Prepare Prelims 2017-Day-53-Defense Current Affairs

Railway Budget To Be Merged with General Budget

·        Putting an end to a 92-year-old tradition of the colonial era, the railway Budget will be merged with the general Budget from 2017-18 onwards.

·        The idea was recently mooted by a committee headed by NITI Aayog member Bibek Debroy, as part of the restructuring of the Railways.

Background Of Railway Budget

·        The Acworth Committee in 1920 was formed to look into the whole question
of railway policy, finances and administration.

·        The committee was of the opinion that the essence of the railway reform was separation of railway budget from general budget.

·        After recommendation of Acworth Committee, Railway budget was introduced in 1925-26.

The Lost Tribe Of Odisha

·19 Juang tribal children have died in Odisha due to acute malnutrition-related diseases. They live in inaccessible hamlets atop the Nagada hills, Jajpur district, Odisha.

Some Facts

Odisha has 62 tribes, the highest number among all States and Union Territories in the country, accounting for 22.85 % of the total population as per 2011 census. As many as 13 of these tribes have been identified as Particularly Vulnerable Tribal Groups (PVTGs).

The Juang tribe is one of the PVTGs that belong to the Munda ethnic group and live in Keonjhar, Dhenkanal, Angul and Jajpur districts of Odisha and speak the Juang language, which is accepted as a branch of the greater Austroasiatic language family.

It was to bring the Juangs into the mainstream that the Juang Development Agency (JDA) was established in 1975. However, even after four decades development seems elusive to them as evident from the recent tragedy.

Madhya Pradesh becomes first state to have Happiness Department

Madhya Pradesh became the first state in India to have „Happiness Department‟ that will work as knowledge resource centre on the subject of happiness on the lines of Bhutan.

Key Facts

·        The Happiness Department will work under a working committee headed by a chairman. The committee will evaluate the state‟s gross happiness.

·        The department will prepare guidelines for coordination between different departments like women and child development, health, and sports for propagating happiness in the state.

·        It will prescribe action plan and activities for experiencing happiness by identifying and defining the parameters of happiness and efficiency.

·        It will also undertake constant researches and surveys for expanding means happiness and improve norms to assess them. It will publish reports pertaining to status of happiness.

·        Bhutan is the first country in the world to come up with the concept of Gross National Happiness (GNH).

·        It has fixed standards of living, education, good governance, health and psychological happiness among the various parameters that make its citizens happy.

·        The World Happiness Report 2016 published by the United Nations ranks India at 118th position among 156 countries.

Union Government constitute Shankar Acharya Committee to examine desirability and feasibility of new financial year

·        The Union Finance Ministry has constituted four members committee to examine the feasibility and desirability of having a new financial year.

·        The committee has been tasked to examine the merits and demerits of various dates for the commencement of the financial year including the existing date (April to March) by taking into account the various relevant factors.

Terms of Reference of Committee

Take into consideration genesis of the current financial year and the earlier studies made in the past on the desirability of change in financial year.
It will take into consideration suitability of the financial year from point of view of

(i) Correct estimations of receipts and expenditure of Union and State Governments. (ii) Effect of the different agricultural crop periods. (iii) Relationship of financial year on the working season. (iv) Impact on business. (v) Taxation systems and procedures. (vi) Statistics and data collection. (vii) Convenience of the legislatures for transacting budget work. (viii) Other relevant matters Recommend the date of commencement of the financial year which in its views is most suitable for the country.
In case the committee recommends change in financial year, it will also work out on the modalities for effecting the change.

The committee will submit its report to the Union Government by 31st December 2016.

Central Board for Workers’ Education renamed

  • The government has renamed Central Board for Workers’ Education as “Dattopant Thengadi National Board for Workers Education and Development”.

 

Dattopant Thengadi:

  • Born on 10th November, 1920 Shri Dattopant Thengadi devoted entire his life for the upliftment of the poor people and promotion of social harmony in the country.
  • He was a great thinker, intellectual and efficient organizer, a towering personality in the Labour Movement in India and founder of many national level social organizations.
  • Dattopant Thengadi contributed very immensely for the economic growth of the county and was a well-known trade unionist of national repute.

About the board:

  • The Dattopant Thengadi National Board for Workers Education and Development having national network is a CentralAutonomous Body, under Government of India, Ministry of Labour & Employment.
  • It is engaged in generating awareness about various subjects relating to labour, industry, nation and other socio-economic issues, besides Government’s schemes amongst both organized and unorganized/ rural sector workers for the last 59 years in the country.
  • It has been working since 1958 with its network of 50 Regional Directorates, 9 Sub Regional Directorates, 6 Zonal Directorates.
  • The Headquarter is situated at Nagpur. It also has an Apex National Training Institute i.e. Indian Institute of Workers’ education at Mumbai.

Sources: PIB & Wiki.

Frequently Asked Questions (FAQs) on Goods and Services Tax (GST)

What is GST? How does it work?

  • GST is one indirect tax for the whole nation, which will make India one unified common market.
  • GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer.
  • Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage.
  • The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

 

What are the benefits of GST?

  • For business and industry
    • Easy compliance: A robust and comprehensive IT system would be the foundation of the GST regime in India. Therefore, all tax payer services such as registrations, returns, payments, etc. would be available to the taxpayers online, which would make compliance easy and transparent.
    • Uniformity of tax rates and structures: GST will ensure that indirect tax rates and structures are common across the country, thereby increasing certainty and ease of doing business. In other words, GST would make doing business in the country tax neutral, irrespective of the choice of place of doing business.
    • Removal of cascading: A system of seamless tax-credits throughout the value-chain, and across boundaries of States, would ensure that there is minimal cascading of taxes. This would reduce hidden costs of doing business.
    • Improved competitiveness:Reduction in transaction costs of doing business would eventually lead to an improved competitiveness for the trade and industry.
    • Gain to manufacturers and exporters: The subsuming of major Central and State taxes in GST, complete and comprehensive set-off of input goods and services and phasing out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the competitiveness of Indian goods and services in the international market and give boost to Indian exports. The uniformity in tax rates and procedures across the country will also go a long way in reducing the compliance cost.

