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Table of Content

WAGE CODE BILL .................................................................................................................................................. 4

COMPANIES (AMENDMENT) BILL, 2019 ................................................................................................................ 6

THE BANNING OF UNREGULATED DEPOSIT SCHEME BILL, 2019 ............................................................................ 7

ARBITRATION AND CONCILIATION (AMENDMENT) BILL, 2019 ............................................................................. 8

CODE ON OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS BILL .................................................... 9

CONSUMER PROTECTION BILL, 2019 .................................................................................................................. 10

MODEL TENANCY ACT, 2019 ............................................................................................................................... 13

NEW GST RETURN FILING SYSTEM FROM OCTOBER 2019 .................................................................................. 14

STATE DIVIDE IN UNEMPLOYMENT: NAGALAND 21.4%, MEGHALAYA 1.5% ....................................................... 14

GOVERNMENT CONSTITUTES WPI REVISION TEAM............................................................................................ 15

SEBI TIGHTENS NORMS FOR MUTUAL FUND INVESTMENTS............................................................................... 16

RBI BEGINS MONITORING HFCS .......................................................................................................................... 16

U K SINHA COMMITTEE ON MSMES: KEY RECOMMENDATIONS ......................................................................... 17

RBI’S CUSTOMER-COMPLAINT PROCESSING GOES DIGITAL ............................................................................... 18

NGOS FOR PROMOTION OF ROAD SAFETY .......................................................................................................... 19

RAILWAYS PLANS A ‘GIVE IT UP’ FOR TRAIN TICKET SUBSIDY .............................................................................. 20

KALESHWARAM LIFT IRRIGATION PROJECT INAUGURATED ............................................................................... 20

CENTRE REDUCES CONTRIBUTION RATE FOR ESI ................................................................................................ 22

‘NATIONAL DATA WAREHOUSE’ ......................................................................................................................... 22

FISCAL PERFORMANCE INDEX (FPI) ..................................................................................................................... 23

SOCIAL AND LABOR CONVERGENCE PROGRAMME (SLCP) .................................................................................. 24

OPEN MARKET OPERATIONS (OMO) ................................................................................................................... 24

COMPETITION COMMISSION OF INDIA(CCI) ....................................................................................................... 25

SECURITIES APPELLATE TRIBUNAL (SAT) ............................................................................................................. 26

MCA21 PORTAL ................................................................................................................................................... 26

DRAFT NOTIFICATION ON THIRD PARTY MOTOR INSURANCE BY IRDAI ................................................................ 27

NON-BANKING FINANCE COMPANIES (NBFC) ..................................................................................................... 27

SANDBOX INITIATIVE .......................................................................................................................................... 28

E-PAYMENTS PANEL HEADED BY NANDAN NILEKANI .......................................................................................... 29

PAYMENT AND SETTLEMENT SYSTEMS IN INDIA: VISION 2019–2021 ................................................................. 29

7TH ECONOMIC CENSUS ..................................................................................................................................... 30

QUICK RESPONSE CODE (QR CODE) ..................................................................................................................... 31

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (NABARD) ..................................................... 31

WORLD CUSTOMS ORGANISATION (WCO) ......................................................................................................... 32

SBI RULES LINK SAVINGS BANK INTEREST TO REPO RATE .................................................................................... 32

SERVICES TRADE RESTRICTIVENESS INDEX (STRI) ................................................................................................ 33

TRANSFER OF SURPLUS FUND BY RBI .................................................................................................................. 33

CONSOLIDATION/AMALGAMATION OF NATIONAL BANKS ................................................................................. 35


DRAFT NATIONAL LOGISTICS POLICY .................................................................................................................. 36

SANDBOX MODEL ............................................................................................................................................... 37

MONETARY POLICY COMMITTEE ........................................................................................................................ 38

NIRVIK SCHEME ........................................................................................................................................... 39

TRADE AND DEVELOPMENT REPORT 2019 ......................................................................................... 40

PROMPT CORRECTIVE ACTION (PCA) ................................................................................................. 41

BHARAT – 22 ETF ........................................................................................................................................... 43

