In news

Union Education Minister Shri Ramesh Pokhriyal 'Nishank' virtually launched the 'KAPILA' campaign on the 89th birth anniversary of former President and Scientist Late Dr. APJ Abdul Kalam.

'KAPILA' Program

·         It will create appropriate awareness regarding the need of IP filing, mechanism and methodology involved in filing IP in India and globally, especially amongst students and faculty of higher education institutions.

·         The objective of KAPILA is to recognise, facilitate and felicitate the Intellectual Property, innovations and best practices in HEIs.

·         KAPILA will help in establishing the much required IP filing ecosystem in large number of education institutions and thus create a culture of systematically protecting new ideas, research and innovation having national and global relevance.

In News:

RoDTEP scheme will be extended to all export goods from Jan 1, 2021.The scheme will be detailed by the Department of Commerce, based on recommendation of the GK Pillai committee that are expected soon.

RoDTEP scheme:

·         This scheme was announced by Government of India (GOI) to boost exports by allowing reimbursement of taxes and duties, which are not exempted or refunded under any other scheme in accordance with WTO norms.

·         RoDTEP is a combination of the current Merchandise Export from India Scheme (MEIS) and Rebate of State and Central Taxes and Levies (RoSCTL).

·         At present, embedded duties and taxes, which are not refunded under any other scheme, range from 1-3%. Under the scheme, rebate of these taxes will be given in the form of duty credit/electronic scrip.

Key features

·         Remission of taxes/duties/levies: RoDTEP covers reimbursement of duties and taxes (such as mandi tax, VAT and central excise on fuel, etc.), which are levied at central, state and local level and are not refunded under any other mechanism. Further, items, which were currently under MEIS and RoSCTL schemes, will be shifted towards the RoDTEP scheme.

·         Scheme for all sectors: RoDTEP covers all sectors including textile. Further, a committee shall decide the sequence of introduction of the scheme across sectors, prioritisation of the sectors and degree of benefit to be given to various items.

·         Other important features include automated refund system and speedy clearance through digitalisation

In News

During the fiscal 2021-22, the Ministry of Corporate Affairs (MCA) will launch data analytics driven MCA21 Version 3.0.

About MCA21 Version 3.0

·         This is the first Mission Mode e-Governance project of Government of India and this Version will have additional modules for e-Adjudication, e-Consultation and Compliance Management.

·         It is envisioned to strengthen enforcement, promote Ease of Doing Business, enhance user experience, facilitate seamless integration and data exchange among Regulators.

·         The project will have Micro-services architecture with high scalability and capabilities for advanced analytics.

·         It is envisioned to transform the corporate regulatory environment in India.

·         The key components of MCA21 to be launched during Fiscal Year 2021-22 are:

o    e-Scrutiny

o    e-adjudication

o    e-Consultation

o    Compliance Management System (CMS)

o    MCA Lab to evaluate the effectiveness of CMS

Topic 3 - Stressed Asset Resolution by setting up a New Structure

In News

Finance minister announced an entity in the form of an asset reconstruction company/asset management company (commonly called a ‘Bad Bank’) would be set up. It would consolidate and take over the existing stressed debt and then manage and dispose of the assets to Alternate Investment Funds and other potential investors for eventual value realization.

Rationale behind the proposal

·         The pandemic-led lockdown, crimped earnings of businesses and individuals, impairing their ability to repay loans and potentially fuelling a jump in non-performing assets of banks.

·         Massive bad loans have made banks risk-averse and eroded their capacity to lend to help spur economic recovery, requiring lenders to set aside capital to cover those losses.

·         Banks will find it tough and exorbitantly expensive to raise capital from the market if the asset-quality trajectory remains uncertain, delaying and even jeopardizing, economic growth.

Potential Benefits

·         Such a mechanism helps a bank segregate its good assets from bad ones, enabling banks to get enough capital, which have been blocked thus fulfilling the capital requirement of the banks too.

·         By transferring sour loans to a bad bank, lenders can prioritize financing businesses, while letting a specialized institution focus on maximizing loan recovery.

·         Bad bank will enjoy scale efficiencies and bargaining power, even as coordination frictions are minimized and decision-making gets both centralized and faster. These factors will add significantly to the quality of resolution and the quantity of recovery.

·         Creation of bad bank would unburden PSBs swiftly as Insolvency and Bankruptcy Code (IBC) process takes an average of 340 days for resolution. This long resolution period amplifies the second-order effects of stressed assets and resolution uncertainty tends to turn banks risk averse.