 

For Central and State Governments

  • Simple and easy to administer: Multiple indirect taxes at the Central and State levels are being replaced by GST. Backed with a robust end-to-end IT system, GST would be simpler and easier to administer than all other indirect taxes of the Centre and State levied so far.
  • Better controls on leakage: GST will result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders.
  • Higher revenue efficiency: GST is expected to decrease the cost of collection of tax revenues of the Government, and will therefore, lead to higher revenue efficiency.

 

For the consumer

  • Single and transparent tax proportionate to the value of goods and services: Due to multiple indirect taxes being levied by the Centre and State, with incomplete or no input tax credits available at progressive stages of value addition, the cost of most goods and services in the country today are laden with many hidden taxes. Under GST, there would be only one tax from the manufacturer to the consumer, leading to transparency of taxes paid to the final consumer.

Relief in overall tax burden: Because of efficiency gains and prevention of leakages, the overall tax burden on most commodities will come down, which will benefit consumers.

Which taxes at the Centre and State level are being subsumed into GST?    

At the Central level, the following taxes are being subsumed:

  • Central Excise Duty,
  • Additional Excise Duty,
  • Service Tax,
  • Additional Customs Duty commonly known as Countervailing Duty, and
  • Special Additional Duty of Customs.

At the State level, the following taxes are being subsumed:

  • Subsuming of State Value Added Tax/Sales Tax,
  • Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States),
  • Octroi and Entry tax,
  • Purchase Tax,
  • Luxury tax, and
  • Taxes on lottery, betting and gambling.

 

What are the major features of the Constitution (122nd Amendment) Bill, 2014?

Answer :The salient features of the Bill are as follows:

  1. Conferring simultaneous power upon Parliament and the State Legislatures to make laws governing goods and services tax;
  2. Subsuming of various Central indirect taxes and levies such as Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, and Special Additional Duty of Customs;
  3. Subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and gambling;
  4. Dispensing with the concept of ‘declared goods of special importance’ under the Constitution;
  5. Levy of Integrated Goods and Services Tax on inter-State transactions of goods and services;
  6. GST to be levied on all goods and services, except alcoholic liquor for human consumption. Petroleum and petroleum products shall be subject to the levy of GST on a later date notified on the recommendation of the Goods and Services Tax Council;
  7. Compensation to the States for loss of revenue arising on account of implementation of the Goods and Services Tax for a period of five years;

Creation of Goods and Services Tax Council to examine issues relating to goods and services tax and make recommendations to the Union and the States on parameters like rates, taxes, cesses and surcharges to be subsumed, exemption list and threshold limits, Model GST laws, etc. The Council shall function under the Chairmanship of the Union Finance Minister and will have all the State Governments as Members.

Merger of Plan and Non-Plan classification in Budget and Accounts

  • The Union Cabinet approved the proposal to do away with the Plan and Non-Plan expenditure classification from 2017-18 and replace with ‘capital and receipt’.
  • The relevance of plan and non-plan expenditure was lost after the abolition of the Planning Commission. However Budget will continue earmarking funds for Scheduled Castes Sub-Plan/Tribal Sub-Plan and similarly, the allocations for North Eastern States.
  • The distinction between plan and non-plan expenditure in budgetary system was brought in when the country adopted a plan model of economic growth.
  • Now that Planning Commission is gone, its relevance is a big question mark.

Background:

  • Plan expenditure, originally meant as development expenditure, is spent on government programmes and flagship schemes.
  • Non-Plan expenditure includes spending on defence, subsidies and devolution to states.
  • In 1998-99, the then finance minister had advocated the elimination of Plan and non-Plan distinction.

Ponzi schemes not under our purview: SEBI

  • The Securities and Exchange Board of India (SEBI) has denied any regulatory purview over ponzi schemes, squarely placing the responsibility of protecting investors on State governments.

Background:

  • This was clarified by the SEBI while responding to the Supreme Court’s poser as to what the government and the market regulator were doing to check the “menace” of schemes running across the country in various forms which robbed the poor and small investors of their hard-earned money.
  • Ponzi schemes are banned under the Prize Chit and Money Circulation (Banning) Act, 1978and the State government concerned is the enforcement agency. Though it is a Central Act, the respective State governments are the enforcement agency of this law.

What are Ponzi Schemes?

  • A Ponzi can be any scheme in which the returns to promised to older investors are paid from the money collected from new investors, and not actual profits from the investments. Ponzi schemes were named after Charles Ponzi, a clerk in Boston who, almost a century ago, duped thousands of investors into speculating on phenomenal returns from the humble postage stamp.
  • Those running a Ponzi scheme reel in their first set of investors by introducing them to a great opportunity. They may even pay up the fanciful returns out of their personal funds. But once investors begin to bite, they build a house of cards, using money from the stream of new entrants, to pay the older patrons.

Even if profits are made from the investments, more often than not, the scheme operators siphon it off to private accounts. As long as new investors are willing to sign up, the Ponzi scheme works. But when the flow of fresh money dwindles, the house of cards collapses.

Sachet

  • The RBI, in line with its efforts to curb illegal and unauthorised pooling of funds by unscrupulous firms, has launched a website – Sachet.
  • The step aims at helping people get information about legalised entities, who are allowed to collect public deposits/ provide investment management services, entities barred from doing so, besides receiving on-the-ground information on illegal entities. (Source: Business Standard)

 

Amitabh Kant committee set up to review FDI, e-commerce rules

  • The government has decided to set up a committee to look into all issues including foreign direct investment norms pertaining to the fast-growing e-commerce industry in the country.
  • The committee will be headed by the NITI Aayog CEO, Amitabh Kant.
  • The Department of Industrial Policy and Promotion (DIPP) has allowed 100 per cent FDI through automatic route in the marketplace format of e-commerce retailing in March.

Cabinet nod for changes to FDI regulations in NBFCs

  • The Cabinet has approved a proposal to amend rules for foreign investment in non-banking finance companies (NBFCs).

