Daily Analysis

An in-depth analysis of the best and most relevant editorials of the day from the best dailies known for civil services preparation.

DAILY CURRENT AFFAIRS, 08th February 2019

Amid conflicting signals, RBI may decide to defer rate cut

Focus: GS3.

Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

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Why in News?

The Reserve Bank of India (RBI) on February 7 lowered the repo rate—its key lending rate—by 0.25 percentage points to 6.25 percent and changed its stance to "neutral" from "calibrated tightening", signalling higher chances of more cuts in the coming months if inflation persisted within tolerable limits.

Background

The central bank also sounded bullish about the prospects in the real sector, only marginally reducing its 2019-20 GDP growth forecast to 7.4 percent from 7.5 percent earlier, amid sprouting investment revival signs.

About the changes

  • The lower repo rate—the rate at which banks borrow from the RBI— has raised hopes of bringing down EMIs for the millions of home loan borrowers as well cut capital raising costs for corporates, with banks expected to pass on the reduced rates to its customers.
  • The six-member Monetary Policy Committee (MPC), headed by RBI governor Shaktikanta Das, noted that large part of the current investment recovery has been driven by government spending and it was necessary to broad base the revival with a private sector boost.
  • RBI will meet banks in the next fortnight to discuss a range of issues, including the extent to which lenders have passed on lower repo rates to its customers, Das told journalists after presenting the policy.
  • In December, it had introduced a new method for fixing floating loan charges—a move that will likely force banks to change home loan rates according to the way the RBI's repo rate or government bond yields move.
  • The RBI also announced a string of regulatory changes including raising the limit of collateral free bank loans for farmers to Rs 1.6 lakh from Rs 1 lakh currently, among others.
  • Banks have also been given greater operational freedom to offer interest rates to bulk deposits, raising the definition of “bulk deposits” to Rs 2 crore from Rs 1 crore currently.
  • Headline inflation will likely persist within the RBI's tolerable level of 4 percent. 
  • Headline inflation will likely persist within the RBI's tolerable level of 4 percent. 
  • India's retail inflation eased to an 18-month low of 2.19 percent in December, driven by cheaper food items.

Source: Times of India, The Hindu.

Cabinet approves establishment of Rashtriya Kamdhenu Aayog

Focus: GS3.

Topic: economics of animal-rearing.

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Why in News?

The Union Cabinet has approved the proposal for the establishment of Rashtriya Kamdhenu Aayog for conservation, protection and development of cows and their progeny.  

Background

The Aayog will work in collaboration with Veterinary, Animal Sciences or Agriculture University or departments or organizations of the Central or State Government engaged in the task of research in the field of breeding and rearing of the cow, organic manure, biogas etc. Rashtriya Kamdhenu Aayog was announced in the budget on the 1st of this month.

Significance

  • It will lead to the development of the cattle population in the country including the development and conservation of indigenous breeds. 
  • It will result in the growth of the livestock sector which is more inclusive, benefit women, and small and marginal farmers. 

Source: AIR News.

International Financial Services Centres (IFSCs)

Focus: GS2.

Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Image result for International Financial Services Centres Authority Bill, 2019

Context

The Union Cabinet chaired by the Prime Minister Narendra Modi has approved establishment of a unified authority for regulating all financial services in International Financial Services Centres (IFSCs) in India through International Financial Srvices Centres Authority Bill, 2019.

Background

  • The first IFSC in India has been set up at GIFT City, Gandhinagar, Gujarat. 
  • An IFSC enables bringing back the financial services and transactions that are currently carried out in offshore financial centers by Indian corporate entities and overseas branches / subsidiaries of financial institutions (FIs)to India by offering business and regulatory environment that is comparable to other leading international financial centers in the world like London and Singapore. 
  • It would provide Indian corporates easier access to global financial markets. 
  • IFSC would also compliment and promote further development of financial markets in India.

The need

  • Currently, the banking, capital markets and insurance sectors in IFSC are regulated by multiple regulators, i.e. RBI, SEBI and IRDAI. 
  • The dynamic nature of business in the IFSCs necessitates a high degree of inter-regulatory coordination. 
  • It also requires regular clarifications and frequent amendments in the existing regulations governing financial activities in IFSCs. 
  • The development of financial services and products in IFSCs would require focussed and dedicated regulatory interventions.
  • Hence, a need is felt for having a unified financial regulator for IFSCs in India to provide world class regulatory environment to financial market participants. 
  • Further, this would also be essential from an ease of doing business perspective. 
  • The unified authority would also provide the much needed impetus to further development of IFSC in India in-sync with the global best practices.