WORLD DIGITAL COMPETITIVENESS RANKINGS ........................................................................... 43

ADVANCE PRICING AGREEMENT ......................................................................................................... 44

EXTERNAL BENCHMARKS BASED LENDING MUST – RBI ................................................................. 45

BHIM 2.0 LAUNCHED WITH ADDITIONAL FEATURES ........................................................................................... 46

WORLD ECONOMIC OUTLOOK REPORT .............................................................................................................. 50

GLOBAL COMPETITIVENESS INDEX ..................................................................................................................... 51

INDIA INNOVATION INDEX .................................................................................................................................. 52

GLOBAL WEALTH REPORT ................................................................................................................................... 53

CORPORATE TAX RATE CUT BY THE GOVERNMENT ............................................................................................. 54

ENTERPRISE DEVELOPMENT CENTRES ................................................................................................................ 57

CABINET APPROVES NEW STRATEGIC DISINVESTMENT PROCESS ....................................................................... 57

GOVERNMENT E-MARKETPLACE ........................................................................................................................ 58

EXPLAINED: WHY STATE BUDGETS MATTER ........................................................................................................ 59

RBI REVISES FRAMEWORK ON CURRENCY SWAP ARRANGEMENT FOR SAARC COUNTRIES.............................. 60

PURCHASING MANAGERS INDEX (PMI) FOR MANUFACTURING SLIPPED TO TWO YEARS LOW ........................ 60

TAXATION LAWS (AMENDMENT) BILL, 2019 INTRODUCED IN LOK SABHA ........................................................... 61

COMPANY LAW COMMITTEE-2019 SUBMITS ITS REPORT TO FINANCE MINISTER* ........................................... 61

INTEGRATED SKILL DEVELOPMENT SCHEME IN THE TEXTILE SECTOR ............................................................... 62

PUDUCHERRY: 29TH RCP MEETING OF ASIA PACIFIC CUSTOMS BEGINS ............................................................ 62

CABINET APPROVES STRATEGIC DISINVESTMENT OF BPCL & 4 OTHER PSUS ....................................................... 63

NCDEX TIES UP WITH NSE INDICES TO LAUNCH AGRIDEX .................................................................................... 64

RBI’S PANEL SUGGESTS MEASURES TO STRENGTHEN CORE INVESTMENT COMPANIES ................................... 64

GOVERNMENT APPROVES RS 25,000 CRORE ALTERNATE FUND FOR STALLED HOUSING PROJECTS ................ 65

TAMIL NADU BECOMES FIRST STATE TO ENACT LAW ON CONTRACT FARMING .................................................. 66

GLOBAL MICROSCOPE REPORT ........................................................................................................................... 66

CORE SECTOR OUTPUT FALLS 5.2% IN SEPTEMBER ............................................................................................. 67

FINANCE MINISTER LAUNCHES IT INITIATIVES ICEDASH AND ATITHI................................................................... 68

ECONOMIC OUTLOOK FOR SOUTH EAST ASIA, CHINA AND INDIA REPORT- OECD ....................................... 69

'INDIAN TECH STARTUP ECOSYSTEM - LEADING TECH IN THE 20S' REPORT BY NASSCOM ............................... 69

ASSET LIABILITY MANAGEMENT (ALM) FRAMEWORK FOR NBFC INTRODUCED BY RBI .................................... 70

CABINET APPROVES THE INDUSTRIAL RELATIONS CODE BILL, 2019 ................................................................. 71

PERIODIC LABOUR FORCE SURVEY: QUARTERLY BULLETIN, JANUARY-MARCH 2019 ........................................ 72

KHADI GETS SEPARATE HS CODE ......................................................................................................................... 73


MOODY'S CUTS INDIA'S GDP GROWTH FORECAST TO 5.6% FOR 2019-20 FROM 5.8% PROJECTED EARLIER .... 73

DRAFT BILL PROPOSES EMPOWERMENT OF NATIONAL STATISTICAL COMMISSION ........................................ 73

GST COUNCIL TO SET UP GRIEVANCE REDRESSAL MECHANISM FOR TAXPAYERS ............................................. 74

RBI RELEASED TREND AND PROGRESS OF BANKING IN INDIA 2018-19 REPORT ................................................. 75

FINANCIAL SYSTEM STABLE DESPITE SLOWDOWN: RBI FINANCIAL STABILITY REPORT..................................... 75

OPERATION TWIST .............................................................................................................................................. 76

