)?

  • Foreign Portfolio Investment (FPI) is investment by non-residents in Indian securities including shares, government bonds, corporate bonds, convertible securities, infrastructure securities etc.
  • The class of investors who make investment in these securities are known as Foreign Portfolio Investors.
  • FPI is induced by differences in equity price scenario, bond yield, growth prospects, interest rate, dividends or rate of return on capital in India’s financial assets.
  • SEBI has recently stipulated the criteria for Foreign Portfolio Investment. According to this, any equity investment by non-residents which is less than or equal to 10% of capital in a company is portfolio investment. While above this the investment will be counted as Foreign Direct Investment (FDI).
  • Investment by a foreign portfolio investor cannot exceed 10 per cent of the paid up capital of the Indian company.
  • All FPI taken together cannot acquire more than 24 per cent of the paid up capital of an Indian Company.
  • As per SEBI regulations, FPIs are not allowed to invest in unlisted shares and investment in unlisted entities will be treated as FDI.

2. RBI removes masala bonds from corporate bond limit:-

  • During his visit to the UK last week, Prime Minister Narendra Modi spoke about the Indian Railways issuing bonds and listing them on the London Stock Exchange.Let’s explore the Bonds as a financial instrument and then dive deep into Masala Bonds.

What are Bonds?

  • Bonds are debt instruments which allow the companies or govt. to raise funds only by incurring debt and lender is guaranteed of a fixed repayment (Principle and Interest).

What are instrument available with Company to raise funds?
1. Issue Bonds – Companies will have to pay the fixed amount when the bond matures.
2. Issue Shares – Companies would like to raise money, but don’t want is as a debt, so company will issue shares.
Company/Investor will prefer what (Debt/Shares)?

  • Companies will prefer to raise money through equities i.e. issuing shares because they will part a share of the company to the investors, while the investors will prefer to purchase bonds because bonds are more secured.
  • Shares may give higher returns in the long run. So, it is risk-return trade-off.

What’s new in the Masala Bonds?

  • Basically, overseas rupee bonds are known as Masala bonds.
  • Indian firms have earlier raised money abroad through bonds and other forms of borrowings, but always in foreign currency.
  • However, the first overseas rupee bonds were issued in 2013 by the International Finance Corporation, the World Bank’s private sector investment arm.
  • To raise funds for capital expenditure, the Indian Railway Finance Corporation will be issuing bonds denominated in rupees.