Highlights of the bill

1.Taking into account the regulatory requirements of IFSCs and the provisions of the existing laws of financial sector, the Department of Economic Affairs (DEA), Ministry of Finance (MoF) has prepared a draft Bill to set up a separate unified regulator for IFSCs. Following are the main features of the Bill:

2.Management of the Authority:  The Authority shall consist of a Chairperson, one Member each to be nominated by the Reserve Bank of India (RBI), the Securities Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority of India (IRDAI) and the Pension Fund Regulatory and Development Authority(PFRDA), two members to be dominated by the Central Government and two other whole-time or full-time or part-time members.

3.Functions of the Authority:  The Authority shall regulate all such financial services, financial products and FIs in an IFSC which has already been permitted by the Financial Sector Regulators for IFSCs. The Authority shall also regulate such other financial products, financial services or FIs as may be notified by the Central Government from time to time. It may also recommend to the Central Government such other financial products, financial services and financial institutions which may be permitted in the IFSCs.

4.Powers of the Authority: All powers exercisable by the respective financial sector regulatory (viz. RBI, SEBI, IRDAI, and PFRDA etc.) under the respective Acts shall be solely exercised by the Authority in the IFSCs in so far as the regulation of financial products, financial services and FIs that are permitted in the IFSC are concerned.

5.Processes and procedures of the Authority: The processes and procedures to be followed by the Authority shall be governed in accordance with the provisions of the respective Acts of Parliament of India applicable to such financial products, services or institutions, as the case may be.

6.Grants by the Central Govt.:  The Central Govt. may, after due appropriation made by Parliament by law in this behalf, make to the Authority grants of such sums of money as the Central Government may think fit for being utilized for the purposes of the Authority.

7.Transactions in foreign currency: The transactions of financial services in the IFSCs shall be done in the foreign currency as specified by the Authority in consultation with the Central Govt.

The establishment of a unified financial regulator for IFSCs will result in providing world-class regulatory environment to market participants from an ease of doing business perspective. This will provide a stimulus for further development of IFSCs in India and enable bringing back of financial services and transactions that are currently carried out in offshore financial centres to India. This would also generate significant employment in the IFSCs in particular as well as financial sector in India as a whole.     

Source: PIB. 

National Gas Grid

Focus on: Paper 3

Topic: Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

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Why in News?

  • The Government has envisaged to develop the National Gas Grid.
  • These pipelines have been authorized by Petroleum and Natural Gas Regulatory Board (PNGRB) and are at various stages of execution viz. Pre-Project activities/laying/testing/commissioning etc.

Background

  • PNGRB has authorized GAIL to develop North East gas pipeline to develop approximately 750 km long Barauni - Guwahati pipeline as an integral part of Jagadishpur –Haldia –Bokaro Dhamra Pipeline (JHBDPL) project which will connect North East region with the National Gas Grid.  
  • Further, PNGRB has also authorized Indradhanush Gas Grid Limited (IGGL), a joint venture company of five Central Public Sector Enterprises (CPSEs) i.e. IOCL, ONGC, GAIL, OIL and NRL for the development of North East Gas Grid to connect eight states of North Eastern India.  

About National Gas Grid

  • Government has launched ambitious “Urja Ganga” gas pipe line project which aims to provide piped cooking gas to residents in Varanasi within two years and in another year after that it would cater to needs of people in Jharkhand, Bihar, Odisha, and West Bengal.
  • It will cater to energy needs of five states, covering 40 districts and 2,600 villages. 
  • It will pave way for revival of three large fertilizer plants, enable industrialisation of over 20 cities and development of city gas network in 7 cities, generating a large number of jobs.
  • It can also give lot of benefits to help renewal of a number of declining fertilizer industrialized units and other sectors like Power and Automotive. 
  • In this scheme not only households but about half a million vehicles may switch over to CNG mode so that the problem of fuel in the country could be resolved. 