INSOLVENCY AND BANKRUPTCY CODE (SECOND AMENDMENT) BILL, 2019 ....................................................... 77

INDIA TO COLLATE E-DATABASE TO TRACK ECONOMIC OFFENDERS .................................................................. 78

CABINET APPROVES LAUNCH OF BHARAT BOND EXCHANGE TRADED FUND ...................................................... 78

RBI LAYS DOWN GUIDELINES FOR PAYMENTS BANKS’ SFB LICENCE ................................................................... 79

OECD RELEASED ITS ECONOMIC SURVEY OF INDIA REP ....................................................................................... 80

INTERNATIONAL FINANCIAL SERVICES CENTRES AUTHORITY BILL, 2019 ............................................................ 81

FINANCE MINISTER UNVEILS ₹102 LAKH CRORE NATIONAL INFRASTRUCTURE PLAN ....................................... 82

INDIA’S RISING RETAIL PRICES STOKE WORRIES OF STAGFLATION .................................................................... 83

LPG PRICING IN INDIA ......................................................................................................................................... 83

NATIONAL PENSION SCHEME FOR TRADERS FAILS TO GAIN TRACTION ............................................................ 83

STRESSED URBAN COOPERATIVE BANKS TO FACE PCA - LIKE CURBS ................................................................. 84

GLOBAL ECONOMIC PROSPECTS REPORT - 2020 ................................................................................................ 85

INDIA JOINS RESKILLING REVOLUTION INITIATIVE AT WORLD ECONOMIC FORUM AS A FOUNDING MEMBER 85

SEBI PUTS IN PLACE GUIDELINES FOR LISTED REIT, INVIT ON RIGHTS ISSUE ...................................................... 86

ECONOMIC SURVEY 2019-2020: SERVICE SECTOR IN INDIA ............................................................................... 87

ECONOMIC SURVEY 2019-2020: SOCIAL INFRASTRUCTURE, EMPLOYMENT AND HUMAN DEVELOPMENT ..... 87

ECONOMIC SURVEY: THALINOMICS ................................................................................................................... 88

ECONOMIC SURVEY: A TEMASEK-LIKE MODEL TO PUT DIVESTMENT ON AGGRESSIVE TRACK ......................... 88

UNION BUDGET 2020-21 .................................................................................................................................... 89

BUDGET 2020: MACRO-ECONOMIC FRAMEWORK STATEMENT (MFS) 2020-21 ............................................... 90

BUDGET 2020: GOVT UNVEILS 16-POINT ACTION PLAN TO REVIVE AGRICULTURAL SECTOR ........................... 91

15TH FINANCE COMMISSION REPORT ............................................................................................................... 91

BUDGET 2020: INVESTMENT CLEARANCE CELL .................................................................................................. 92

BUDGET 2020: TAXATION AND GOVERNANCE ................................................................................................... 93

CABINET CLEARS AMENDMENTS TO ENSURE GREATER RBI CONTROL OVER COOPERATIVE BANKS ................. 93

UNION CABINET CLEARS BILL TO REGULATE PESTICIDE BUSINESS ..................................................................... 94

TAMIL NADU CM DECLARES CAUVERY DELTA AS PROTECTED SPECIAL AGRICULTURE ZONE ............................ 94

CABINET GIVES NOD FOR FORMATION OF 10,000 FARMER PRODUCER ORGANIZATIONS ............................... 95

RBI SYNCS FINANCIAL YEAR WITH THE FISCAL YEAR .......................................................................................... 96

INDIA’S ‘IMPORTED’ FOOD INFLATION ............................................................................................................... 96

FINANCE MINISTER LAUNCHES EASE 3.0 FOR TECH-ENABLED BANKING ........................................................... 97

RBI UNVEILS 5-YR FINANCIAL INCLUSION STRATEGY: HERE'RE KEY RECOMMENDATIONS................................ 97


WAGE CODE BILL

News - Parliament has passed Code on Wages bill, 2019.

