Interpol warns of more ransomware attacks against healthcare sector

The International Criminal Police Organisation (Interpol) has warned member countries that cyber criminals were attempting to target major hospitals and other institutions on the front lines of the fight against COVID-19 with ransomware.

  • Interpol also issued a ‘Purple Notice’. “At this point, the ransomware appears to be spreading primarily via e-mails.
  • Cybercriminals are using ransomware to hold hospitals and medical services digitally hostage, preventing them from accessing vital files and systems until a ransom is paid.


  • Ransomware is a form of malware that encrypts a victim’s files. The attacker then demands a ransom from the victim to restore access to the data upon payment. Cryptocurrency are used for the ransoms payment, making tracing and prosecuting the perpetrators difficult.
Types :
  1. Crypto malware: This form of ransomware can cause a lot of damage because it encrypts things like your files, folders, and hard-drives.  (WannaCry in 2017)
  2. Lockers: completely lock you out of your computer or devices, making it impossible to access any of your files or applications.
  3. Scareware : Often claims to have found issues on your computer, demanding money to resolve the problems.
  4. Doxware: threatens to publish your stolen information online if you don’t pay the ransom.
  5. RaaS: “Ransomware as a service,” is a type of malware hosted anonymously by a hacker. These cybercriminals handle everything from distributing the ransomware and collecting payments to managing decryptors — software that restores data access — in exchange for their cut of the ransom.
Examples :
  • Services in the U.S. cities of Baltimore and Maryland were paralysed earlier in 2019 when a ransomware attack locked up computer networks and made it impossible for residents to make property transactions or pay their municipal bills. Officials refused to meet hacker demands for a ransom of $76,000 to unlock the systems, but have been saddled with an estimated $18 million in costs of restoring and rebuilding the city’s computer networks.
  • Two Florida cities reportedly paid a total of $1 million in ransom.
  • At least 170 county, city or State government systems have been hit since 2013.

Interpol Notices

Types of notices :
  • Red Notice: To seek the location and arrest of wanted persons with a view to extradition or similar lawful action.
  • Yellow Notice : To help locate missing persons, often minors, or to help identify persons who are unable to identify themselves.
  • Blue Notice: To collect additional information about a person’s identity, location or activities in relation to a crime.
  • Black Notice :To seek information on unidentified bodies.
  • Green Notice: To provide warnings and intelligence about persons who have committed criminal offences and are likely to repeat these crimes in other countries.
  • Orange Notice: To warn of an event, a person, an object or a process representing a serious and imminent threat to public safety.
  • INTERPOL–United Nations Security Council Special Notice: Issued for groups and individuals who are the targets of UN Security Council Sanctions Committees.
  • Purple Notice: To seek or provide information on modus operandi, objects, devices and concealment methods used by criminals.

Eligibility Criteria for Grant of Maharatna, Navratna and Miniratna Status to CPSEs

Recently ‘Maharatna’ status has been granted by the Government to state-owned Hindustan Petroleum Corporation Limited and Power Grid Corporation of India Limited. Focus on Criteria for Prelims , delegation of powers is optional read.  The eligibility criteria laid down by the Government for grant of Maharatna, Navratna and Miniratna status to Central Public Sector Enterprises (CPSEs) are following:

Criteria for grant of Maharatna status :-

 The CPSEs fulfilling the following criteria are eligible to be considered for grant of Maharatna status.
  • (i)   Having Navratna status.
  • (ii)  Listed on Indian stock exchange with minimum prescribed public shareholding under SEBI regulations.
  • (iii) Average annual turnover of more than Rs. 25,000 crore, during the last 3 years.
  • (iv) Average annual net worth of more than Rs. 15,000 crore, during the last 3 years.
  • (v)   Average annual net profit after tax of more than Rs. 5,000 crore, during the last 3 years.
  • (vi) Should have significant global presence/international operations.

Delegation of powers to Maharatna CPSEs

The Boards of Maharatna CPSEs have been delegated the following powers:
  • To incur capital expenditure on purchase of new items or for replacement, without any monetary ceiling
  • To enter technology joint ventures (JVs) or strategic alliances
  • To obtain technology and know-how by purchase or other arrangements
  • To effect organizational restructuring including establishment of profit centre, opening of offices in India/abroad, creating new activity centres etc.
  • To create below Board level posts up to E-9 level and to wind up all below Board level posts. The Boards of Directors of these CPSEs will have powers to make all appointments, effect internal transfers and re-designation of all below Board level posts.
  • To structure and implement schemes related to personnel and human resource management and training
  • To raise debt from the domestic capital markets and international markets, the latter being subject to the approval of RBI/Department of Economic Affairs, as may be required. Approval for the same should be obtained through the administrative Ministry.
  • To make equity investment to establish financial JVs and wholly owned subsidiaries and undertake mergers and acquisitions (M&As) in India or abroad, subject to a ceiling of 15% of the net worth of the concerned CPSE, limited to Rs.5.000 crore in one project. The overall ceiling on such investments in all projects put together will not exceed 30% of the net worth of the concerned CPSE. While normally the investment would be done directly by the parent CPSE, in cases where it proposes to invest through a subsidiary into another JV, and also provide the additional capital for this purpose, the above stipulations would be in the context of the parent company.
  • The Board of Directors shall have the powers for M&As, subject to the conditions that (a) it should be as per the growth plan and in the core area of functioning of the CPSE and (b) the Cabinet Committee on Economic Affairs (CCEA) would be kept informed in case of investments abroad. Further, the powers relating to M&As should be exercised in such a manner that it should not lead to any change in the public sector character of the concerned CPSEs.
  • CMD is empowered to approve international business tours of functional Directors up to 5 days duration (other than study tours, seminars, etc.) in emergency, under intimation to the Secretary of the Administrative Ministry.
  • Holding companies are empowered to transfer assets, float fresh equity and divest shareholding in subsidiaries subject to the condition that the delegation will only be in respect of subsidiaries set up by the holding company under the powers delegated to Navratna/Maharatna CPSEs and further to the proviso that a) the public sector character of the concerned CPSE (including subsidiary) would not be changed without prior approval of the Government, and b) such Maharatna CPSEs will be required to seek Government approval before exiting from their subsidiaries.

Criteria for grant of Navratna status :-

The Miniratna Category – I and Schedule ‘A’ CPSEs, which have obtained ‘excellent’ or ‘very good’ rating under the Memorandum of Understanding system in three of the last five years, and have composite score of 60 or above in the six selected performance parameters, namely,
  • (i) net profit to net worth,
  • (ii) manpower cost to total cost of production/services,
  • (iii) profit before depreciation, interest and taxes to capital employed,
  • (iv) profit before interest and taxes to turnover,
  • (v) earning per share and
  • (vi) inter-sectoral performance.

The powers presently delegated to the Boards of Navratna PSUs are as under:

  • To incur capital expenditure on purchase of new items or for replacement, without any monetary ceiling
  • To enter into technology joint ventures or strategic alliances
  • To obtain by purchase or other arrangements, technology and know-how
  • To effect organisational restructuring including establishment of profit centers, opening of offices in India and abroad, creating new activity centres, etc.
  • Creation and winding up of all posts including and upto those of non Board-level Directors, i.e. Functional Directors, who may have the same pay scale that of Board level Directors, but who would not be members of the Board. All appointments upto this level would also be in the powers of the Boards and would include the power to effect internal transfers and redesignation of posts
  • To further delegate the powers relating to Human Resource Management (appointments, transfer, posting etc) of below Board level executives to sub-committees of the Board or to executives of the CPSE, as may be decided by the Board of CPSE.
  • To raise debt from the domestic capital markets and for borrowings from international market, which would be subject to the approval of RBI/Department of Economic Affairs as may be required and should be obtained through the administrative ministry.
a. Rs 1000 crore in any one project
    • To establish financial joint ventures and wholly owned subsidiaries in India or abroad with the stipulation that the equity investment of the CPSE should be limited to the following:-
    • b. 15 % of the net worth of the CPSE in one project
    • c. 30 % of the net worth of the CPSE in all joint ventures/subsidiaries put together
  • To undertake mergers and acquisitions, subject to the conditions that (i) it should be as per the growth plan and in the core area of functioning of the CPSE, (ii) conditions/limits would be as in the case of establishing joint ventures/subsidiaries, and (iii) the Cabinet Committee on Economic Affairs would be kept informed in case of investments abroad.
  • To approve business tours abroad of functional directors upto 5 days duration (other than study tours, seminars, etc) in emergency, by the Chief Executive or the CPSE under intimation to the Secretary of the Administrative Ministry. In all other cases including those of Chief Executive, tours abroad would continue to require the prior approval of the Minister of the Administrative Ministry/Department.

Criteria for grant of Miniratna status :-

The Miniratnas (I and II)

  • In October 1997, the Government decided to grant enhanced autonomy and delegation of financial powers to some other profit making companies (other than the Navratnas) subject to certain eligibility conditions and guidelines to make them efficient and competitive.
  • These categories were Category I and Category II

1. Category I CPSEs

    • should have made profit in the last three years continuously,
    • the pre-tax profit should have been Rs. 30 crore or more in at least one of the three years and
    • should have a positive net worth.

2. Category II CPSEs

    • should have made profit for the last three years continuously and
    • should have a positive net worth.

These CPSEs have enhanced delegated powers provided they meet the following eligibility conditions and criteria:

  • 1. They have not defaulted in the repayment of loans/interest payment on any loans due to the Government
  • 2. These public sector enterprises shall not depend upon budgetary support or Government guarantee.
  • 3. The Boards of these CPSEs should be restructured by inducting at least three non-official Directors as the first step before the exercise of enhanced delegation of authority.
  • 4. The administrative ministry concerned shall decide whether a public sector enterprise fulfilled the requirements of a category I/category II company before the exercise of enhanced powers.