New norms:

  • Foreign investment in ‘other financial services’ that are not regulated by any regulators or by a government agency can be made via the approval route.
  • Minimum capitalisation norms as mandated under FDI policy have been eliminated as most of the regulators have already fixed minimum capitalisation norms.

 

Background:

  • The present regulations on NBFCs stipulates that FDI would be allowed on automatic route for only 18 specified NBFC activities after fulfilling prescribed minimum capitalisation norms mentioned therein.

NBFCs:

  • Non-bank financial companies (NBFCs) are financial institutions that provide banking services without meeting the legal definition of a bank, i.e. one that does not hold a banking license.
  • These institutions typically are restricted from taking deposits from the public depending on the jurisdiction. Nonetheless, operations of these institutions are often still covered under a country’s banking regulations.
  • The Reserve Bank of India is entrusted with the responsibility of regulating and supervising the Non-Banking Financial Companies by virtue of powers vested under Reserve Bank of India Act, 1934.
  • NBFCs lend and make investments and hence their activities are akin to that of banks; however there are a few differences as given below:
  • NBFC cannot accept demand deposits.
  • NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself.
  • Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.

Centre may ease regulatory norms for Exim Bank, ECGC

  • The Commerce Ministry will this week consider measures to strengthen state-owned export promotion firms — Exim Bank and Export Credit Guarantee Corporation (ECGC), including freeing them from strict regulatory norms to help boost exports, official sources said.
  • Exim Bank is India’s premier export finance institution, while ECGC provides credit risk insurance cover for Indian exporters and offers overseas investment insurance to Indian companies.

About EXIM bank:

  • Established in 1982 under the Export-Import Bank of India Act 1981.
  • Since its inception, Exim Bank of India has been both a catalyst and a key player in the promotion of cross border trade and investment.
  • Over the period, it has evolved into an institution that plays a major role in partnering Indian industries, particularly the Small and Medium Enterprises, in their globalisation efforts, through a wide range of products and services offered at all stages of the business cycle, starting from import of technology and export product development to export production, export marketing, pre-shipment and post-shipment and overseas investment.

About ECGC:

  • A company wholly owned by the Government of India. It provides export credit insurance support to Indian exporters and is controlled by the Ministry of Commerce.
  • Government of India had initially set up Export Risks Insurance Corporation (ERIC) in July 1957. It was transformed into Export Credit and Guarantee Corporation Limited (ECGC) in 1964 and to Export Credit Guarantee Corporation of India in 1983.

Functions:

  • Provides a range of credit risk insurance covers to exporters against loss in export of goods and services as well.
  • Offers guarantees to banks and financial institutions to enable exporters to obtain better facilities from them.

Provides Overseas Investment Insurance to Indian companies investing in joint ventures abroad in the form of equity or loan and advances.

Provide loans to women SHGs at 7 per cent: RBI to banks

§  The Reserve Bank has asked banks to provide loans to women self-help groups (SHGs) at 7% per annum, as per the government’s revised guidelines for 2016-17.

§  All women SHGs are eligible for interest subvention on credit up to Rs 3 lakh at 7% per annum under Deendayal Antyodaya Yojana-National Rural Livelihoods Mission.

 

Deen Dayal Antyodaya Yojana – NRLM:

  • Aajeevika – National Rural Livelihoods Mission (NRLM) was launched by the Ministry of Rural Development (MoRD) in June 2011. Aided in part through investment support by the World Bank, the Mission aims at creating efficient and effective institutional platforms of the rural poor, enabling them to increase household income through sustainable livelihood enhancements and improved access to financial services.
  • Under the scheme, the poor would be facilitated to achieve increased access to rights, entitlements and public services, diversified risk and better social indicators of empowerment.
  • In November 2015, the program was renamed Deen Dayal Antayodaya Yojana (DAY-NRLM).

 

Banks to issue Masala bonds, RBI opens currency markets

§  The Reserve Bank of India has announced a slew of debt market reforms to simplify participation and enhance liquidity, besides allowing the use of newly-introduced instruments such as Masala Bonds. The measures accept many of the recommendations made by HR Khan Committee.

Masala Bond:

  • Masala bond is a term used to refer to a financial instrument through which Indian entities can raise money from overseas markets in the rupee, not foreign currency. These are Indian rupee denominated bonds issued in offshore capital markets.

India Post Payments Bank Incorporated

  • The India Post Payments Bank Limited has received the Certificate of Incorporation from the Registrar of Companies, Ministry of Corporate Affairs yesterday under the Companies Act 2013.
  • This would be the first PSU under the Department of Posts. This has happened in the wake of Prime Minister Shri Narendra Modi’s Independence Day address, raising the expectations of the people from the soon to be set up India Post Payments Bank. With this move the Department of Posts has cleared an important milestone on this journey. 
  • With the incorporation, the Board of the India Post Payments Bank Limited is likely to be constituted soon. The incorporation of the IPPB Ltd is a significant step forward as this also paves the way for the bank to begin hiring of banking professionals to set up the bank and begin its operations in 2017. The Department of Posts is expected to complete the roll out of its branches all over the country by September 2017. This could be the fastest roll out for a bank anywhere in the world. 
  • The aspiration for the India Post Payments Bank is to become the most accessible bank in the world riding on state of the art banking and payments technology. Coupled with the physical presence across 1.55 lakh post offices and the reach of “The Dakiya”, the India Post Payments Bank aims to become a powerful and effective vehicle of real financial inclusion in the country. It is poised to create a national payments architecture riding on a modern payments platform and ubiquitous information and communication technologies that can be accessed by all users and service providers like never before. The stakeholders of the India Post Payments Bank within the Government and outside are looking at this new entity as a catalyst to social and financial inclusion.

What is Unified Payment Interface?

What is UPI and what can a user do with the app?

  • UPI is a payment system that allows money transfer between any two bank accounts by using a smartphone.
  • UPI allows a customer to pay directly from a bank account to different merchants, both online and offline, without the hassle of typing credit card details, IFSC code, or net banking/wallet passwords.