Facts

• The bill seeks to amend and consolidate the laws relating to bonus and wages

payments in all employments where any industry, trade, business, or manufacture is

carried out.

• The Code replaces the following four laws: (i) the Payment of Wages Act, 1936, (ii) the

Minimum Wages Act, 1948, (iii) the Payment of Bonus Act, 1965, and (iv) the Equal

Remuneration Act, 1976.

• Salient Features of the Bill:

o Coverage - The provision of the bill will be applicable to all employments

covering both organised and unorganised sector. At present, the provisions of both

the Minimum Wages Act and Payment of Wages Act apply on workers below a

particular wage ceiling working in Scheduled Employments only. Many

unorganized sector workers like agricultural workers, painters, persons working in

restaurants and dhabas, chowkidars, etc. who were out of the ambit of minimum

wages will get legislative protection of minimum wages after the bill becomes an

Act. As per the Bill, the central government will make wage-related decisions for

employments such as railways, mines, and oil fields, among others. State

governments will make decisions for all other employments.

o Wages: Wages include salary, allowance, or any other component expressed in

monetary terms. This does not include bonus payable to employees or any

travelling allowance, among others.

o Floor Wage - As per Bill, Central govt is empowered to fix floor wage by taking

into account the living standards of workers. Central govt may set different floor

wages for different geographical areas. The minimum wages decided by the

central or state governments must be higher than the floor wage. In case the

existing minimum wages fixed by the central or state governments are higher

than the floor wage, they cannot reduce the minimum wages.

o Fixing the minimum wage: The Code prohibits employers from paying wages

less than the minimum wages. Minimum wages will be notified by the central or

state governments. This will be based on time, or number of pieces produced.

The minimum wages will be revised and reviewed by the central or state

governments at an interval of not more than five years. While fixing minimum

wages, the central or state governments may take into account factors such as:

(i) skill of workers, and (ii) difficulty of work. It simplifies the methodology to fix

minimum wage by doing away with the “type of employment” as one criterion. The

minimum wage fixation would primarily be based on geography and skills.

o Deductions: Under the Code, an employee’s wages may be deducted on certain

grounds including: (i) fines, (ii) absence from duty, (iii) accommodation given by

the employer, or(iv) recovery of advances given to the employee, among others.

These deductions should not exceed 50% of the employee’s total wage.


o Determination of bonus: All employees whose wages do not exceed a specific

monthly amount, notified by the central or state government, will be entitled to

an annual bonus. The bonus will be at least: (i) 8.33% of his wages, or (ii) Rs 100,

whichever is higher. In addition, the employer will distribute a part of the gross

profits amongst the employees. This will be distributed in proportion to the annual

wages of an employee. An employee can receive a maximum bonus of 20% of his

annual wages.

o Gender discrimination: The Code prohibits gender discrimination in matters

related to wages and recruitment of employees for the same work or work of

similar nature. Work of similar nature is defined as work for which the skill,

effort, experience, and responsibility required are the same.

Additional Information:

Wage

• It means any economic compensation paid to the employee by employer to his

works for the services rendered by them

• Different Types of Wages

1 Floor Wage • It is a concept introduced by Code of wages bill, 2019

• The central government will fix a floor wage, taking into account

living standards of workers. Further, it may set different floor wages

for

different geographical areas. 2 Minimum

Wage

• As per ILO, it is the minimum amount of remuneration that an

employer is required to pay to wage earners for the work performed

during a given period, which cannot be reduced by collective

agreement or an individual contract. It should be paid by an employer

to his workers irrespective of his ability to pay.

• It must provide not merely for the bare sustenance of life but for the

preservation of the efficiency of the worker. For this purpose, the

minimum wage must also provide for some measure of education

medical requirements and amenities.

• It is higher than the floor wage

3 Fair Wage • It is above the minimum wage but below the living wage. The lower

limit of the fair wage is the minimum wage; the upper limit is set by the

capacity

of the industry to pay. 4 Living Wage • It represents a higher level of wage.

• A living wage is one which should enable the earner to provide for

himself and his family not only the bare essentials of food, clothing

and shelter but a measure of frugal comfort including education for

his children, protection against ill-health, requirement of essential

social’ needs and a measure of insurance against the more

important misfortunes, including old-age.