The delegation of decision making authority available at present to the Boards of these Miniratna CPSEs is as follows:

  1. Capital Expenditure
    1. CPSEs Category I: The power to incur capital expenditure on new projects, modernisation, purchase of equipment etc., without Government approval upto Rs. 500 crore or equal to net worth, whichever is less.
    2. CPSEs Category II: The power to incur capital expenditure on new projects, modernisation, purchase of equipment etc., without Government approval upto Rs. 250 crore or equal to 50 % of the net worth, whichever is less.
  2. Joint Ventures and Subsidiaries
    1. CPSEs Category I: The power to incur capital expenditure on new projects, modernisation, purchase of equipment etc., without Government approval upto Rs. 500 crore or equal to net worth, whichever is less.
    2. CPSEs Category II: The power to incur capital expenditure on new projects, modernisation, purchase of equipment etc., without Government approval upto Rs. 250 crore or equal to 50 % of the net worth, whichever is less.
  3. Mergers and Acquisitions
    The Board of Directors of these CPSEs have the powers for mergers and acquisitions, subject to the conditions that (i) it should be as per the growth plan and in the core area of functioning of the CPSE, (ii) conditions/limits would be as in the case of establishing joint ventures/subsidiaries, and (iii) Cabinet Committee on Economic Affairs would be kept informed in case of investments abroad
  4. Scheme for HRD
    The Board of Directors of these CPSEs have the powers to structure and implement schemes relating to personnel and human resource management, training, voluntary or compulsory retirement schemes, etc. The Board of Directors of these CPSEs has the power to further delegate the powers relating to Human Resource Management (appointments, transfers, postings, etc). of below Board level executives to subcommittees of the Board or to executives of the CPSE, as may be decided by the Board of the CPSE.
  5. Tour Abroad of Functional Directors
    The Chief Executives of these CPSEs have the power to approve business tours abroad of functional directors upto 5 days, duration (other than study tours, seminars, etc) in emergency, under intimation to the Secretary of the administrative ministry. In all other cases including those of Chief Executive, tours abroad would continue to require the prior approval of the minister of the Administrative Ministry/Department.
  6. Technology Joint Ventures and Strategic Alliances
    The Board of Directors of these CPSEs have the powers to enter into technology joint ventures, strategic alliances and to obtain technology and know-how by purchase or other arrangements, subject to government guidelines as may be issued from time to time.
  7. The above delegation of powers is subject to similar conditions as are applicable to Navratna CPSEs.
Source: Department of Public Enterprises (as on March, 2018)

Explained: Tiger Conservation Foundation (TCF)

In news: Thanks to concerted efforts by the Tiger Conservation Foundation (TCF), the number of tigers in the Nagarjunasagar Srisailam Tiger Reserve (NSTR) in Andhra Pradesh has gone up, reversing the steady decline in the number of the endangered species over a period.

The TCF has decided to hike the Environment Maintenance Charge (EMC) and use the funds for anti-poaching activities, which included development of an intelligence network and reforestation of the degraded patches in the Nallamala forests.’ Tiger conservation gets a boost in A.P.

 The Wildlife (Protection) Amendment Act, 2006

The State Government shall establish a Tiger Conservation Foundation for tiger reserves within the State in order to facilitate and support their management for conservation of tiger and biodiversity and, to take initiatives in eco-development by involvement of people in such development process.

 The Tiger Conservation Foundation shall, inter alia have the following objective:—

  • (a) to facilitate ecological, economic, social and cultural development in the tiger reserves;
  • (b) to promote eco-tourism with the involvement of local stakeholder communities and provide support to safeguard the natural environment in the tiger reserves;
  • (c) to facilitate the creation of, and or maintenance of, such assets as may be necessary for fulfilling the above said objectives;
  • (d) to solicit technical, financial, social, legal and other support required for the activities of the Foundation for achieving the above said objectives;
  • (e) to augment and mobilise financial resources including recycling of entry and such other fees received in a tiger reserve, to foster stake-holder development and eco-tourism;
  • (f) to support research, environmental education and training in the above related fields.

As of today (10-11-2019 ) there are 41  Tiger Conservation Foundation (TCF) in the country.

Sl. No.
Tiger Reserve/State
Pakke Tiger Conservation Foundation, Arunachal Pradesh
Namdapha Tiger Conservation Foundation, Arunachal Pradesh
Dampa Tiger Conservation Foundation. Tuikhuahtlang, Mizoram
Andhra Pradesh Tiger Conservation Foundation, Andhra Pradesh (for Nagarjunasagar Srisailam TR)
Bandipur Tiger Conservation Foundation, Karnataka
Bhadra Tiger Conservation Foundation, Karnataka
Dandeli Anshi (Kali) Tiger Conservation Foundation, Karnataka
Kalakakad Mundanthurai Tiger Conservation Foundation, Tamil Nadu
Mudumalai Tiger Conservation Foundation, Tamil Nadu, Udhagamandlam.
Anamalai Tiger Conservation Foundation, Tamil Nadu
Madhya Pradesh (Kanha, Satpura, Pench, Panna, Bandhavgarh & Sanjay-Dubri)
Buxa Tiger Conservation Foundation Trust, West Bengal
Sundarban Tiger Conservation Foundation Trust, West Bengal
Manas Tiger Conservation Foundation, Assam
Kaziranga Tiger Conservation Foundation, Assam
Nameri Tiger Conservation Foundation, Assam
Achanakmar Tiger Conservation Foundation, Chhattisgarh
Udanti-Sitanadi Tiger Conservation Foundation, Chhattisgarh
Tadoba Andhari Tiger Reserve Conservation Foundation, Maharashtra
Indravati Tiger Conservation Foundation, Chhattisgarh
Ranthambhore Tiger Conservation Foundation, Rajasthan
Sariska Tiger Conservation Foundation, Alwar, Rajasthan
Corbett Tiger Conservation Foundation, Uttarakhand
Pench Tiger Conservation Foundation, Maharashtra
Melghat Tiger Reserve Conservation Foundation, Maharashtra
Similipal Tiger Conservation Foundation, Odisha
Satkosia Tiger Reserve, Orissa
Nagarhole Tiger Reserve, Karnataka
Periyar Foundation, Periyar Tiger Reserve, Kerala
Parambikulam Tiger Reserve, Kerala
Valmiki Tiger Conservation Foundation, Bihar
BRT Tiger Conservation Foundation, Karnataka
Sahyadri Tiger Reserve Conservation Foundation, Kohlapur, Maharashtra
Palamau Tiger Reserve Conservation Foundation, Jharkhand
Bor Tiger Conservation Foundation, Maharashtra
Nawegaon-Nagzira Tiger Conservation Foundation, Maharashtra
Kawal Tiger Conservation Foundation, Telangana
Amrabad Tiger Conservation Foundation, Telangana
Sathyamangalam Tiger Conservation Foundation, Tamil Nadu
Mukandra Hills Tiger Conservation Foundation, Rajasthan
Dudhwa Tiger Reserve Conservation Foundation, Uttar Pradesh

Pending TCF :-

1.     Pilibhit Tiger Reserve, Uttar Pradesh
2.     Rajaji Tiger Reserve, Uttarakhand
3.     Orang Tiger Reserve, Assam
4.     Kamlang Tiger Reserve, Arunachal Pradesh

UPSC Civil Services Mains 2019 GS 3 Question Paper

Answer in 150 Words

  1. Enumerate the indirect taxes which have been subsumed in the goods and service taxes (GST) in India.Also, comment on the revenue implications of GST introduced in India since July 2017.
  2. Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? give reasons in support of your arguments.
  3. How far is integrated farming system (IFS) helpful in sustaining agricultural production?
  4. Elaborate the impact of national watershed project in increasing agricultural production from water stressed areas?
  5. how was India benefited from the contributions of Sir M. Visvesvaraya and Dr. M.S.Swaminathan in the fields of water engineering and agricultural science respectively?
  6. what is India’s plan to have its own space station and how will it benefit our space program?
  7. Coastal sand mining, whether legal or illegal, poses one of the biggest threats to our environment. Analyze the impact of sand mining along the lndian coasts,Citing  specific examples.
  8. Vulnerability is an essential element for defining disaster impacts and its threats to people. How and in what ways can vulnerability to disasters be characterized? Discuss different types of vulnerability with reference to disasters.
  9. The banning of ‘Jamaat-e-Islami’ in Jammu and Kashmir brought into focus the role of over-ground workers (OGWs) in assisting terrorist organizations. Examine the role played by OGWs in assisting terrorist organizations in insurgency affected areas. Discuss measures to neutralize influence of OGWs.
  10. What is CyberDome Project? Explain how it can be useful in control internet crimes in India.

Answer in 250 Words

  1. It is argued that the strategy of inclusive growth is intended to meet the objectives of inclusiveness and sustainability together. Comment on this statement.
  2. The public expenditure management is a challenge to the Government o f India in the context of budget making during the post-liberalization period. Clarify it.
  3. What are the reformative steps taken by the Government to Make food grain distribution system more effective?
  4. Elaborate the policy taken by the Government of India to meet the challenges of the food processing sector. 
  5. how is Government of India protecting the traditional knowledge of medicine from patenting by pharmaceutical companies?
  6. How can biotechnology help to improve the living standards of farmers?
  7. define the concept of carrying capacity of an ecosystem as relevant to an environment. explain how understanding this concept is vital while planning for sustainable development of a region?
  8. .disaster preparedness is the first step in any disaster management process explain how hazard zonation mapping will help disaster mitigation in the case of landslides
  9. Indian government has recently strengthened the anti terrorism laws by amending the unlawful activities (prevention) act (UAPA)1967 and the NIA act.Analyse the changes in the context of prevailing security environment while discussing the scope and reason for opposing the UAPA by human rights organisations.
  10. Cross-border movement of insurgents is only one of the several security challenges facing the policing for the border in North east India .Examine the various challenges currently emanating across the India Myanmar border.Also discuss the steps to counter the challenges.

Explained: merger of public sector banks

The government  unveiled a plan to merge 10 public sector banks (PSBs) into four, reducing the number of state-owned banks from 18 to 12.

  • Punjab National Bank (PNB) will take over Oriental Bank of Commerce (OBC) and United Bank of India (UBI) to become the country’s largest lender after State Bank of India (SBI) in terms of business.
  • Canara Bank will subsume Syndicate Bank;
  • Andhra Bank and Corporation Bank will merge with Union Bank of India; and
  • Allahabad Bank will become part of Indian Bank.