Concerns that have been raised

·         Existing system already there: There exist several private asset reconstruction firms that buy bad loans at a discount. Also, the Bankruptcy Code, though not perfect, has helped in higher recoveries.

·         Moral Hazard: It may lead to banks and financial institutions taking rash decisions and undue risks. This may lead to an accumulation of new bad assets causing further financial turpitude.

·         Not addressing the issue of new NPAs: The proposed bad bank is focusses with reducing the NPA stock, which is a much lesser problem, rather than contain additions or flow, which is a bigger problem.

Challenges related to bad bank

·         Capital implications for banks: Unlike earlier days, any new ARC will need deep pockets since the RBI rules mandate that 90% of the consideration amount should be paid in cash. Banks will have to shoulder this burden and operate the entity.

·         Lack of market for NPAs leading to lower value realisations: India does not have a securitisation market and number of market participants is not wide enough to allow sufficient price-discovery.

·         Management and issue of governance: The decisions taken by these officials will be under scrutiny from the government’s vigilance arm and the CBI leading to the paralysis in decision making.

How can present proposal meet these challenges?

·         With the proposed bad bank being set up, the valuation issue is unlikely to come up since this is a government initiative which itself be working for value maximisation.

·         Once the industry bad loans are aggregated in one entity, the existing ARCs can negotiate deals with that bad bank directly, reducing unnecessary delays and cost overruns in dealing with multiple lenders.

·         Government-backed ARC will have deep pockets to buy out big accounts and thus free up banks from carrying these accounts on their books.

·         Funding and capital requirements: Being a government initiative, the RBI is likely to extend certain rule relaxations in provisioning norms for banks on assets sold to an ARC and with respect to the requirement of 15 percent capital payment. Since banks have already made significant provisions, the capital burden on banks will not be huge.

In News

While making a fresh move towards lateral induction of domain experts and technocrats into the bureaucracy, the UPSC has sought applications from “motivated Indian nationals” for 30 different posts of joint secretary and director across various ministries and departments.

What is lateral entry?

The term lateral entry is used to refer to appointment of specialists, particularly from the private sector in government organisations. The objective behind lateral entry is to include individuals with expertise in revenue, financial services, economic affairs, renewable energy, civil aviation, environment, etc. Lateral entry is intended to resolve three structural issues of shortage of personnels, lack of specialisation and infusion of energy and new ideas.

The rationale behind lateral entry

●        Bring in expertise and domain expertise - The career progression of civil servants is such that there is not much scope to develop domain expertise.

●        Shortage of Personnel - The Lok Sabha informed in 2019, that there is a shortage of nearly 1,500 IAS officers. The foreign ministry has fewer diplomats to service India’s global ambitions than Singapore. Increase in annual recruitment and promotions has also not been sufficient to address the shortage of personnel.

●        Participatory governance - As governance in the 21st century gets increasingly complicated there is a need to include non-governmental organizations and private sector participation in the governance of the country.

Issues involved

●        Addressing political and social realities - The government is among the truly diverse and representative employers in the country. It not only helps the disadvantaged access opportunities but also lends systemic stability by giving different social groups a sense that they have a stake in the Indian state. Diversity has to remain an important principle in lateral entries as well.

●        Lateral entrants may succumb to political pressure - The fact that Indian bureaucrats have come through an independent system and will remain in office irrespective of the political regime insulates them to some extent, from undue pressure. If lateral entry becomes a way for only those politically and ideologically committed to the regime to stay in power then the exercise will be undermined.

Previous commissions that have recommended lateral entry

●        First Administrative Reforms Commission - The need for specialisation was first pointed out as far back as 1965 by the first Administrative Reforms Commission.

●        Surinder Nath Committee - In its 2003 report, the committee stressed the idea for domain expertise of bureaucrats, suggesting that assigning particular domains to the officers should be a key step for their selection to the Central staffing scheme posts.

●        Hota Committee - The Hota committee (2004) recommended that empanelment and posting of joint secretaries, additional secretaries and secretaries should be carried out through domain assignment, competitive selection and matching of available skills with the job requirements.

●        Second Administrative Reforms Commission - In its tenth report, Refurbishing of Personnel Administration, the ARC recommended that at higher levels of government, lateral entry from the private sector should be introduced to encourage competition for the selected posts.

Way ahead

●        The Second ARC’s recommendation of an institutionalised and transparent process for lateral entry at both the Central and the state levels have so far gone unheeded. This is the first step that needs to be addressed.

●        The ARC had also recommended creating a senior management or leadership pool in the government through two mechanisms. One of which would be to open up the senior management cadre to all existing services. The other stream it suggested was through lateral entry by opening the senior management cadre to aspirants from the private sector who would bring new skills into government.