• Thus, a living wage represents a standard of living. A living wage is fixed

considering the general economic conditions of the country.

• Labour Law Reforms


o The Second National Commission on Labour had recommended that the

existing set of labour laws should be broadly amalgamated into 4 groups.

o Accordingly, the Central govt has taken steps to rationalize 44 central

labour laws into 4 codes

▪ Code on Wages

▪ Code on Industrial Relations

▪ Code on Social Security & welfare

▪ Code on Occupation Safety, Health and Working Conditions

COMPANIES (AMENDMENT) BILL, 2019

News - Parliament passed the Companies (Amendment) Bill, 2019. It amends the Companies Act, 2013

Facts:

• Salient Feature of Amendment Bill

o Tightening the Corporate Social Responsibility (CSR) compliance: Under

the Companies Act, 2013, if companies which have to provide for CSR, do not

fully spent the funds, they must disclose the reasons for non-spending in their

annual report. The Amendment bill provides that any unspent annual CSR

funds must be transferred to one of the funds under Schedule 7 of the Act (e.g.,

PM Relief Fund) within six months of the financial year.

o Debarring Auditors by NFRA: Under the Act, the National Financial

Reporting Authority debar a member or firm from practising as a Chartered

Accountant for a period between six months to 10 years, for proven misconduct.

The Bill amends the punishment to provide for debarment from appointment as

an auditor or internal auditor of a company, or performing a company’s

valuation, for a period between six months to 10 years.

o Re-categorisation of certain Offences: The 2013 Act contains 81

compoundable offences punishable with fine or fine or imprisonment, or both.

These offences are heard by courts. The Bill re-categorizes 16 of these

offences as civil defaults, where adjudicating officers (appointed by the central

government) may now levy penalties instead. These offences include: (i)

issuance of shares at a discount, and (ii) failure to file annual return. Further,

the Bill amends the penalties for some other offences.

o Issuance of dematerialised shares: Under the Act, certain classes of public

companies are required to issue shares in dematerialised form only. The Bill

states this may be prescribed for other classes of unlisted companies as well.

o Powers pertaining to change in Financial Year- The Central Govt will

decide (earlier NCLT decides) cases for adopting a different financial year

by a company or body corporate, which is a holding company, or a subsidiary or

associate company of a company incorporated outside India and is required to

follow a different financial year for consolidation of its accounts outside India.

o Conversion of a public company into a private company shall not be valid

unless it is approved by an order of the Central Government (earlier it was

approved by NCLT)

o Pecuniary limits on compoundable offences has been increased to Rs. 25 lakhs

(earlier it was Rs. 5 lakhs)



• The Companies Act, 2013 was enacted with a view to consolidate and amend

the law relating to companies.

• Corporate Social Responsibility (CSR) -

o CSR is a way of conducting business, by which corporate entities visibly

contribute to the social good.

o As per Companies Act, 2003, companies registered under the

companies act having net worth of Rs 500 crore or more, or turnover of

Rs 1000 crore or more or a net profit of Rs 5 crore of more during any

financial year will have to spend 2% of the average of net profits of the

company made during three immediately preceding financial years, in

pursuance of its Corporate Social Responsibility Policy.

• India has become the first country to make CSR spending mandatory through a law.

• NFRA (National Financial Regulating Authority)

o It is a statutory body constituted under section 132 of the Companies Act 2013.

o Functions: - It is for the establishment and enforcement of accounting

and auditing standards and oversight of the work of auditors.

o Composition

▪ It shall consist of a chairperson, who shall be a person of

eminence and having expertise in accountancy, auditing, finance

or law to be appointed by the Central Government and such other

members not exceeding fifteen consisting of part- time and full-

time members

o It shall have the power to investigate, either suo motu or on a reference

made to it by the Central Government, for such class of bodies corporate

or persons, into the matters of professional or other misconduct

committed by any member or firm of chartered accountants, registered

under the Chartered Accountants Act, 1949.

o It shall have the same powers as are vested in a civil court

THE BANNING OF UNREGULATED DEPOSIT SCHEME BILL, 2019

News: The Parliament has passed The Banning of Unregulated Deposit Scheme Bill,

2019. It will replace the banning of Unregulated Deposit Schemes Ordinance, 2019. It

also seeks to amend three laws, i.e., the Reserve Bank of India Act, 1934, the

Securities and Exchange Board of India Act, 1992 and the Multi-State Co-operative

Societies Act, 2002.