Context :

  • In 2017, when there were 27 public sector banks, after announcement there will be 12. 12 solidly present, well-consolidated, energised, adequately capital-endowed banks will now operate to achieve the target of $5-trillion economy
  • With greater segmentation of credit and different kinds of banks catering to different customer classes — small finance banks, regional banks, a healthier set of non-banking financial companies and fintech serving the small borrower — India can do with a few more large banks that can lend to large companies.
  • By merging small public sector banks (PSBs) with their larger counterparts, the government has managed to rationalize the demand on government finances for capital infusion.
  • The larger banks stand to benefit more in terms of capital adequacy than the smaller lenders, a sharp departure from the past, wherein the government infused capital in their balance sheets year after year.
  • Canara Bank had a capital adequacy ratio of 11.9% and Syndicate Bank’s capital adequacy ratio was at 14.23%, the merged entity will be at 12.63%. Barring Indian Bank, all larger banks among their respective merger sets, have lower capital adequacy ratio than the ones they are taking over.

Advantages :


  • Building Next Gen Banks.
  • Enhanced credit giving capacity.
  • Operational efficiency gains that will reduce their cost of lending.
  • Enhance their risk appetite.
  • Thrust on Next Gen technologies for banking.
  • Customers will get wider offerings.
  • Act as building block for achieving $5 trillion economy target.
  • The consolidation in the banking sector will create higher efficiencies through better utilization of capital, greater credit disbursal, focused customer service and global expansion opportunities.
  • Fundamentally cleaner, structurally robust and profitable banking system will be created.
  • Departure from the plan to privatise some of the banks or bringing in a strategic investors to usher in reform in the sector.
  • The merged banks are on similar technology platform, the integration should be smoother.

Governance Reforms :

  • Need : The governance reforms of banks are of great significance to make banks run professionally. It is as important as the consolidation announcement.
  •  To make management accountable to Board, Board committee of nationalized banks to approve performance of GM and above (including MD)
  •  To make span of control manageable in large PSB, post consolidation, Boards given flexibility to introduce CGM level as per business needs
  •  To recruit Chief Risk Officer from market, at market-linked compensation to attract best available talent
  •  To enable succession planning, Board to decide system of ‘Individual Development Plans’ for all senior executive positions
  •  To ensure sufficient tenure, Boards given flexibility to prescribe residual service of two years for appointment of GM and above
  •  Flexibility given to Boards of large PSBs to enhance sitting fees of non-official directors (NODs)
  •  For better Board commiitee functioning, Boards given mandate to reduce/rationalize Board committees
  •  Risk Management Committee given mandate to fix accountability for compliance of Risk Appetite Framework
  •  Longer term to directors on Management Committee of Board to enable them to contribute effectively
  •  MCB loan sanction thresholds enhanced by up to 100%, to enable focussed attention to higher value loan proposals
  •  Boards given mandate for training of directors, both for induction and for specialized purposes
  •  Boards given mandate to evaluate NOD performance annually on peer-review basis
  •  Executive Directors’ strength in larger banks raised to four, for better functional focus and thrust on technology
  • Creation of leadership pipeline under BBB’s Leadership Development Programme
  • In June, RBI governor  had said the central bank would focus on governance reforms in the banking space to improve transparency and accountability.
  • “The government, the Banks Board Bureau and the Reserve Bank are engaged in developing an objective framework for performance evaluation of public sector banks.
  • This should redefine the contours of corporate governance in PSBs with a focus on transparency, accountability and efficiency,”
  • Former governor Urjit Patel had also sought more powers to oversee PSBs to ensure governance reforms.
Issues :
  • Moral hazard,If large banks feel they are too large to fail, they could end up taking on more risk than they should, on the assumption that the government would bail them out.
  • To keep the taxpayer insulated from such risk, larger banks need to have larger buffers of capital to absorb possible loss.
  • Systemically important banks are required to have significantly higher loss-absorbing capital than smaller banks are required to have.

Recapitalization :

  • 10 PSBs will get a total of Rs 55,250 crore. Here is the breakup:
  1. Punjab National Bank — Rs 16,000 crore.
  2. Union Bank of India — Rs 11,700 crore.
  3. Bank of Baroda — Rs 7,000 crore.
  4. Canara Bank — Rs 6,500 crore.
  5. Indian Bank — Rs 2,500 crore.
  6. Indian Overseas Bank — Rs 3,800 crore.
  7. Central Bank of India — 3,300 crore.
  8. UCO Bank — Rs 2,100 crore.
  9. United Bank of India — Rs 1,600 crore.
  10. Punjab & Sind Bank — Rs 750 crore.
Earlier Measures : 
The seven-pronged strategy for the revival of public sector banks (PSBs), termed ‘Indradhanush’, has the potential to transform the banking sector.  Its seven elements include
  1. Appointments,
  2. Board of bureau,
  3. Capitalisation,
  4. De-stressing,
  5. Empowerment,
  6. Framework of accountability,
  7. Governance reforms.
  • Narasimham Committee report on banking sector reforms, recommending mergers to form a three-tier structure with
    • three large banks with international presence at the top,
    • eight to 10 national banks at tier two,
    • and a large number of regional and local banks at the bottom.
  •      The committee also recommended shutting down the weaker banks and not merging them with the strong ones.
  • PJ. Nayak Committee had also suggested that state-run banks should either be merged or privatized.
Value Addition : 
  • The government said profitability of public sector banks has improved and total gross non-performing assets have come down to Rs 7.9 lakh crore at end-March 2019 from Rs 8.65 lakh crore at end-December 2018.
  • In FY19, the government had infused over ₹1 trillion in public sector banks with the last round of ₹48,239 crore in February, which allowed six banks to exit the Reserve Bank of India’s (RBI) prompt corrective action (PCA) framework.
  • The central bank uses the PCA framework to rein in banks that have breached certain regulatory thresholds in bad loans and capital adequacy.
  • Since FY14, the government and the Life Insurance Corp. of India have infused ₹3 trillion in PSBs.

The provision coverage ratio (PCR)

  • Gives an indication of the provision made against bad loans from the profit generated. Higher the PCR, lower is the unexposed part of the bad debts.
  • “The PCR of public sector banks has risen steeply from 46.04 per cent as of March 2015 to 66.85 per cent as of September 2018, giving banks cushion to absorb losses
  • Since the date of classification as NPA had been pushed back, the banks had to make higher provisioning due to the ageing factor.In the first stage of NPA, which is the ‘sub-standard’ category, 15-20% provision is required and for next category, which is ‘doubtful’, a 40% provision is required.
  • In 2009, RBI had mandated a 70% provision coverage ratio, which resulted in banks increasing their coverage. However, in April 2011, the mandate was withdrawn.

Reserve Bank’s Prompt Corrective Action (PCA) Framework

  • The Reserve Bank’s PCA framework was introduced in December 2002 as a structured early intervention mechanism . Subsequently, the framework was reviewed by the Reserve Bank keeping in view the international best practices and recommendations of the Working Group of the Financial Stability and Development Council (FSDC) on Resolution Regimes for Financial Institutions in India (January 2014) and the Financial Sector Legislative Reforms Commission (FSLRC, March 2013). The Revised PCA Framework was issued by the Reserve Bank on April 13, 2017 and implemented with respect to the bank financials as on March 31, 2017.

The PCA framework deems banks as risky if they slip below certain norms on three parameters — It has three risk threshold levels (1 being the lowest and 3 the highest) based on where a bank stands on these ratios.

  • Capital ratios
  • Asset quality
  • Profitability.
  • Banks with a capital to risk-weighted assets ratio (CRAR) of less than 10.25 per cent but more than 7.75 per cent fall under threshold 1.
  • Those with CRAR of more than 6.25 per cent but less than 7.75 per cent fall in the second threshold.
  • In case a bank’s common equity Tier 1 (the bare minimum capital under CRAR) falls below 3.625 per cent, it gets categorised under the third threshold level.
  • Banks that have a net NPA 
  • >=6.0% but <9.0% Risk Threshold 1
  • >=9.0% but < 12.0% Risk Threshold 2
  • >=12.0% Risk Threshold 2
  • On Profitability- Return on assets (ROA) banks with negative return on assets for two, three and four consecutive years fall under threshold 1, threshold 2 and threshold 3, respectively.
  • The scope of mandatory actions across all risk thresholds has been restricted essentially to:
  1.  Restriction on dividend distribution/remittance of profits;
  2.  Requirement on promoters/owners/parents to bring in more capital;
  3.  Restrictions on branch expansion;
  4.  Higher provisioning requirement; and,
  5.  Restrictions on management compensation.
  • As most bank activities are funded by deposits which need to be repaid, it is imperative that a bank carries a sufficient amount of capital to continue its activities.
  • PCA is intended to help alert the regulator as well as investors and depositors if a bank is heading for trouble.
  • The idea is to head off problems before they attain crisis proportions.
  • Essentially PCA helps RBI monitor key performance indicators of banks, and taking corrective measures, to restore the financial health of a bank.
  • On breach of any of the risk thresholds mentioned above, the RBI can invoke a corrective action plan.
  • Depending on the threshold levels, the RBI can place restrictions on dividend distribution, branch expansion, and management compensation.
  • Only in an extreme situation, breach of the third threshold, would identify a bank as a likely candidate for resolution through amalgamation, reconstruction or winding up.

Domestic Systemically Important Banks (D-SIBs)

  • SBI, ICICI Bank, and HDFC Bank continue to be identified as Domestic Systemically Important Banks (D-SIBs)
  • The indicators which would be used for assessment are: size, interconnectedness, substitutability and complexity.
  •  The banks will be selected for computation of systemic importance based on the analysis of their size (based on Basel III Leverage Ratio Exposure Measure) as a percentage of GDP.
  • The banks having size as a percentage of GDP beyond, 2% will be selected in the sample of banks.
  • D-SIB means that the bank is too big to fail.  The RBI stated that should such a bank fail, there would be significant disruption to the essential services they provide to the banking system and the overall economy.

Status of Policing in India Report 2019

Status of Policing in India Report 2019 by Common Cause and Centre for the Study Developing Societies, highlights the dismal work conditions in which the police operate in the country.

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  • A survey of nearly 12,000 police personnel across 22 states,along with interviews with their family members, finds that the forces work with just3/4th of its required capacity.
  • The institutional neglect of two key responsibilities of improving work conditions and of orienting the police to a more sophisticated,democratic and humane work ethic emerges as the most striking finding of the study.
  • It stated that 72 per cent of police officers have experienced political pressure while investigating cases involving influential persons.
  • 28% police personnel believe that pressure from politicians is the biggest hindrance in a crime investigation.
  • The other obstacles cited were related to society, legal systems and internal working systems in police
  • 38% personnel reported always facing pressure from politicians in cases of crime involving influential persons.
  • Roughly one third also reported “always” facing pressure from their seniors in the police force.