How can one download the UPI app?

  • The UPI app of 19 banks — Andhra Bank, Axis Bank, Bank of Maharashtra, Bhartiya Mahila Bank, Canara Bank, Catholic Syrian Bank, DCB Bank, Federal Bank, ICICI Bank, TJSB Sahakari Bank, Oriental Bank of Commerce, Karnataka Bank, UCO Bank, Union Bank of India, United Bank of India, Punjab National Bank, South Indian Bank, Vijaya Bank and YES Bank — will be available on the Google Play Store of Android phones in the next few days for customers to download.

Steps to get started with UPI

  • Download the app from Play Store and install in phone; 2. Set app login; 3. Create virtual address; 4. Add your bank account; 5. Set M-Pin; and 6. Start transacting using UPI

How safe is UPI?

  • It is safe as the customers only share a virtual address and provide no other sensitive information.

What kind transactions can be performed via UPI?

  • Merchant payments, remittances, bill payments among others.

Is there a per transaction limit?

  • The per transaction limit is Rs.1 lakh.

How exactly does one make a payment transaction?

  • A user can make an in-app payment for goods or services purchased online.
  • For instance a site allows purchase of a movie-on-demand.

User clicks buy, the site/app triggers the UPI payment link and is taken to the pay screen of the UPI app, where the transaction information is verified and a click followed by entry of a secure PIN completes the purchase.

Project Development Fund

  • The Union Cabinet has given its approval to create a Project Development Fund (PDF) for catalysing Indian economic presence in the Cambodia, Laos Myanmar and Vietnam.

Details:

  • The fund will be established with a corpus of Rs 500 Crore.
  • It shall be housed in Department of Commerceand operated through the EXIM Bank.
  • It shall be governed by an Inter-Ministerial Committee under the chairpersonship of the Commerce Secretary.

About the fund:

  • CLMV countries namely Cambodia, Laos, Myanmar and Vietnamhave a unique position in the regional value chains and offer a gateway for market access to China/EU and other markets due to various trade agreements.
  • The key advantage of positioning India on the regional value chains is securing on a long term basis, a dedicated market for Indian raw materials and intermediate goods besides a dedicated source for inputs and raw materials for Indian industry.
  • While opportunities are a plenty in CLMV region, Indian entrepreneurs’ endeavors in these countries have, thus far, been limited due to limited information, infrastructure and other contingent risks.
  • The PDF shall benefit India’s industrial community for business expansion, and to maintain cost competitive supply chains, besides integrating with global production networks.

Jains have highest percentage of literates: Census 2011

  • Census 2011 data on ‘education level by religious community for age 7 and above’ was recently released.

 About the Published data:

  • Jains have the highest percentage of literates above 7 years of age among India’s religious communities, with 86.73% of them as literate and only 13.57% as illiterate.
  • Muslims have the highest percentage of illiterates aged beyond 7 years at 42.72%, as compared to 36.40% among Hindus, 32.49% among Sikhs, 28.17% among Buddhists and 25.66% among Christians.
  • Other minority communities score over both Hindus and Muslims in literacy levels. As compared to 63.60% of 7 years-plus Hindus and 57.28% Muslims in the ‘literate’ category, the percentage of literates among Christians is 74.34%, among Buddhists 71.83% and among Sikhs 67.51%.

Incorporation of Sagarmala Development Company

  • As part of the efforts to promote port-led development in the country, the Sagarmala Development Company (SDC) has been incorporated under the Companies Act, 2013.

 All About it:

  • SDC will be under the administrative control of the Ministry of Shipping.
  • It will have an initial Authorized Share Capital of Rs. 1,000 Crore and a Subscribed Share Capital of Rs. 90 Crore.
  • SDC will Identify port-led development projects and assist the project SPVs in project development and structuring activities, bidding out projects for private sector participation, putting in place suitable risk management measures for strategic projects cutting across multiple States / Regions and obtaining requisite approvals and clearances.
  • Since the Identified projects will be undertaken by multiple agencies, SDC will also work as the nodal agency for coordination and monitoringof all the currently identified projects as well as other projects emerging from the master plans or other sources.
  • SDC will undertake the preparation of the detailed master plans for the Coastal Economic Zones (CEZs) identified as part of the NPP and provide a framework for ensuring the integrated development of Indian maritime sector.
  • Other important role assigned to SDC is to manage the coastal community development scheme and fund coastal community development projects identified under the Sagarmala Programme. The projects considered would be specific time-bound local interventions and innovative in nature.
  • It will also be raising funds as debt/equity (as long term capital), as per the project requirements/ by leveraging resources provided by the Government of India and from multi-lateral and bilateral funding agencies. SDC will also aim to increase the scope of private sector participation in project development.

Background:

The Cabinet in July had approved the formation of the SDC. The incorporation of SDC is part of the ambitious Sagarmala Programme by the Government of India. The concept of the Sagarmala Programme was approved by the Cabinet in March 2015.

Sagarmala Initiative:

The Sagarmala project seeks to develop a string of ports around India’s coast. The objective of this initiative is to promote “Port-led development” along India’s 7500 km long coastline.

  • It aims to develop access to new development regions with intermodal solutions and promotion of the optimum modal split, enhanced connectivity with main economic centres and beyond through expansion of rail, inland water, coastal and road services.
  • The Union Ministry of Shipping has been appointed as the nodal ministry for this initiative.

 Other objectives:

  • In addition to strengthening port and evacuation infrastructure, it also aims at simplifying procedures used at ports for cargo movement and promotes usage of electronic channels for information exchange leading to quick, efficient, hassle-free and seamless cargo movement.
  • It also strives to ensure sustainable development of the population living in the Coastal Economic Zone (CEZ). This would be done by synergising and coordinating with State Governments and line Ministries of Central Government through their existing schemes and programmes such as those related to community and rural development, tribal development and employment generation, fisheries, skill development, tourism promotion etc.