Facts:

• The bill aims to provide for a comprehensive mechanism to ban the unregulated

deposit schemes and protect the interest of depositors:

• Salient Feature of the Bill:

o The bill defines ‘deposit’ and ‘deposit taker’ comprehensively

o The Bill bans unregulated deposit taking activities altogether, by making

them an offence ex-ante rather than the existing legislative-cum-


regulatory framework which only comes into effect ex-post with

considerable time lags.

o A deposit-taking scheme is defined as unregulated if it is taken for a

business purpose and is not registered with the regulators listed in the Bill.

At present, 9 regulators oversee and regulate various deposit taking

scheme. For eg - RBI regulates deposits accepted by non- banking

financial companies, SEBI regulates mutual funds, state and union

territory governments regulate chit funds, among others.

o The bill defines three different types of offences:

▪ running unregulated deposit schemes,

▪ fraudulently defaulting on regulated deposit schemes,

▪ wrongfully inducing depositors to invest in unregulated deposit

schemes by willingly falsifying facts

o The bill provides for severe punishment and heavy pecuniary fines for

different types of offences to act as deterrent

▪ Provisions for disgorgement or repayment of deposits in cases

where such schemes nonetheless manage to raise deposits

illegally.

▪ Attachment of properties/assets by the Competent Authority, and

subsequent realization of assets for repayment to depositors.

▪ Clear-cut time lines have been provided for attachment of

property and restitution to depositors.

o The Bill provides for the central government to designate an authority to

create an online central database for information on deposit takers. All

deposit takers will be required to inform the database authority about their

business.

• Significance of Bill:

o The Bill will help tackle the menace of illicit deposit taking activities in the country

ARBITRATION AND CONCILIATION (AMENDMENT) BILL, 2019

News: The parliament has passed Arbitration and Conciliation (Amendment) Bill, 2019.

Facts

• The Bill seeks to amend the Arbitration and Conciliation Act, 1996

• The Arbitration and Conciliation Act, 1996 contained provision for domestic

arbitration, international commercial arbitration and defines law for conducting

conciliation proceedings

• Salient Features of the Bill:

o Arbitration Council of India (ACI) - The bill aims to establish an

independent body called Arbitration Council of India (ACI) for promotion

of arbitration, mediation, conciliation and other alternative dispute

redressal mechanisms.

o The functions of ACI include: (i) framing policies for grading arbitral

institutions and accrediting arbitrators, (ii) making policies for the

establishment, operation and maintenance of uniform professional

standards for all alternate dispute redressal matters, and (iii) maintaining a


depository of arbitral awards (judgments) made in India and abroad.

o Composition: It comprises of chairperson and other members. The

chairperson of the ACI will be appointed by Central govt in consultation

of Chief Justice of India. The chairperson can be a judge of the Supreme

Court or Chief Justice of a high court or a judge of a high court or an

eminent person, having special knowledge and experience in the

conduct or administration of arbitration. Other members will include an

eminent arbitration practitioner, an academician with experience in

arbitration, and government appointees.

o Appointment of Arbitrators: The Amendment Bill empowers the

Supreme Court (in the case of an international commercial arbitration)

and the High Court (in cases other than international commercial

arbitration) to designate arbitral institutions for the purpose of appointment

of arbitrators. (Under the 1996 Act, parties were free to appoint arbitrators.)

o Timelines under the Amendment Act

▪ Completion of pleadings: the statement of claim and defence must

be completed within a period of six months

▪ Arbitral award: In cases other than international commercial

arbitration, the award will be made by the arbitral tribunal within

a period of twelve months from the date of completion of

pleadings. In the case of international commercial arbitrations,

the award may be made as expeditiously as possible and

endeavour may be made to dispose of the matter within a

period of twelve months from the date of completion of

pleadings.