Police issues India

Working Condition :

  • More than one-third of police personnel would be willing to give up their profession if they were given a chance to join another job with the same salaries and perks
  • Three in four personnel said the workload made it difficult for them to do their job well and was affecting their physical and mental health.
  • The survey found that except for Nagaland, the average working hours of police officers were between 11 and 18 hours.
  • An average police officer works for 14 hours a day, six hours more than what the Model Police Act recommends.
  • A quarter of the respondents said they worked for more than 16 hours a day.
  • Other than working overtime, every second police personnel reported not getting any weekly off day.

Infrastructure and Support :

  • About 46 per cent personnel frequently experienced situations where government vehicles were not available when they needed them.
  • More than 50 per cent were found to have spent on stationery from their own pockets.
  • The police personnel also reported the absence of basic technological facilities such as computers – only 68% of civil police personnel reported that they always had access to a functional computer at their workplace.

Procedural lapses :

  • The survey highlights the casual attitude of many in the police force towards judicial processes.
  • A majority of police personnel (about three in five) believed that there should be a preliminary investigation done before registering a first investigation report (FIR), no matter how serious the reported crime is.
  • This is in contradiction to a 2013 Supreme Court ruling which made it mandatory for the police to register an FIR if a victim discloses information about a cognisable offence.
  • “Contributing significantly to the police’s failure in developing a people-friendly image is its inability to perform one of its core functions—register crimes,” the report states.

Rule of law ?

  • Every third police personnel surveyed agreed with the statement that for minor offences, a minor punishment handed down to the accused by the police was better than a legal trial.
  • About 20% personnel agreed with the statement that killing dangerous criminals was better than a legal trail.
  • A three-fourths majority believed it was alright for the police to adopt a violent attitude towards criminals
  • A greater proportion of personnel considered it justifiable to beat criminals for extracting confessions while investigating serious cases.  1

Representation :

  • The study also found a decline in the total strength of women in the police from 11.4 per cent in 2007 to 10.2 per cent in 2016.
  • None of the states have been able to meet the 33 per cent benchmark set out by the MHA, with Tamil Nadu having the highest representation of women at 12.9 per cent in 2016
  • Representation of SCs in the state police forces ranges from 40.2 per cent (of the reserved sanctioned strength) in Uttar Pradesh to 101.8 per cent in Punjab.
  • In fact, SCs are under-represented across Hindi-belt with four out of five poorest performing states – UP, Chhattisgarh, Haryana, West Bengal and Madhya Pradesh – belonging to the region.

Prejudices :

  • One in every two Indian policemen believes that Muslims are “very much” or “somewhat” prone to committing crimes.
  • 15 out of 21 states surveyed believe that complaints under SC/ST (Prevention of Atrocities) Act are “very much” or “somewhat” false and motivated. This prejudice is highest among UP Police (82%) followed by Andhra Pradesh police (74%).
  • One-third of policemen also believe that people from Schedule Caste (35%), OBCs (33%), upper-caste (33%) and tribals (31%) are prone to committing crimes.
  • It said An institutional bias against the marginalised sections further increases the vulnerability of these groups

Mob Violence 

  • The survey also found that a significant proportion of police force has a casual attitude towards mob violence.2
  • The respondents were asked to what extent is it natural for a mob to punish the culprits on their own in cases involving cow slaughter, kidnapping, rape and road accidents caused by the driver’s negligence. More than one-third of respondents said it was to a large extent or somewhat natural.

Lack of Training and Sensitization :

  • The survey also found that while the police personnel were sufficiently trained on physical parameters, weaponry and in crowd control, many lacked training on modules of new technology, cybercrime or forensic technology.
  • The survey report states that negative attitude towards registration of cases, use of violence on criminals and mob violence could be a reflection of the lack of proper and frequent training in human rights and caste sensitization.
  • More than one in 10 personnel reported not having received training on human rights and caste sensitization.


  • Policing is becoming a thankless job and the police are increasingly finding it difficult to maintain a work-life balance. Over the years, it is becoming more and more difficult to be a law enforcer.

Suggested Reading :

Value addition :

  • In October last year, the Delhi High Court in its landmark judgment on the Hashimpura massacre case relied on the 2018 edition of the Status of Policing in India Report to establish institutional bias of the police force against Muslims to convict 16 policemen for killing 42 people in 1987. The trial court had acquitted the policemen for lack of motive.
  • The data on representation of Muslims, who are not covered under any reservation, was discontinued by the National Crime Records Bureau (NCRB) after 2013.
  • World Justice Project released its Rule of Law Index 2017-18 report which measures the extent to which 113 countries have adhered to the rule of law in that period. India’s rank is 62 .
  • Rule of Law Index measures countries’ rule of law performance across eight factors
    1. Constraints on Government Powers.
    2. Absence of Corruption.
    3. Open Government
    4. Fundamental Rights.
    5. Order and Security.
    6. Regulatory Enforcement.
    7. Civil Justice.
    8. Criminal Justice.

Notes :

  1.  ( India is a signatory to the UN Convention against Torture or Other Cruel, Inhuman, or Degrading Treatment or Punishment (“UNCAT”). It signed the treaty in 1997. India did not Ratify the convention: The Law Commission of India (Chairperson: Dr.Justice B. S. Chauhan) observed India has faced problems in extradition of criminals from foreign countries.  This is because the convention prevents extradition to a country where there is danger of torture.  It recommended that this issue should be resolved by ratifying the convention.
  2. Lynching, a form of violence in which a mob, under the pretext of administering justice without trial, executes a presumed offender, often after inflicting torture and corporal mutilation. The term lynch law refers to a self-constituted court that imposes sentence on a person without due process of law.

India’s water crisis and CSR

India’s water crisis  Water and its management will determine India’s ability to achieve high economic growth, ensure environmental sustainability, and improve the quality of life

  • India is home to 17% of world’s population, but has only 4% of the world’s fresh water resources.If not addressed, water scarcity is also likely to affect the GDP, accounting for almost a 6% loss by 2050.
  • Around 600 million people are already facing a severe water shortage, according to reports.
  • At present, 75% of Indian households do not have access to drinking water, and close to 90% of rural households have no access to piped water.
  • India is a water-stressed country, and with 1,544 cubic metre per capita annual availability, we are advancing towards becoming water-scarce.
  • Five of the world’s 20 largest cities under water stress are in India.
  • As per the Economic Survey 2018-19, by 2050, India will be extremely susceptible to water insecurity.
  • There are some other aspects that pertain to the economic cost of environmental degradation that India is faced with.
  • A 2018 World Bank study pegged the cost of environmental degradation to India at approximately $80 billion per year, which amounts to around 5.7% of our GDP.
  • Further, an environment survey of 178 countries ranked India at 155. This is extremely worrying, especially since among the BRIC nations, India ranked last.

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Solutions :

  • Community management of water will be crucial if India is to become water secure. From State-led initiatives to local community driven initiatives, work on community engagement has begun.
  • State-led efforts to manage water have been assessed and shared by the NITI Aayog, which has developed the composite water management index (CWMI). States are ranked on the management of water and progress in 28 indicators relating to water management.

Corporate Social Responsibility (CSR)

  • But given the magnitude of the challenge in water management, corporations must play a more active role in using their Corporate Social Responsibility (CSR) efforts towards innovation and conservation of water, along with the dissemination of proven practices that help conserve and harness water recharge.
  • For corporations, the community focus is often manifest in the sustainable efforts undertaken by their owners. The question remains as to whether CSR commitment and sustainability initiatives in the current scenario are effective and pervasive enough to make a substantial impact.
  • Conservation efforts among Indian and multinational corporations, and their efforts must be emulated across the board.
    • ITC’s integrated water management approach :
    • Is now extended to implement four large-scale river basin regeneration projects for achieving water balance and year-round environmental flows in select sub-basins in Maharastra, Tamil Nadu, Telangana and Madhya Pradesh to strengthen water security– one of the most important priorities for India.
    • Today, ITC’s integrated watershed development programme covers over one million acres spread across 15,000 water harvesting structures, benefiting over 300,000 people in 43 districts across 16 states.
    • This initiative has generated over six million person-days of employment within project villages, reducing levels of distress migration.
    • In addition, a pilot programme at scale on “water use efficiency in agriculture” is also being promoted to enable effective demand-side management.
    • This initiative has yielded water savings of 20% to 45% in crops like sugarcane, wheat, rice and banana.
  • Tata’s Water Mission aims to provide better access to pure water for six million people spread across 7,000 villages in 12 states, by 2020.
    • Key focus areas are to improve access to safe water and sanitation, and to make a difference through rigorous and technologically advanced interventions.
  • Pepsico under its 2025 sustainability agenda,  is said to aim for a global improvement in water use efficiency in high water risk areas of its direct agricultural supply chain by 15% by 2025.
  • Mahindra too is doing extensive work under its Mahindra Hariyali programme. As its climate change resistance movement, the initiative is a social upsurge where tree planting is not merely a duty, but, in fact, is termed a celebration.
    • Since 2007, this initiative has achieved a target of planting 16 million saplings. Even in water conservation efforts, the Mahindra group has managed to reduce water consumption requirements per vehicle produced by 64% since 2012.

Way Forward: 

  • Water is a critical resource and community water management is a must. This will range from corporate engagement to smaller scale community initiatives, to individual efforts.
  • Now, the entire ecosystem must work in a cooperative manner to ensure India’s water conservation efforts are forward-thinking, and leveraging synergies from the State, corporations, and the community as a whole.

Explained: RBI transfer of ‘surplus’ to government

The Central Board of the Reserve Bank of India (RBI) decided to transfer a sum of ₹1,76,051 ($24.4 billion)  crore to the Government of India (Government) comprising of ₹1,23,414 crore of surplus for the year 2018-19 and ₹52,637 crore of excess provisions identified as per the revised Economic Capital Framework (ECF).