Exchange of Tariff concessions under the Fourth Round of Negotiations APTA

  • The Union Cabinet has approved the exchange of tariff concessions, on Margin of Preference basis, under the Fourth Round of Negotiations under the Asia Pacific Trade Agreementand related amendments.

Details:

  • The Cabinet has approved India’s offer 28.01% of dutiable national tariff lines with an average MoP of 33.45%. This will deepen the concessions being offered under this Agreement.
  • Approval was also given to amend the preamble of APTA to effect accession of Mongolia as the 7th APTA Participating State.
  • Other amendments to incorporate the Sectoral Rule of Origin to the Agreement were also approved.
  • The Fourth Session of the Ministerial Council of APTA, which is scheduled to be held shortly, will formally implement all the above decisions.

 About Asia Pacific Trade Agreement (APTA):

  • The Asia Pacific Trade Agreement or APTA (formerly the Bangkok Agreement) is an initiative under the United Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP) for trade expansion through exchange of tariff concessions among developing country members of the Asia Pacific Region.
  • The current membership of APTA consists of six countries or Participating States (PSs), namely, Bangladesh, China, India, Lao PDR, Republic of Korea, and Sri Lanka.
  • Since this is a preferential trade agreement, the basket of items as well as extent of tariff concessions are enlarged during the trade negotiating rounds which are launched from time to time. Till date, three rounds of trade negotiations have taken place.

Cabinet approves establishment of Higher Education Financing Agency

  • The Union Cabinet has approved the creation of theHigher Education Financing Agency (HEFA) to give a major push for creation of high quality infrastructure in premier educational institutions.

Details:

  • The HEFA would be jointly promoted by the identified Promoter and the Ministry of Human Resource Development (MHRD).
  • The HEFA would be formed as a SPV within a PSU Bank/ Government-owned-NBFC (Promoter).
  • The HEFA would also mobilise CSR funds from PSUs/Corporates, which would in turn be released for promoting research and innovation in these institutions on grant basis.
  • The HEFA would finance the civil and lab infrastructure projects through a 10-year loan. The principal portion of the loan will be repaid through the ‘internal accruals’ (earned through the fee receipts, research earnings etc) of the institutions. The Government would service the interest portion through the regular Plan assistance.

All the Centrally Funded Higher Educational Institutions would be eligible for joining as members of the HEFA. For joining as members, the Institution should agree to escrow a specific amount from their internal accruals to HEFA for a period of 10 years. This secured future flows would be securitised by the HEFA for mobilising the funds from the market. Each member institution would be eligible for a credit limit as decided by HEFA based on the amount agreed to be escrowed from the internal accruals.

Project SAKSHAM

  • Project Saksham, a new indirect tax network of the Central Board of Excise and Customs (CBEC), has been approved by the Cabinet Committee on Economic Affairs (CCEA).

About the project:

  • Under the project, the CBEC’s existing IT systems will be integrated with the GST Network. This is required for processing of registration, payment and returns data sent by GSTN systems to CBEC, as well as act as a front-end for other modules such as audit, appeals, investigation.
  • The exercise is also expected to help the indirect tax department cater to the larger number of taxpayers when GST rolls out from April 1, 2017. According to official estimates, the number of taxpayers under various indirect tax laws administered by CBEC is about 36 lakh at present, and will nearly double to 65 lakh after the introduction of GST.
  • It will also help in implementation of GST, extension of the Indian Customs Single Window Interface for Facilitating Trade and other taxpayer-friendly initiatives under Digital India and ease of doing business.

ICICI Bank: First bank to introduce Software Robotics for power banking operations

  • India’s largest private sector bank ICICI Bank has successfully deployed ‘Software Robotics’ for power banking operations.
  • With this, it becomes first bank in the country and among few globally to deploy ‘Software Robotics’.
  • ICICI Bank has deployed Software Robotics to over 200 business processes across various functions.
  • The 200 business processes include retail banking operations, agri-business, trade & foreign exchange, treasury and human resources management, among others

Some Facts:

  • In banking, software robotics emulates human actions to automate and perform repetitive, high volume and time consuming business tasks cutting across multiple applications.
  • It leverages recent advancements in artificial intelligence such as facial and voice recognition, machine learning, natural language processing, and bots among others.
  • The software robots can perform over 10 lakh (1 million) banking transactions every working day.
  • The software robots at ICICI Bank are configured to capture and interpret information from systems, recognize patterns and run business processes across multiple applications.
  • Besides, it can execute activities including data entry and validation, automated formatting, workflow acceleration, multi-format message creation, text mining, reconciliations and currency exchange rate processing among others.
  • The software robots help to bring operational efficiency, higher accuracy and a massive reduction in processing time for customer services.

It will help ICICI Bank to cut response time to customers by 60 per cent and increase accuracy to 100 per cent.

Canada to apply to join China-backed AIIB

  • Canada is all set to join the China-backed Asian Infrastructure Investment Bank. In this regard, Canada will submit its application by the end of September 2016.

 About AIIB- Key facts:

  • The AIIB was established as a new multilateral financial institution aimed at providing “financial support for infrastructure development and regional connectivity in Asia.”
  • It was founded in October, 2014, and will have its headquarters in Beijing.
  • Its goals are also to boost economic development in the region, create wealth, prove infrastructure, and promote regional cooperation and partnership.
  • The value of AIIB’s authorized capital amounts to $100 billion, with almost $30 billion invested by China.

The bank expects to lend $10 billion to $15 billion a year for the first five years of its operations, beginning in the second quarter of 2016.

World’s largest solar power plant

  • The ‘world’s largest solar power plant’ with an installed capacity of 648 MW has been commissioned at Kamudhi in Ramanathapuram district of Tamil Nadu.
  • It is set up by Adani Group.
  • The plant comprises 3.8 lakh foundations, 25 lakh solar modules, 27,000m of structure, 576 inverters, 154 transformers and 6,000km length of cables.