Aims and Objectives

  • To remove regional imbalance within the country with regard to access of natural gas and provide clean and green fuel throughout the country.
  • To connect gas sources to major demand centres and ensure availability of gas to consumers in various sectors. 
  • Development of City Gas Distribution Networks in various cities for supply of CNG and PNG. 

Source: PIB. 

Institution of Income-Tax Ombudsman & Indirect Tax Ombudsman to be abolished: Cabinet

Focus: GS2.

Topic: Statutory, regulatory and various quasi-judicial bodies.

Image result for Income-Tax Ombudsman

Why in News?

  • The Institution of Income-Tax Ombudsman and Indirect Tax Ombudsman will be abolished as the public prefer more the alternative complaint redressal mechanisms over the Ombudsman.
  • The Union Cabinet chaired by Prime Minister Narendra Modi approved the proposal. 

Background

The approval for Abolition of Institution of Income-Tax Ombudsman and Indirect Tax Ombudsman comes in the wake of alternative complaint redressal mechanisms chosen by public and the institution of Ombudsman could not prove to be more effective than regular existing parallel channels of grievance redressal, both the institutions of Income-Tax Ombudsman as well as Indirect Tax Ombudsman have been abolished, said a Cabinet release.

Highlights

  • The Institution of Income-Tax Ombudsman was created in the year 2003 to deal with grievances of public related to settlement of complaints relating to Income Tax.
  • However, the Institution of Ombudsman failed to achieve its objectives.
  • It was observed that institution of new complaints have in turn fallen to single digits. Also, tax payers started preferring alternate methods of grievance redressal like CPGRAMS (Centralized Public Grievance Redress and Monitoring System), AaykarSevaKendras etc. further, it was also decided in 2011 to close vacant offices of Indirect Tax Ombudsman.

Source: The Hindu. 

Prelims Corner

Global Women Initiative

  • Ivanka Trump is unveiling an effort aimed at helping 50 million women in the developing world, including India, get ahead economically over the next six years.
  • The White House will officially launch the Women's Global Development and Prosperity Initiative, a government wide project led by the senior adviser and daughter to President Donald Trump.
  • The initiative will involve the State Department, the National Security Council and other agencies.
  • It aims to coordinate current programs and develop new ones to assist women in areas such as job training, financial support, and legal or regulatory reforms.

Map of the Day

Indian Standard Time

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Quote for the Day

" To live is the rarest thing in the world. Most people exist, that is all.” - Oscar Wilde 

Mains Answer Writing

1.Explain the need and significance for the establishment of Rashtriya Kamdhenu Aayog.

2.Critically analyse the establishment of a unified authority for regulating all financial services in International Financial Services Centres (IFSCs).

3.Discuss the salient features of National Gas Grid.

Test your Knowledge

1.Consider the following statement regarding Sanjay Gandhi National Park:

1.It is a protected area in Mumbai and previously known as Borivali National Park.
2.The proposed Mumbai Ahmedabad bullet train will pass through the park.

Which of the following statements given above is/are incorrect?

a) 1 only

b) 2 only

c) Both 1 and 2

d) None of the above 

2.Consider the following statements regarding PM KISAN Scheme:

1.It is an income support scheme announced in the Union Budget

2.It is fully funded by Union Government.

Which of the statements given above is/are correct ? 

a) 1 only

b) 2 only

c) Both 1 and 2

d) None of the above

3. Consider the following statements regarding Voter Verifiable Paper Audit Trail (VVPAT):

1.Election commission has decided to use VVPAT only in the cities with population over ten thousand.

2.It is an Electronic Voting Machine-connected verification printer device.

Which of the statements given above is/are correct ?

a) 1 only

b) 2 only

c) Both 1 and 2

d) None of the above 

4. Consider the following statements regarding National Board of Wildlife:

1.It’s Chairman is Minister of Environment, Forest and Climate Change .

2.Its primary function is to promote the conservation and development of wildlife and forests.

Which of the statements given above is/are correct ?

a) 1 only

b) 2 only

c) Both 1 and 2

d) None of the above 

5. Consider the following statements:

1.Income Tax act 1961 extends  to whole of india except Jammu and Kashmir.

2.Angel Tax was introduced to curb Money-Laundering.

Which of the statements given above is/are correct ?

a) 1 only

b) 2 only

c) Both 1 and 2

d) None of the above


Answers

  1. D 2.B 3.B 4.B 5.B