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Background :

Why Government wanted it :
  • The government has argued that relatively lower transfers crimped public spending for infrastructure projects and social sector programmes, considering the pressure to meet deficit targets and to provide space for private firms to borrow.
Why Central Banks(RBI) has to Maintain it : 
  • After the global financial crisis when central banks had to resort to unconventional means to revive their economies, the approach has been to build adequate buffers in the form of higher capital, reserves and other funds as a potential insurance against future risks or losses.
  • The balance sheet of central banks is unlike that of the institutions that it regulates or supervises. They are not driven by the aim of boosting profits given their public policy or public interest role.
  • Their aim is primarily ensuring monetary and financial stability – maintaining confidence in the external value of the currency, of course, is a key mandate.
  • Essentially, the economic capital framework reflects the capital that an institution requires or needs to hold as a counter against unforeseen risks or events or losses in the future.
  • A higher buffer enhances the credibility of a central bank during a crisis and helps avoid approaching the government for fresh capital and thus maintain financial autonomy.
The potential risks
  • Traditionally, central banks have been factoring in risks such as
  • Credit risk — when there could be a potential default by an entity in which there has been an investment or exposure.
  • Interest rate risk — when interest rates either move up or slide, depending on the price of which securities or bonds held by a central bank or banks can be impacted.
  • Operational risk — when there is a failure of internal processes.
  • To measure these risks, both quantitative and qualitative methods are typically used.
    • These include stress tests to evaluate worst-case scenarios such as collapse of banks, value at risk and so on.

How does the RBI generate surplus?

  • A significant part comes from RBI’s operations in financial markets, when it intervenes for instance to buy or sell foreign exchange;
  • Open Market operations, when it attempts to prevent the rupee from appreciating;
  • As income from government securities it holds;
  • As returns from its foreign currency assets that are investments in the bonds of foreign central banks or top-rated securities;
  • From deposits with other central banks or the Bank for International Settlement or BIS;besides lending to banks for very short tenures and management commission on handling the borrowings of state governments and the central government.
  • RBI buys these financial assets against its fixed liabilities such as currency held by the public and deposits issued to commercial banks on which it does not pay interest.
  • Central banks do make money thanks to seigniorage, or the profits earned by issuing currency which is passed on to the owner of the central bank, the government.
  • Expenditure: 
  • The RBI’s expenditure is mainly on printing of currency notes, on staff, besides commission to banks for undertaking transactions on behalf of the government and to primary dealers that include banks for underwriting some of these borrowings.
  • The central bank’s total costs, which includes expenditure on printing and commissions forms, is only about 1/7th of its total net interest income.

What are these reserves, how will this amount help the Central government and does this move harm the RBI?

The Reserve Bank of India (RBI) has decided to transfer ₹1.76 lakh crore to the Central government from its own reserves. What are these reserves, how will this amount help the government and does this move harm the RBI?

Where do the reserves come from?

To understand what the transfer is, we must first understand where the funds come from. The central bank has three different funds that together comprise its reserves. These are the
  1. Currency and Gold Revaluation Account (CGRA),  largest and makes up the significant bulk of the RBI’s reserves.
  2. the Contingency Fund (CF) and
  3. the Asset Development Fund (ADF).

CGRA fund, which in essence is made up of the gains on the revaluation of foreign exchange and gold, stood at ₹6.91 lakh crore as of financial year 2017-18. The CGRA has grown quite significantly since 2010, at a compounded annual growth rate of 25%.

  • The CF is the second biggest fund, amounting to ₹2.32 lakh crore in 2017-18. It is designed to meet contingencies from exchange rate operations and monetary policy decisions and is funded in large part from the RBI’s profits.
  • The ADF makes up a much smaller share of the reserves.
  • Revaluation reserve is a nominal reserve. Contingency fund is a real reserve that the RBI built up from its earnings.
  • Transfer Mechanism : It is a book entry really. There is no hard cash getting carried to Delhi from Mumbai. The RBI is the bank of the government and manages its cash anyway. So the amount is debited from the RBI’s books and gets credited to the government’s books maintained with the RBI.

How much should the RBI keep?

This has been a contentious issue. The RBI and the Finance Ministry have been at loggerheads over how much should be transferred to the Centre for a while. The most recent boiling over of tensions between the two was when the then RBI Deputy Governor, Viral Acharya, spoke up about the dangers of governments infringing upon central bank autonomy. One of the ways this was happening, he said, was in the government raiding the RBI’s coffers. The government countered that the RBI had reserves far in excess of what the global norms were and, so, should transfer the excess. Finally, the government in November 2018 set up a committee under former RBI Governor Bimal Jalan to look into the issue. That committee submitted its report, and the recent transfers have been made on the basis of its recommendations.

What did the Jalan Committee recommend?

  • The Jalan Committee, as it was called informally, is actually called the Expert Committee to Review the RBI’s Extant Economic Capital Framework.
  • The committee recommended that the RBI maintain a Contingent Risk Buffer — which mostly comes from the CF — of between 5.5-6.5% of the central bank’s balance sheet.
  • Since the latest CF amount was about 6.8% of the RBI’s balance sheet, the excess amount was to be transferred to the government.
  • The committee also decided, for the year under consideration, to use the lower limit of 5.5% of the range it recommended.
  • So, basically, whatever was excess of 5.5% of the RBI’s assets in the CF was to be transferred. That amount was ₹52,637 crore.
  • Regarding the RBI’s economic capital levels — which is essentially the CGRA — the committee recommended keeping them in the range of 20-24.5% of the balance sheet.
  •  Since it stood at 23.3% as of June 2019, the committee felt that there was no need to add more to it, and so the full net income of the RBI — a whopping ₹1,23,414 crore — should be transferred to the Centre.
  • That ₹1.23 lakh crore plus the ₹52,637 crore is what comprises the ₹1.76 lakh crore that the RBI has decided to transfer to the government.
  • It must be noted that this ₹1.76 lakh crore includes the ₹28,000 crore interim dividend earlier transferred to the Centre and does not come over and above it.
  • Recommendation on a profit distribution policy has been endorsed by the Central Board meaning a more transparent and rule-based payout from next year, as in many other central banks, which could help narrow differences between the government and RBI.

Legal side of Transfer :

  • Under Section 47 of the RBI Act, “after making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds and for all other matters for which provision is to be made by or under this Act or which are usually provided for by bankers, the balance of the profits shall be paid to the Central government”.

Does this harm the RBI?

  • While it does not immediately do the RBI any harm, the fact remains that the central bank now has far less wiggle room in the event of a financial catastrophe, since its reserves have been emptied to their minimum levels or thereabouts.
  • That is, it has the minimum amount to deal with a crisis, but extra cash always comes in handy.
  • That said, given that the RBI’s transfers have now been as emptied as they can be, there is no scope for the government to rely on this source of funding in the near future.
  • The government in its Budget already accounted for a transfer of ₹90,000 crore from the RBI, and so the unexpected amount is ₹86,000 crore.
  • This is a one-time bonanza and does not fix the fact that tax revenues — both direct and indirect tax — are coming in much lower than they need to.
Implications : 
Reserves are a liability side item. After the transfer, the RBI’s liability side shrinks, but the asset side remains intact. So, the RBI can sell bonds from its asset side, or some of its other assets to shrink the balance sheet. But that will suck out liquidity from the system, something that the RBI has rectified after a lot of struggle in the recent past. Instead, it can print more currencies and increase the liability side. So, the currency in circulation increases.
What happens if currency in circulation increases?
If the currency in circulation is more than the demand, then the currency loses its value. That means more inflation, and as the rupee depreciates, import cost also rises and that causes additional inflation. At a time when the RBI is officially mandated to contain inflation within a specific range, increased currency in circulation works against that goal. Surely, the RBI will have to contain it at some point.

How Will Government Benefit ?

  • Normally, the money is transferred to the Consolidated Fund of India from which salaries and pensions to government employees are paid and interest payments done, besides spending on government programmes.
  • The large payout can help the government cut back on planned borrowings and keep interest rates relatively low.
  • Besides, it will provide space for private companies to raise money from markets.
  • The RBI’s transfer of ₹1.76 trillion to the government should offset any revenue shortfall from lower tax buoyancy amid slower growth this year, allowing more room to boost spending.
  • And if it manages to meet its revenue targets, the windfall gain can lead to a lower fiscal deficit. It will also make it easier for the government to meet its budget deficit target of 3.3% of GDP for fiscal 2020.
  • The other option is to earmark these funds for public spending or specific projects, which could lead to a revival in demand in certain sectors and boost economic activity.

Criticism :

  • Statistics on Goods and Services Tax (GST) collections for 2018-19 show that there was a shortfall of ~1 lakh compare to what was budgeted. This is not a minor slippage, but a windfall loss, or rather, a misplaced windfall gain.
  • Surviving on the fiscal front via windfall gains, and faltering when they do not materialise, has been an integral part of India’s fiscal trajectory in the last few years.
  • This is unsustainable, and avoidable. RBI’s mandate is to pump-prime the economy via monetary policy, while the government has to manage the fiscal front. RBI’s extra transfer this year means it has effectively taken care of the fiscal task as well. This cannot be the norm.

Way forward :

The bottom line however remains unchanged. India’s economy has weakened in the last few years. To reverse this trend and bring ‘animal spirits’ back, government needs to unleash a new round of reforms which encompass factors of production such as land, labour and capital.
Value Addition :
  •  Is the profits governments make by minting currency. It is the difference between the face value of a currency note or coin, and its actual production cost.
  • For instance, if the cost of printing a ₹2,000-note is about ₹4, printing one such note and putting it into circulation fetches a profit of ₹1,996.
  • Usually central banks ‘earn’ this profit and transfer it to the Government.
  • It is normal to assume that whenever the it issues new currency, the RBI will pocket a profit. Higher denomination notes earn higher profits.

This Article will be updated on a regular basis.

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Iceland holds funeral for Okjökull glacier

Iceland has marked its first-ever loss of a glacier to climate change as scientists warn that hundreds of other ice sheets on the subarctic island risk the same fate.
  • As the world recently marked the warmest July ever on record, a bronze plaque was mounted on a bare rock in a ceremony on the barren terrain once covered by the Okjökull glacier in western Iceland.
  • The plaque bears the inscription “A letter to the future”, and is intended to raise awareness about the decline of glaciers and the effects of climate change.
  • “In the next 200 years all our glaciers are expected to follow the same path. This monument is to acknowledge that we know what is happening and what needs to be done. Only you know if we did it,” the plaque reads.

  • Iceland loses about 11bn tonnes of ice per year, and scientists fear all of the island’s 400-plus glaciers will be gone by 2200
  • Glaciologists stripped Okjökull of its glacier status in 2014, a first for Iceland. In 1890, the glacier ice covered 16sq km (6.2 square miles) but by 2012 it measured just 0.7sq km, according to a report from the University of Iceland in 2017.
  • It is also labelled “415 ppm CO2”, referring to the record level of carbon dioxide measured in the atmosphere last May.