Sports Sector Gets the Infrastructure Status

  • Sports infrastructure will be included under the Harmonized Master List of Infrastructure Subsectors.
  • This is mainly aimed at addressing the issue of deficit of sports infrastructure in the country.
  • The sports sector now becomes eligible for obtaining long term financial support from banks and other financial institutions on the same principle as is available to other infrastructure projects.
  • This inclusion would encourage private investment in a public good which has socio-economic externalities in a country with young population.
  • It will also bolster investment in sports infrastructure sector which will contribute to the economy and help in promotion of health and fitness of the people of this country as also provide opportunities for employment in the new and exciting sectors.

SC/ST hub

  • National SC/ST hub has been setup to facilitate things to people from SC/ST categories to start their own micro, small and medium enterprises (MSME) units. The government has set an initial budget outlay of Rs. 490 Crores for the National SC/ST hub.
  • The Hub will work towards strengthening market access/linkage, monitoring, capacity building, leveraging financial support schemes and sharing industry-best practices for entrepreneurs belonging to the SC/ST categories. The hub will also enable central public sector enterprises to fulfill the procurement target set by the government.
  • Under the scheme, the nationalized banks will provide loans to SC/ST men and women entrepreneurs up to Rs. 1 Crore to make them self dependent and employ the youth.
  • The SC/ST hub will further help in increasing the contributions of MSME sector to India’s GDP which is about 38% at present. The MSME sector employs about 11 Crore people at present. The announcement of setting up the National SC/ST hub was made by the finance minister Shri Arun Jaitly in his budget speech of 2016-17.
  • The scheme will be implemented by the Ministry of Micro, Small and Medium Enterprises. 

ZED scheme

  • ZED or Zero Defect, Zero Effect scheme is a new initiative launched by the Central government.
  • The scheme is for MSME (Micro, Small and Medium Enterprises) Sector to increase the quality of products matching global standards.

 

ZED (Zero Defect, Zero Effect) Scheme

  • The main objective of ZED (Zero Effect, Zero Defect) scheme is to reduce the bad effect of products on environment. While MSME sector plays a big role in the GDP of India, the scheme will help contribute to environment as well.
  • Under the scheme, MSME sector is urged to make products with “Zero Defect” and “Zero Effect” on the environment, thus improving the brand image of the country. The prime minister also asked the MSME sector to make products at par with global standards.
  • Under the scheme, the MSME companies which follows the guidelines and meet the standards set by the ZED will be awarded ZED certification along with several benefits.

Benefits of ZED certification

  • Credible recognition of the industry for international customers seeking investment in India
  • Streamlined operations and lower costs
  • Superior quality, reduced rejection and higher revenues
  • Increased environmental & social benefits
  • Additional employment generation
  • Other benefits as announced by the Government from time to time

DBT in kerosene

  • Jharkhand has become the first state in the country to implement Direct Benefit Transfer (DBT) in Kerosene in four identified districts namely, Chatra, Hazaribagh, Khunti and Jantara from 1st October, 2016.
  • Under the DBTK Scheme, PDS kerosene is being sold at non-subsidised price, and, subsidy, as admissible, is being transferred to consumers directly into their bank accounts.

This initiative of the governments is aimed at rationalising subsidy, based on the approach to cut subsidy leakages but not subsidy per se.

India’s first international arbitration centre

The Mumbai Centre for International Arbitration (MCIA), India’s first international arbitration centre, was recently inaugurated in Mumbai.

  • This is being seen as a major step towards making Mumbai an International Financial Services Centre (IFSC) and providing an arbitration platform for Indian business houses to negotiate commercial disputes.

Mumbai Centre for International Arbitration:

  • The MCIA will be an independent, not-for-profit organisation governed by a council comprising eminent national and international legal luminaries.
  • It can resolve disputes between different companies or individual.

It will have a 12-month timeline to complete arbitration seated in India and a prescribed fee structure as per the size of the disputed contract amount, which will enable both parties to know the cost of arbitral proceedings before they approach MCIA.

Cabinet approves revision of ethanol price

  • The Cabinet Committee on Economic Affairs has approved the mechanism for revision of ethanol price for supply to Public Sector Oil Marketing Companies (OMCs) to carry out the Ethanol Blended Petrol (EBP) Programme.

Background:

  • Ethanol Blended Petrol (EBP) Programme was launched by the Government in 2003 which has been extended to the Notified 21 States and 4 Union Territories to promote the use of alternative and environment friendly fuels.

This intervention also sought to reduce import dependency for energy requirements.

Life expectancy highest in Jammu and Kashmir: RGI Data

  • According to the data given by the Registrar General of India (RGI), Jammu and Kashmir has the highest life expectancy (i.e. post-60 life expectancy), except life expectancy at birth. With this, Jammu and Kashmir has surpassed Kerala which used to be the leader in life expectancy in almost all categories of age till 2010.

What is data about?

  • RGI’s Sample Registration System (SRS) had published state level life expectancy data prepared following surveys done between 2010 and 2014.
  • The data was released for different ages: 0 (at birth), 1, 5, 10, 20, 30, 40, 50, 60 and 70. It had defined life expectancy as estimate of average number of additional years that a person of a given age can expect to live.
  • However this statistical system was confined only to 21 bigger states and UTs and it did not produce life expectancy numbers on 15 small states and UTs such as Arunachal Pradesh, Lakshadweep.

Key Facts:

  • The data shows that Kerala still has the highest overall life expectancy at birth at 74.9 years. It is 72 for men and 77.8 for women.
  • Delhi is second, with an overall life expectancy at birth at 73.2 years. It is 72 for men and 74.7 for women.
  • Jammu and Kashmir stands at third and it had the second-highest life expectancy at birth. It is behind only Kerala even during 2006-10.

Haryana tops the list amid national trend of worsening sex ratio at birth

  • The sex ratio at birth for the country has worsened by 3 points to 906 in 2012-2014 from 909 in 2011-13, shows the latest Sample Registration System (SRS) Statistical report 2014.

Sex ratio:

  • The number of female live births per 1,000 male live births.