·         It is an intelligence alliance comprising Australia, Canada, New Zealand, the United Kingdom and the United States.

·         These countries are parties to the multilateral UK-USA Agreement, a treaty for joint cooperation in signals intelligence.

·         Recently, Five Eye Nations along with Japan and India backed a campaign against end-to-end encryption of messages by social media giants such as Facebook, which they say hinder law enforcement by blocking all access to them.

·   It was set up by the Ministry of Labour, Government of India (GOI) on 4th March, 1966 to generate, develop and sustain a voluntary movement on Safety, Health and Environment (SHE) at the national level.

·       It is an apex not-for-profit making tripartite body, registered under the Societies Registration Act, 1860 and the Bombay Public Trust Act, 1950.

·       The Council will now play a major role in ensuring safety in workplaces under the New Occupational Health Safety, Health and Working Conditions Code, 2020.

·         Ministry of Education (MoE), Govt. of India has established ‘MoE’s Innovation Cell (MIC)’ to systematically foster the culture of Innovation amongst all Higher Education Institutions (HEIs).

·         MIC has envisioned encouraging creation of ‘Institution’s Innovation Council (IICs)’ across selected HEIs. A network of these IICs will be established to promote innovation in the Institution through multitudinous modes leading to an innovation promotion eco-system in the campuses.

·         Major focus of IIC:

o   To create a vibrant local innovation ecosystem.

o   Start-up supporting Mechanism in HEIs.

o   Prepare institute for Atal Ranking of Institutions on Innovation Achievements Framework.

o   Establish Functional Ecosystem for Scouting Ideas and Pre-incubation of Ideas.

o   Develop better Cognitive Ability for Technology Students.

Essence – The importance of enhancing the availability of bank credit for achieving the objective of a $5 trillion economy, while creating well-paid jobs for India’s currently underemployed workers, cannot be overstated. The article in this context analyses the recent proposal of RBI’s Internal Working Group to allow the entry of corporate houses as promoters of banks.

Why you should read this editorial?

·         While much of the commentary is on the negatives of the proposal, article brings out positives of such a proposal.

·         The article also addresses the criticisms that have been forwarded against this proposal.

·         Gives important data regarding banking in India – proportion of domestically sourced financial flows to the commercial sector, domestic credit to the private sector by banks as a proportion of GDP.

Link - https://timesofindia.indiatimes.com/blogs/toi-edit-page/corporates-for-banking-to-address-indias-credit-scarcity-problem-allow-corporate-houses-to-set-up-banks/

Essence – The article takes note of the attempt to provide worth to housework. It argues that unpaid work performed by women and girls fundamentally alters their life opportunities. Therefore, discussions on this issue are important to ensure women’s rights and a sense of social justice.

Why you should read this editorial?

·         Briefly understand how unpaid work performed by women and girls fundamentally alters their life opportunities.

·         Identify the challenges involved in compensating women for their unpaid work.

·         Given the challenges, the articles mentions certain steps that can be taken to address the issue.

Link - https://www.hindustantimes.com/opinion/recognising-housework-is-paying-the-only-way-101612532127348.html

Essence - Editorial is covering India-Sri Lanka relationship through prism of domestic politics & its importance in forging our way ahead. China factor, Sri Lanka ethnic issue, UNHRC resolution are common contentions but Fishermen issue & economic ties are more complicated knots to solve.

Why you should read this article?

·         To understand the dynamics of Sri Lankan politics & how they impact ties. (You need not to cram the names of all political outfits mentioned in this article, just remember the major opposition & ruling party)

·         To understand India’s interest in East container terminal or port presence in Sri Lanka.

·         Providing analysis of what has been done until now to handle Fishermen issues & how it’s time to change our strategy to safeguard livelihood of these coastal communities & thereby improving ties between two ocean neighbours.

Link - https://www.orfonline.org/expert-speak/colombo-port-dilemma-why-india-srilanka-ties-seem-sea/

·     The following case study can be used as an anecdote in Essay, Ethics etc.

·     Pappammal, 105 year old farmer, who wants people to take up farming was recently awarded Padma Shri.

·     She has been ardent proponent of organic farming for more than seven decades.

·     She proves that Age is only a number.

·     She works at her field in Thekkampatti, Tamil Nadu, and cultivates millets, pulses & vegetables across 2.5 acres

·     Her simple food habits and active lifestyle keeps her healthy.

·     She is living example that a Healthy Mind resides in a Healthy Body.