  • The concentration of carbon dioxide in the atmosphere hit 415.39 parts per million (ppm) over the weekend — the highest level seen in some 3 million years, before humans existed, according to scientists at the Mauna Loa Observatory in Hawaii.
  • CO2 levels are now rising 3 ppm each year, up from an average 2.5 ppm over the last decade, the scientists said.
  • Based on current emissions, scientists estimate CO2 levels could hit 500 ppm in as little as 30 years.
  • The last time CO2 levels were this high was during the Pliocene Epoch, 5.3 to 2.6 million years ago, when the Earth was several degrees warmer, sea levels were an estimated 50 feet higher than they are today, and forests grew as far north as the Arctic.

Explained: Dual class shares in India

Facebook’s CEO and founder Mark Zuckerberg has close to 54% voting rights in the company where he holds roughly 28% of class B shares. Why are his voting rights so much higher? What are class B shares? Some companies have two types of share classes, one with enhanced voting rights and the other with limited voting rights; these are known as dual class shares. In case of Facebook, the class B shares have 10 votes per share. Dual class shares help the promoter retain management control and give limited voice to other shareholders.

Context: The Securities and Exchange Board of India (Sebi) issued a draft framework to allow domestic companies to issue shares with differential voting rights (DVRs).If approved, companies will be allowed to issue shares with either fractional or superior voting rights.

For Indian companies, there is a provision of creating differential shares for diluting stake. These are called differential voting right shares or DVRs; similar to dual class shares, voting rights on DVRs are different from those of the regular shares issued by the company.

  • The move will particularly help new-age companies and promoters as they will be able to retain decision-making powers without diluting too much control. It will also act as a mechanism to stave off hostile takeovers, which have become a concern among companies with low-promoter holding.
  • The current regulatory framework doesn’t permit DVRs with higher or superior voting rights.
  • Sebi has proposed dual-class share framework with superior voting rights, where a share will have higher voting power than an ordinary share.
  • This, however, will be restricted only to unlisted companies.
  • Listed companies will be permitted to issue shares with inferior voting rights, where a share will carry a fraction of voting power compared to an ordinary share. Besides voting power, these shares could carry other rights like higher dividends.
  • Sebi has proposed to allow unlisted companies to issue superior right (SR) shares. Also, companies that issued SR shares will be allowed to come out with an initial public offering (IPO). Sebi has, however, said that only ordinary shares can be issued in the IPO.
  • The SR shares will come with a “sunset clause”, where they will be converted into ordinary shares after five years of their issuance.
  • In India, five companies such including Tata Motors, erstwhile Pantaloons Retails and Gujarat NRE Coke had issued shares with DVRs. In 2009, Sebi had directed stock exchanges to prohibit use of DVRs.

Significance : The new-age firms, continuously require to grow only through equity, which dilutes the founder’s stake, thereby diluting control. In such cases, retaining the founder’s interest and control in the business is of great value to all shareholders.

The need for dual-class shares in India

  • First, outside shareholder control is a myth in Indian firms. Even without dual-class shares, outside shareholders do not enjoy much control.
  • Second, the dual-class share structure makes insider control more transparent. It will signal the firms in which insiders enjoy absolute control. This will put greater onus on outside investors to exercise due diligence before investing.
  • Third, allowing dual-class shares is the only way we can have an Indian-owned unicorn. In finance, a unicorn is a privately held startup company with a current valuation of US$1 billion or more.
  • In the absence of a dual-class share structure, raising outside equity would dilute the insider’s ownership stake and risk loss of control. Thus, in the absence of debt finance, the Indian technology firms are caught between a rock and a hard place. Either depend on internal cash generation to grow and settle for slower growth, or depend on outside equity and risk losing control.
  • To avoid this painful choice, it is important to give them an alternative and that will be to issue dual-class shares. This will enable them to grow fast using outside equity while retaining control.

Issue with existing system :

  • In a majority of listed firms in India, the insiders own a majority of the shares outstanding. This means that outside shareholder votes are in the minority. If all of the outside shareholders do not like something happening in the firm, they can go to the shareholder meeting and express their displeasure by voting against the proposal. But if the insider owns a majority of the shares, then the outside shareholder votes are symbolic.
  • The Satyam Computers scandal. Nobody could fault its board for its quality and independence. It had members whowere world-renowned experts in accounting and corporate governance. However, the board was in the dark for an extended period.

Suggested Reading :

Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM)

  • The scheme by Ministry of Labour and Employment will benefit 42 crore workers estimated to be engaged in the unorganized sector of the country.
  • Eligibility : The unorganised workers mostly engaged as home based workers, street vendors, mid-day meal workers, head loaders, brick kiln workers, cobblers, rag pickers, domestic workers, washer men, rickshaw pullers, landless labourers, own account workers, agricultural workers, construction workers, beedi workers, handloom workers, leather workers, audio- visual workers and similar other occupations whose monthly income is Rs 15,000/ per month or less
  • Belong to the entry age group of 18-40 years are eligible for the scheme.
  • Excluded: They should not be covered under New Pension Scheme (NPS), Employees’ State Insurance Corporation (ESIC) scheme or Employees’ Provident Fund Organisation (EPFO). Further, he/she should not be an income tax payer.

Salient Features of PM-SYM

  •  Minimum Assured Pension: Each subscriber under the PM-SYM, shall receive minimum assured pension of Rs 3000/- per month after attaining the age of 60 years.
  • Family Pension: During the receipt of pension, if the subscriber dies, the spouse of the beneficiary shall be entitled to receive 50% of the pension received by the beneficiary as family pension. Family pension is applicable only to spouse.
  • If a beneficiary has given regular contribution and died due to any cause (before age of 60 years), his/her spouse will be entitled to join and continue the scheme subsequently by payment of regular contribution or exit the scheme as per provisions of exit and withdrawal.
  • Contribution by the Subscriber: The subscriber’s contributions to PM-SYM shall be made through ‘auto-debit’ facility from his/ her savings bank account/ Jan- Dhan account. The subscriber is required to contribute the prescribed contribution amount from the age of joining PM-SYM till the age of 60 years.
  • Matching contribution by the Central Government:  PM-SYM is a voluntary and contributory pension scheme on a 50:50 basis where prescribed age-specific contribution shall be made by the beneficiary and the matching contribution by the Central Government.
  • Enrolment: The subscriber will be required to have a mobile phone, savings bank account and Aadhaar number. The eligible subscriber may visit the nearest Community Service Centers (CSCs) and get enrolled for PM-SYM.
  • Facilitation Centres: All the branch offices of LIC, the offices of ESIC/EPFO and all Labour offices of Central and State Governments will facilitate the unorganised workers about the Scheme, its benefits and the procedure to be followed, at their respective centers.

Exit and Withdrawal:

  • Considering the hardships and erratic nature of employability of these workers, the exit provisions of scheme have been kept flexible.
  • In case subscriber exits the scheme within a period of less than 10 years, the beneficiary’s share of contribution only will be returned to him with savings bank interest rate.
  •  If subscriber exits after a period of 10 years or more but before superannuation age i.e. 60 years of age, the beneficiary’s share of contribution along with accumulated interest as actually earned by fund or at the savings bank interest rate whichever is higher.
  • If a beneficiary has given regular contributions and died due to any cause, his/ her spouse will be entitled to continue the scheme subsequently by payment of regular contribution or exit by receiving the beneficiary’s contribution along with accumulated interest as actually earned by fund or at the savings bank interest rate whichever is higher.
  • If a beneficiary has given regular contributions and become permanently disabled due to any cause before the superannuation age, i.e. 60 years, and unable to continue to contribute under the scheme, his/ her spouse will be entitled to continue the scheme subsequently by payment of regular contribution or exit the scheme by receiving the beneficiary’s contribution with interest as actually earned by fund or at the savings bank interest rate whichever is higher.
  •  After the death of subscriber as well as his/her spouse, the entire corpus will be credited back to the fund.
  • Default of Contributions: If a subscriber has not paid the contribution continuously he/she will be allowed to regularize his contribution by paying entire outstanding dues, along with penalty charges, if any, decided by the Government.

National Minimum Wage

  • The Ministry of Labour and Employment had constituted an expert committee on 17th January 2017, under the Chairmanship Dr. Anoop Satpathy to review and recommend methodology for fixation of National Minimum Wage (NMW).
  • The Expert Committee has submitted its report on Determining the Methodology for Fixation of the National Minimum Wage.
  • The report using scientific approach has updated the methodological framework of fixation of minimum wages based on the overall guidelines of the ILC 1957 and the Supreme Court Judgment of Workmen v Reptakos Brett & Co. in 1992.
  • The report has undertaken a rigorous and meticulous analysis and has generated a large amount of evidence relating to changes in the demographic structure, consumption pattern and nutritional intakes, the composition of food baskets and the relative importance of non-food consumption items to address the realities in the Indian context.
  • According to the committee’s proposed formula, a family with a consumption unit of 3.6 requires 2,400 calories of food, along with a minimum of 50 gm of protein and 30 gm of fat every day, according to the National Sample Survey Office’s consumption-expenditure reports.
  • On the basis of the aforesaid approach, the report has recommended to fix the need based national minimum wage for India at INR 375 per day (or INR 9,750 per month) as of July 2018, irrespective of sectors, skills, occupations and rural-urban locations for a family comprising of 3.6 consumption unit.
  • It has also recommended an additional house rent allowance, averaging up to Rs 55 per day, that is, Rs 1,430 per month for urban workers over and above the national minimum wage saying house rent accounts for a significant proportion of the overall non-food component.
  • Apart from proposing the level of a single national minimum wage at an all-India level, the report has also estimated and recommended different national minimum wages for different geographical regions of the country to suit the local realities and as per socio-economic and labour market contexts. For the purpose of estimating national minimum wages at regional levels it has grouped the states into five regions based on a composite index and have recommended region specific national minimum wages as follows:
The committee has also recommended reviewing the consumption basket every five years, subject to the availability of NSSO-CES data, and – within the period of 5 years – revising and updating the basic minimum wage at least in line with the consumer price index (CPI) every six months, to reflect changes in the cost of living.
  • The existing rate of Rs 321 for agriculture or unskilled workers and Rs 371for semi-skilled workers.