About the Study”

  • The data shows that the worsening of sex ratio in rural areas is faster than that in the urban areas.
  • Rapid urbanisation in rural areas is being cited as the main reason for the worsening sex ratio at birth.
  • In case of rural areas it has worsened to 907 in 2012-14 from 910 in 2011-13. While for urban areas it has reduced to 905 in 2012-14 from 906 in 2011-13.
  • “The rural sex ratio at birth is catching up faster to the urban sex ratio which is a cause of worry,”said Pronab Sen, former chairman of the National Statistical Commission.
  • The ideal sex ratio at birth is 960 female live births per 1,000 male live births. A sex ratio of 907—as in the case of rural areas—essentially means that 53 girl children are being aborted. Hence, there will be 53 less females available per 100 male counterparts.
  • For the period 2012-14, Kerala has reported the highest sex ratio at birth (974), while Haryana, the lowest (866).While for the period 2011-13,Chhatisgarh reported highest sex ratio at birth (970), while Haryana, the lowest (864).
  • An interesting finding from these results is that tribal areas have a good sex ratio at birth as they are not bound by any social stigma.

Also it has been found that the sex ratio among the Muslims is better than the Hindus.

Why the 2016 economics Nobel for contract theory really matters

  • The decision to award the Nobel Prize in economics this year to Oliver Hart and Bengt Holmstrom for their work in contract theory is further proof that some of the best work in economics is being done to understand the rules of the game—and the contracts that determine our actions in the real world.
  • Most of us sign contracts. Why do we do so? Take the contracts we enter into with our employers, for example. There are two main reasons.
  • First, a contract helps the two sides of the deal work together over a long period of time. Think of what would happen if each company would have to search for new employees at the start of every day, or vice versa.
  • Second, the contract creates rules that allow agents with different interests to cooperate to achieve some goal. No market economy can work without such cooperation premised on trust but also backed by the law. How contracts are designed defines our incentives in various situations in the real world.
  • There are various nuances in our contracts. They could be formal or informal, depending on whether they are enforced by law or social norms. They could be complete or incomplete, which is based on whether they take into account all possibilities that lay in the future.
  • One side of a contract may know more than the other because of information asymmetry, so insurance companies, for example, may end up covering people with health problems rather than the healthy, through what is called adverse selection.
  • There are also agency problems—as when managers who are under contract with shareholders actually try to maximize their own earnings rather than those of their shareholders.

Why does it matter:

  • Contract theory helps us understand these problems. And helps us solve them through better contract design.

Take a simple informal contract.

  • A harried mother has to leave the house for a couple of hours. She is worried her two children will bring the house down by fighting over a large piece of cake in the refrigerator.
  • The mother leaves a simple instruction—the elder child will cut the cake while the younger one will choose which piece to eat. Now, the elder child cannot cheat. The mother has aligned their interests—or achieved incentive compatibility—through an informal contract.
  • Contract theory is not just about such parlour games. In two landmark papers written in 1979 and 1991, Holmstrom provided the principles that can help companies draw up contracts to ensure that managers do not sacrifice the long-term health of the firm in pursuit of bonuses linked to short-term performance.
  • This was precisely the problem in Wall Street before the 2008 financial crisis — investment bankers took excess risks to earn their annual bonuses while those very risky bets almost destroyed the financial system.
  • Hart has similarly written seminal papers on using contract theory in mergers, acquisitions, corporate ownership and vertical integration. One of his most cited papers was written with Sandy Grossman in 1986. Once again, think of the recent controversy over the non-compete clause for Analjit Singh in the merger between HDFC Life and Max Life. There is contract theory at work again here.
  • It is with good reason that the Royal Swedish Academy of Sciences has said on the official Nobel website: “The contributions by the laureates have helped us understand many of the contracts we observe in real life. They have also given us new ways of thinking about how contracts should be designed, both in private markets and in the realm of public policy.” The use of contract theory in public policy is something that the Indian government needs to learn, be it the design of telecom auctions or the public distribution system.

The fact that the 2016 Nobel Prize in economics has gone to two giants of contract theory tells us something else as well. Most of the public attention is lavished on macroeconomics and the related dark art of forecasting. This is where the crisis of economics is the deepest.

What’s Blockchain technology? Explained

  • ICICI Bank announced that it has successfully executed transactions in international trade finance and remittances using blockchain technology in partnership with a Dubai based bank Emirates NBD.

What is blockchain technology?

  • A blockchain is an anonymous online ledger that uses data structure to simplify the way we transact. Blockchain allows users to manipulate the ledger in a secure way without the help of a third party.
  • A bank’s ledger is connected to a centralised network. However, a blockchain is anonymous, protecting the identities of the users. This makes blockchain more secure to carry transactions.
  • The algorithm used in blockchain reduces the dependence on people to verify the transactions. The technology used for recording transactions has the potential to disrupt the financial system.

How it works?

  • According to Sunny Ray, Co-founder and President of India’s leading bitcoin blockchain company, Unocoin, “blockchain enables two entities that do not know each other to agree that something is true without the need of a third party. As opposed to writing entries into a single sheet of paper, a blockchain is a distributed database that takes a number of inputs and places them into a block. Each block is then ‘chained’ to the next block using a cryptographic signature. This allows blockchains to be used as a ledger which is accessible by anyone with permission to do so.  If everyone in the process is pre-selected, the ledger is termed ‘permissioned’. If the process is open to the whole world, the ledger is called unpermissioned.”

Why are banks interested?

  • All major banks are experimenting with blockchain as they can use it for money transfers, record keeping and other back-end functions.
  • The blockchain application replicates the paper-intensive international trade finance process as an electronic decentralised ledger, that gives all the participating entities, including banks, the ability to access a single source of information.
  • It also enables them to track documentation and authenticate ownership of assets digitally, as an un-alterable ledger in real time.
  • Indian IT service providers like Infosys and TCS have been throwing their weight around blockchain technology. Both these companies are using blockchain mechanism to create core banking platforms for banks.

Where can it be used?