Background :

  • Currently, the Minimum Wages Act, 1948 lists the employments where employers are required to pay minimum wages to workers.
  • The Act applies to the organised sector as well as certain workers in the unorganised sector such as agricultural workers.
  • The centre and states may add more employments to this list and mandate that minimum wages be paid for those jobs as well.
  • At present, there are more than 1700 employments notified by the central and state governments.
  • The Code on Wages, 2017 proposes to do away with the concept of bringing specific jobs under the Act, and mandates that minimum wages be paid for all types of employment – irrespective of whether they are in the organised or the unorganised sector.

Under the Minimum Wages Act, 1948, both Central and State government have dominion over fixing the wages. The State governments fix their own scheduled employments and further release the rates of Minimum Wage along with the VDA (Variable Dearness Allowance). Wage boards are set up to review and fix minimum wages at specified intervals. The wage rates in scheduled employments differ across states, sectors, skills, regions and occupations owing to a lot of differentiating factors. Hence, there is no single uniform minimum wage rate across the country and the revision cycle differs for each state.

The Tripartite Committee on Fair Wages, appointed in 1948, defined three different levels of wages: a living wage, a fair wage, and a minimum wage.

  1. Living wage is what a human being needs to get the basic essentials of food, shelter, clothing, protection against ill-health, security for old age, etc.
  2. A fair wage is lower than the living wage and takes into account efficiency, from the employer’s perspective.
  3. Minimum wage is similar to the fair wage except in two respects: it is even lower, and has a statutory dimension.

The Code on Wages, 2017

The Standing Committee on Labour (Chairperson: Dr. Kirit Somaiya) submitted its report on the Code on Wages, 2017. The Code seeks to regulate wage and bonus payments in all employments where any trade, business, or manufacture is carried on.  It replace four existing laws related to wages:
  • The Payment of Wages Act, 1936,
  • The Minimum Wages Act, 1948,
  • The Payment of Bonus Act, 1965, and
  • The Equal Remuneration Act, 1976.

Key observations and recommendations made by the Committee include:

  • National minimum wage: The Code provides that a national minimum wage may be set by the central government.  The central government may set separate national minimum wages for different states or regions of the country.  The Committee recommended that this provision should be modified to state that the central government shall fix the national minimum wage in the manner as may be prescribed.
  • Factors for fixing minimum wages: The Code allows the central or state governments to set factors by which minimum wages will be determined.  These include skills required, difficulty of work assigned, and geographical location.  The Committee recommended that in addition to these factors, experience and length of service should be taken into account.
  • Revision of minimum wages: The Code specifies that the central or state governments must revise minimum wages at an interval of five years.  The Committee observed that under the Minimum Wages Act, 1948, state governments have flexibility in revising minimum wages, as long as it is not more than five years.  In order to maintain flexibility, the Committee recommended that the Code should specify that central or state governments should revise minimum wages, at an interval not exceeding five years.
  • Gender discrimination: The Equal Remuneration Act, 1976 prohibits discrimination in wage payments as well as recruitment of employees on the basis of gender.  While the Code subsumes the Act, it only prohibits gender discrimination in matters related to wages.  In this context, the Committee recommended that the Code should include a provision that prohibits employers from gender discrimination in recruitment and conditions of employment.
  • Definition of employee and worker: The Committee noted that the definitions of ‘worker’ and ‘employee’ under the Code are different.  While the definition of employee includes those in managerial or administrative roles, the definition of worker does not include such persons.  The Committee noted that this may lead to employers discriminating between workers and employees.  The Committee recommended that since minimum wage is a matter of right for every working person, a common and comprehensive definition of employee/worker should be given in the Code.  This would allow for better clarity at the implementation level.
  • Non-applicability of bonus: The Code states that provisions related to payment of bonus will not apply to establishments in which twenty or more persons are employed.  The Committee recommended that in the larger interests of workers, the threshold for application of bonus payments should be reduced to cover establishments with ten or more persons.
  • Inspections: The Code provides for the appointment of a Facilitator to carry out inspections.  The Committee stated that use of the term ‘Facilitator’ gave the impression of diluting the enforcement mechanism, and recommended that it be replaced by the term ‘Inspector’ instead.

71st Army Day Parade 2019

Every year Indian Army celebrates 15th January as ‘Army Day’ to commemorate the day when General (later Field Marshal) K M Carriappa took over the command of Army from General Sir FRR Bucher, the last British Commander-in-Chief in 1949 and became the first Commander-in-Chief of Indian Army post Independence.

  • The leading contingent of the parade was formed of the recipients of the Param Vir Chakra and Ashok Chakra awardees.
This was followed by army contingents which included ( Prelims Bits can be expected)
  • T-90 tank BHISHMA,
  • infantry combat vehicle BMP II,
  • M 777 ultra light howitzer,
  • K-9 Vajra guns,
  • Akash missile system,
  • Mobile transportable satellite terminal service vehicle,
  • surface minimum clearing system,
  • international sports awardees and
  • seven marching contingents including mounted horse cavalry.

Value addition ( Interview)

Field Marshal,Marshal of the Indian Air Force,Admiral of the Fleet

  • The highest rank attainable in the Indian Army is Field Marshal. Ranked as a Five Star General Officer, a Field Marshal is ranked above a General.
  • This rank has been conferred on only two individuals.
    • Field Marshal Sam Hormusji Framji Jamshedji Manekshaw, MC (3 April 1914 – 27 June 2008), popularly known as Sam Bahadur (“Sam the Brave”)
    • Field Marshal Kodandera “Kipper” Madappa Cariappa, OBE (28 January 1899 – 15 May 1993) (Order of the British Empire)
  • The highest rank attainable in the Air force is the Marshal of the Indian Air Force. It is mostly awarded in a ceremonial capacity. MIAFs are ranked immediately above the Chief of Air Staff.
    • Marshal of the Indian Air Force Arjan Singh, DFC (15 April 1919 – 16 September 2017) (Distinguished Flying Cross)
  • Admiral of the Fleet is the highest attainable rank in the Naval force. This Five Star rank is primarily conferred in wartime and honourary capacity.
    • This rank has never been conferred on any individual in the country.

Military Awards

Wartime gallantry awards
  •  Param Vir Chakra — Highest military award
  •  Maha Vir Chakra – The Maha Vir Chakra (MVC) is the second highest military decoration in India and is awarded for acts of conspicuous gallantry in the presence of the enemy, whether on land, at sea or in the air.
  •  Vir Chakra – Third in precedence in the awards for wartime gallantry
Peacetime gallantry awards
  1.  Ashok Chakra Award – An Indian military decoration awarded for valour, courageous action or self-sacrifice away from the battlefield. It is the peacetime equivalent of the Param Vir Chakra.
  2.  Kirti Chakra – Second in order of precedence of peacetime gallantry awards.
  3.  Shaurya Chakra – Third in order of precedence of peacetime gallantry awards.

Happy Birthday Tricolour!

Tokenization Explained

  • In news: RBI issues guidelines for tokenisation of card transactions.
  • RBI has given permission to offer tokenised card transactions services to all channels such as near field communication (NFC), magnetic secure transmission (MST) based contactless transactions, in-app payments, QR code-based payments or token storage mechanisms, including cloud, secure element and trusted execution environment.
  • Tokenisation and de-tokenisation shall be performed only by the authorised card network and recovery of original Primary Account Number (PAN) should be feasible for the authorised card network only, the release said.

What is tokenization?

  • Tokenization is the process of protecting sensitive data by replacing it with an algorithmically generated number called a token.
  • Often times tokenization is used to prevent credit card fraud.
  • In credit card tokenization, the customer’s primary account number (PAN) is replaced with a series of randomly-generated numbers, which is called the “token.”
  • These tokens can then been passed through the internet or the various wireless networks needed to process the payment without actual bank details being exposed.
  • The actual bank account number is held safe in a secure token vault.

How does it work?

  • Typical consumer credit/Debit cards come with names, 16-digit personal account numbers (PANs), expiration dates and security codes — any of which can be “tokenized.”
  • Let’s use the 16-digit PAN (4321-1234-5678-8765) as an example. When a merchant swipes a customer’s  card, the PAN is automatically replaced with a randomly generated alphanumeric ID (“token”).
  • 4321-1234-5678-8765 becomes something like a7f6%gf83fhAu on the merchant’s end the original PAN never enters the merchant’s payment system. Only the token ID does. The merchant can use this special token ID to keep records of the customer (i.e. a7f6%gf83fhAu = John Smith).
  • This token then gets transmitted to the payment processor who de-tokenizes the ID and authorizes payment.
  • a7f6%gf83fhAu becomes 4321-1234-5678-8765 on the processor’s end
  • This token is only readable by the payment processor — it is meaningless to any other party (including the merchant). Someone who manages to get his hands on this ID has no way of linking the token back to the original personal account number.
  • Moreover, this randomly generated token is only valid with that single merchant. The ID can never be used to initiate payment with another retailer.
How are tokens generated?
  • Tokens can be generated through mathematically reversible algorithms, one-way non-reversible cryptographic functions, or static tables mapped to randomly generated token values

Advantages of tokenization :

  • The biggest benefit to all involved is that payment card numbers are no longer used or saved where unauthorized access can occur.
  • For customers, this means added security and convenience. It eliminates the need to enter and re-enter the account number when shopping on a smartphone, tablet or computer. Enabling one-click (or even “0-click”) payments for shoppers
  • It is safer than magnetic strips because tokens don’t carry the consumer’s primary account number, there is less risk in storing tokens on mobile devices online by e-commerce merchants, and in cloud-based mobile platforms and applications.
  • Even if it is hacked, there wouldn’t be anything of use as it devalues the entire data.
  • Eliminates the need for your cards to physically leave your hands
  • Enhances transaction efficiency
  • Provides a secure method for third-party enablement (for example, wallet, near-field communication (NFC) and quick response (QR) Codes
  • It potentially reduces the merchant’s effort to implement PCI DSS (Payment Card Industry Data Security Standard) requirements.

National Clean Air Programme (NCAP)

The Centre has launched National Clean Air Programme (NCAP) to reduce particulate matter (PM) pollution by 20-30% in at least 102 cities by 2024.

  • Air pollution is one of the biggest global environmental challenges of today. A time bound national level strategy for pan India implementation to tackle the increasing air pollution problem across the country in a comprehensive manner in the form of National Clean Air Programme (NCAP) was  launched by Union Minister of Environment, Forest and Climate Change.
  • The World Health Organisation’s database on air pollution over the years has listed Tier I and Tier II Indian cities as some of the most polluted places in the world. In 2018, 14 of the world’s 15 most polluted cities were in India. A study in the journal Lancet ranked India as No.1 on premature mortality and deaths from air pollution.
  • Inter Link: SDG 11: Sustainable Cities And Communities By 2030, reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality and municipal and other waste management.

  • Approach: Collaborative and participatory approach involving relevant Central Ministries, State Governments, local bodies and other Stakeholders with focus on all sources of pollution forms the crux of the Programme.
  • The approach for NCAP includes collaborative, multi-scale and cross-sectoral coordination between the relevant central ministries, state governments and local bodies. Dovetailing of the existing policies and programmes including the National Action Plan on Climate Change (NAPCC) and other initiatives of Government of India in reference to climate change will be done while execution of NCAP.
  • Target: Taking into account the available international experiences and national studies, the tentative national level target of 20%–30% reduction of PM2.5 and PM10 concentration by 2024 is proposed under the NCAP taking 2017 as the base year for the comparison of concentration.
  • Today cities occupy just 3% of the land, but contribute to 82% of GDP and responsible for 78% of Carbon dioxide emissions; cities though are engines of growth and equity but they have to be sustainable and it is in this context that NCAP being a very inclusive program holds special relevance.
  • Overall objective : of the NCAP is comprehensive mitigation actions for prevention, control and abatement of air pollution besides augmenting the air quality monitoring network across the country and strengthening the awareness and capacity building activities.
  • The NCAP will be a mid-term, five-year action plan with 2019 as the first year.
  • However, the international experiences and national studies indicate that significant outcome in terms of air pollution initiatives are visible only in the long-term, and hence the programme may be further extended to a longer time horizon after a mid-term review of the outcomes.
  • There will be use of the Smart Cities program to launch the NCAP in the 43 smart cities falling in the list of the 102 non-attainment cities.
  • The NCAP is envisaged to be dynamic and will continue to evolve based on the additional scientific and technical information as they emerge.
  • The NCAP will be institutionalized by respective ministries and will be organized through inter-sectoral groups, which include, Ministry of Road Transport and Highway, Ministry of Petroleum and Natural Gas, Ministry of New and Renewable Energy, Ministry of Heavy Industry, Ministry of Housing and Urban Affairs, Ministry of Agriculture, Ministry of Health, NITI Aayog, CPCB, experts from the industry, academia, and civil society.
  • The program will partner with multilateral and bilateral international organizations, and philanthropic foundations and leading technical institutions to achieve its outcomes.
City specific action plans
  • are being formulated for 102 non-attainment cities identified for implementing mitigation actions under NCAP. Cities have already prepared action plans in consultation with CPCB. Institutional Framework at Centre and State Level comprising of Apex Committee at the Ministry of Environment Forest and Climate Change in the Centre and at Chief Secretary Level in the States are to be constituted.
For effective implementation and Monitoring :
  • Sectoral working groups,
  • national level Project Monitoring Unit,
  • Project Implementation Unit,
  • state level project monitoring unit,
  • city level review committee under the Municipal Commissioner and
  • DM level Committee in the Districts are to be constituted under NCAP .
Monitoring stations:  Increasing number of monitoring stations in the country including
  • rural monitoring stations,
  • technology support,
  • emphasis on awareness and capacity building initiatives,
  • setting up of certification agencies for monitoring equipment,
  • source apportionment studies,
  • emphasis on enforcement,
  • specific sectoral interventions etc.

Universal Basic Income

“I will give you a talisman. Whenever you are in doubt, or when the self  becomes too much with you, apply the following test. Recall the face of  the poorest and the weakest man [woman] whom you may have seen, and ask yourself, if  the step you contemplate is going to be of  any use to him [her]. Will he [she] gain anything by it? Will it restore him [her] to a control over his [her] own life and destiny? In other words, will it lead to swaraj [freedom] for the hungry and spiritually starving millions? Then you will find your doubts and your self  melt away.” – Mahatma Gandhi

“Wiping every tear from every eye” based on the principles of  universality, unconditionality, and agency—the hallmarks of  a Universal Basic Income (UBI)—is a conceptually appealing idea. A number of  implementation challenges lie ahead, especially the risk that UBI would become an add-on to, rather than a replacement of, current anti-poverty and social programs, which would make it fiscally unaffordable.

Despite  making  remarkable  progress in  bringing  down  poverty  from  about  70 percent at independence to about 22 percent in  2011-12  (Tendulkar  Committee),  it  can safely be said that “wiping every tear from every eye” is about a lot more than being able to imbibe a few calories.  Gandhi ji intuited that  it  is  also  about  dignity,  invulnerability, self-control  and  freedom,  and  mental  and psychological  unburdening.  From  that perspective,  Nehru’s  exhortation  that  “so long as there are tears and suffering, so long our work will not be over” is very much true nearly 70 years after independence.

Universal Basic Income, ( UBI ) has three components:
  1. universality,
  2. unconditionality,
  3. and  agency

(by providing support in the form of cash transfers  to  respect,  not  dictate,  recipients’ choices).

  • Universal  Basic  Income is a radical and compelling paradigm shift  in thinking about  both  social  justice  and  a  productive economy.
  • It is premised on the idea that  a  just  society  needs  to  guarantee  to each  individual  a  minimum  income  which they can count on, and which provides the necessary material foundation for a life with
  • access to basic goods and a life of dignity. A universal basic income is, like many rights, unconditional and universal: it requires that every person should have a right to a basic income to cover their needs, just by virtue of being citizens.

The time has come to think of UBI for a number of reasons:

  • Social Justice
    • promotes many of  the basic values of a society which respects all individuals as free and equal.
    • It  promotes  equality  by  reducing poverty.
    • It promotes efficiency by reducing waste in government transfers.
    • And it could,under  some  circumstances,  even  promote greater productivity.
  • Poverty Reduction
    • Universal Basic Income may simply be the fastest way of reducing poverty.
  • Agency:
    • The poor in India have been treated as objects of government policy.
    • The circumstances that keep individuals trapped in poverty are varied; the risks they face and the shocks they face also vary.
  • Employment:
    • UBI is an acknowledgement that society’s obligation to guarantee a minimum living standard is even more urgent in an era of uncertain employment generation.
  • Administrative Efficiency:
    • In India in particular,the case for UBI has been enhanced because of the weakness of existing welfare schemes which are riddled with misallocation, leakages and exclusion of the poor.
    • UBI is not a substitute  for  state  capacity:  it  is  a  way  of ensuring that state welfare transfers are more efficient so that the state can concentrate on other public goods.

The conceptual case against UBI

From an economic point of view there are  three  principal  and  related  objections to  a universal  basic  income.
  •  The  first concern  is whether  UBI  reduces  the  incentive  to work
    • the levels at which universal basic  income  are  likely  to  be  pegged  are going to be minimal guarantees at best; they are  unlikely  to  crowd  incentives  to  work.
  • The  second  concern  is  this:  Should income be detached from employment?
    • The honest economic answer to this concern is that society already does this, but largely for the rich and privileged.
  • The  third  is  a  concern out of reciprocity.
    • If  society  is  indeed  a  “scheme of  social  cooperation”,  should  income  be unconditional,  with  no  regard  to  people’s contribution  to  society?
    • the  short  answer is that individuals as a matter of fact will in most  cases  contribute  to  society,
    • UBI  can  also  be  a  way  of acknowledging  non-wage  work  related contributions  to  society
    • homemaking contributions  of  women  are  largely unacknowledged  economically,  since  they do  not  take  the  form  of  wage  or  contract employment.  It  is  important  that  UBI  is not framed as a transfer payment from the rich to the poor.

What  would  a  UBI  potentialy  cost?

  • The income needed to take her above INR  893  per month (Tendulkar poverty line ), which is the poverty line in 2011-12. This comes to INR 5400 per year. Subsequently, that number is scaled up for inflation between 2011-12 and 2016-17: this yields  INR  7620  per  year.  This  is  the  UBI for 2016-17, which is  4.9 percent of GDP .

Issues to set up :

If  universality  has  powerful  appeal, it  will  also  elicit  powerful  resistance. Approaching  targeting  from  an exclusion of the non-deserving perspective than the current inclusion of the deserving
  • Define the  non-deserving based on ownership  of  key assets such as automobiles or air-conditioners or bank balances exceeding a certain size. SECC
  • Adopt a ‘give it up’ scheme wherein those who are non-deserving chose to opt out of the programme just as in the case of LPG and are given credit for doing so.
  •  Introduce a system where the list of UBI beneficiaries  is  publicly  displayed;  this would “name and shame” the rich who choose to avail themselves of a UBI
  •  Self-targeting: Develop a system where beneficiaries regularly verify themselves in  order  to  avail  themselves  of  their UBI  –  the  assumption  here  is  that  the rich,  whose  opportunity  cost  of  time is higher, would not find it worth their while to go through this process and the poor would self-target into the scheme. The  issue  with  an  approach  of  this sort is that it conflicts with the essence of  JAM,whose  appeal  lies  in  its  direct, costless  transfer  of  the  state’s  welfare subsidies to beneficiaries’ accounts.
  • UBI must be embraced in a deliberate, phased manner. A key advantage of phasing would  be  that  it  allows  reform  to  occur incrementally.
  • A  UBI  for  women  can,  therefore,  not  only reduce the fiscal cost of providing a UBI (to about half) but have large multiplier effects on the household.

Sikkim Democratic Front (SDF) has decided to include Universal Basic Income (UBI)

  • Sikkim’s ruling Sikkim Democratic Front (SDF) has decided to include Universal Basic Income (UBI) in its manifesto for the upcoming assembly and Lok Sabha elections, according to a report by The Indian Express.
  • The state has already begun the process of introducing the unconditional direct cash transfer scheme and is planning to implement the same by 2022. It could become the first state in India to implement UBI.
  • The 2017 Economic Survey had advocated implementation of UBI as an alternative to the various social welfare schemes in an effort to reduce poverty.
  • The Survey said, “UBI is a powerful idea whose time even if not ripe for implementation, is ripe for serious discussion.”
  • However, Finance Minister Arun Jaitley in June 2017 said the scheme as proposed in the Economic Survey will not be politically feasible in today’s India.