  • Use of blockchain technology is not limited to the financial sector. It is being used in many other areas. For example, Honduras government has put all land records on a public ledger – the blockchain. The minute there is a change in ownership, it gets recorded publicly.
  • The Australian Securities Exchange (ASX) announced this year that it would move Australia’s equities clearing and settlement system on to blockchain
  • In October 2015, Nasdaq unveiled Linq, a solution enabling private companies to digitally represent share ownership using blockchain-based technology.

Is it safe?

  • The USP of blockchain is that it allows two parties to execute a transaction without any intermediary. Blockchain allows financial institutions to execute and verify transactions discretely without any human intervention.
  • The electronic ledger of transactions is continuously maintained and verified in ‘blocks’ of records.
  • With the help of cryptography, the tamper-proof ledger is shared between parties on computer servers.
  • Experts believe that blockchain architecture can significantly bring down the costs and reduce inefficiencies in the financial sector.

Extended Fund Facility (EFF) arrangement

  • The International Monetary Fund (IMF) Executive Board has completed the twelfth and final review of Pakistan’s three-year economic reform program supported by an Extended Fund Facility (EFF) arrangement. The Board’s decision enables the immediate disbursement of the final tranche in an amount equivalent to the SDR 73 million in the IMF currency or about $102.1 million. Even though India wanted to isolate Pakistan on international level, but there is no opposition from India side on this decision because is not big amount.

About Extended Fund Facility (EFF) arrangement:

  • The EFF was established to provide assistance to countries: (i) experiencing serious payments imbalances because of structural impediments; or (ii) characterized by slow growth and an inherently weak balance of payments position.
  • The EFF provides assistance in support of comprehensive programs that include policies of the scope and character required to correct structural imbalances over an extended period
  • It is an IMF lending facility to help members with balance of payments problems that need an adjustment period longer than that provided for under a standby arrangement.
  • A country requesting an extended fund facility outlines its objectives and policies for the period of the arrangement, usually about three years, and each year presents a detailed statement of the measures it plans over the next 12 months.
  • The Extended Fund Facility was created in 1974 to help the developing countries over longer periods (up to 3 years) than stand-by arrangements (12-18 months). Further, in this facility developing countries can borrow more than their quota. The loans taken under this facility can be paid back over a period of 4-10 years.

Analysis:

  • Under the extended fund facility, since developing countries can borrow to meet for long- term balance of payments difficulties stringent conditions are to be fulfilled for availing borrowing facility under this scheme. A country borrowing under this programme has to provide every year a detailed statement of measures and policies it has adopted to solve its balance of payments problems.
  • This facility represented an important and significant shift in emphasis from viewing the balance Of payments as a stabilization problem to recognizing the balance of payments as a fundamental long-term constraint on growth that cannot be rectified in a short period of time.
  • This is very important method of finance support by IMF for meeting balance of payments difficulties of developing countries. However in recent years other special facilities provided by IMF are being extensively used by the developing countries to tackle their problem arising from balance of payments.
  • EEF have a strong focus on structural reforms to address institutional or economic weaknesses, in addition to policies that maintain macroeconomic stability.

The EFF has flexibility in the frequency of reviews based on the strength of the country’s policies and the nature of its financing needs.

World Bank award for Almatti dam

  • Almatti dam, one of the largest reservoirs in Karnataka, was chosen for the World Bank’s Award of Excellence for best utilisation of funds for renovation to enhance the strength of the dam.
  • The World Bank had granted Rs.72 crore to the Krishna Bhagya Jal Nigam Limited to prevent seepage which could damage the dam.
  • The Almatti Dam is a hydroelectric project on the Krishna River at the Bagalkot district in North Karnataka.

CCEA gives nod to development of AUSC technology for thermal power plants:

  • The Cabinet Committee on Economic Affairs (CEEA) has given its approval for the development of Advanced Ultra Super Critical (AUSC) technology for thermal power plants.
  • In this regard, CCEA has approved a one-time grant of 900 crore rupees spread over three years for an R&D project for the development of AUSC technology for thermal power plants.
  • The project was proposed by a consortium of three government entities to reduce coal consumption as well as Carbon di-oxide (CO2) emission. They are Bharat Heavy Electricals Ltd (BHEL), Indira Gandhi Centre of Atomic Research (IGCAR) National Thermal Power Corporation (NTPC).

Key Facts

  • AUSC technology will enable Indian industries to design, manufacture and commission higher efficiency coal-fired power plants with indigenously developed technology.
  • This will be the first time large power plant equipment will be manufactured without any technological collaboration or licensing agreement with foreign companies.
  • Use of this technology in all future large coal-fired power plants will ensure energy security for the country for a longer period as well as greener environment.

Significance

  • Power generation from coal-fired power plants contributes to about 38% of CO2 pollution in the atmosphere.
  • AUSC technology which is still in research stage will help in 20% reduction in CO2 emission at source combined with 20% saving in coal consumption compared to sub-critical plants.

World’s first Indian green Masala bond

  • The National Thermal Power Corporation Limited (NTPC), an Indian public sector company, has recently listed the world’s first Indian green Masala bond on the London Stock Exchange (LSE).
  • With this, NTPC has become the first-ever Indian quasi-sovereign to issue a Masala bond on LSE.
  • The bond is Climate Bonds Initiative certified and will be listed on London Stock Exchange’s green bonds segment.
  • NTPC will invest the proceeds of the green Masala bond in the renewable energy market as it seeks to add more wind and solar power projects to its portfolio to support the Indian government’s ambition to

    generate 175GW of renewable energy by 2022.

  • NTPC Limited (previously known as National Thermal Power Corporation Limited) is an Indian PSU Public Sector Undertaking, engaged in the business of generation of electricity and allied activities.
  • It is a company incorporated under the Companies Act 1956 and a “Government Company” within the meaning of the act.
  • The headquarters of the company is situated at New Delhi.
  • NTPC’s core business is generation and sale of electricity to state-owned power distribution companies and State Electricity Boards in India.
  • The company also undertakes consultancy and turnkey project contracts that involve engineering, project management, construction management and operation and management of power plants.

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