▪ Extension of time: Where an application for extension of time is

pending, the mandate of the arbitrator will continue till the

disposal of the said application.

• Significance of the Bill:

o to make India an international arbitration hub by providing facilities for

settlement of commercial disputes

o It will reduce the burden on the courts- Presently, in case of any dispute

with respect to appointment of Arbitrators, parties have to approach the

Supreme Court or the High Court for appointment of Arbitrators or to

resolve their dispute. With the huge backlog of cases, the courts are

already overburdened. An effective ACI will share this burden of the court

and even facilitate speedy appointment of arbitrators. This would further

aid quick resolution of disputes outside the court.

CODE ON OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS BILL

News - The Occupational Safety, Health and Working Conditions Code, 2019 was

introduced in Lok Sabha by Minister of Labour and Employment

Facts:


• The Code repeals and replaces 13 labour laws relating to safety, health and

working conditions. These include the Factories Act, 1948, the Mines Act, 1952,

and the Contract Labour (Regulation and Abolition) Act, 1970.

• Salient Feature of the Bill:

o The Code applies to all establishments employing at least 10 workers. In

case of mines and dock, the code will be applicable even with one worker.

o The Bill proposes one registration for an establishment instead of multiple registrations

o All establishments covered by the Code must be registered with registering officers.

o Advisory Bodies: The central and state governments will set up

Occupational Safety and Health Advisory Boards at the national and

state level, respectively. These Boards will advise the central and state

governments on the standards, rules, and regulations to be framed

under the Code.

o Working Hours: Work hours for different classes of establishment and

employees will be provided as per the rules prescribed by the central or

state government. For overtime work, the worker must be paid twice the rate

of daily wages. Female workers, with their consent, may work past 7pm

and before 6am, if approved by the central or state government.

o Leave: No employee may work for more than six days a week. However,

exceptions may be provided for motor transport workers. Workers must

receive paid annual leave for at least one in 20 days of the period spent on

duty. During medical leave, the worker must be paid half his daily wages.

o Working conditions and welfare facilities: The employer is required

to provide a hygienic work environment with ventilation, comfortable

temperature and humidity, sufficient space, clean drinking water, and

latrine and urinal accommodations.

o The Code specifies several duties of employers. These include: (i)

providing a workplace that is free from hazards that may cause injury or

diseases, and (ii) providing free annual health examinations to

employees, as prescribed.

o Duties of employees under the Code include: (i) taking care of their

own health and safety, (ii) complying with the specified safety and health

standards, and (iii) reporting unsafe situations to the inspector.

o Offences and penalties: Under the Code, an offence that leads to the

death of an employee will be punishable with imprisonment of up to two

years, or a fine up to five lakh rupees, or both.

• Significance

o The Draft Code promotes health, safety, welfare and better working

conditions of workforce by enhancing the ambit of a dynamic legislation

as compared to the existing sectoral approach limited to few sectors.

CONSUMER PROTECTION BILL, 2019

News: Parliament has passed Consumer Protection Bill, 2019. The Bill replaces the


Consumer Protection Act 1986

Facts:

• The objective of the bill is to protect the rights of consumers by timely

settlement of consumer disputes.

• Salient Features of the Consumer Protection Bill, 2019

o The bill defines consumer as a person who buys any goods or avails a

service for a consideration.

o It covers transactions through all modes [offline, and online through

electronic means, teleshopping, multi-level marketing or direct selling].

o Consumer Rights-- Six consumer rights have been defined in the Bill.

Some of these rights are :

▪ be protected against the marketing of goods and services which

are hazardous to life and property;

▪ be informed of the quality, quantity, potency, purity, standard and

price of goods or services;

▪ be assured of access to a variety of goods or services at competitive prices; and

▪ seek redressal against unfair or restrictive trade practices

o Consumer Protection Council (or Central Council) -- The Bill has mandated

the central government to establish Consumer Protection Councils known as

Central Council. It has also mandated the state government to establish

Consumer Protection Councils in states and districts as State Council and District

Council respectively. These are advisory bodies which will advise on promotion

and protection of consumer rights. It will be headed by the respective ministers of

consumer affairs at the central and state levels. It will be headed by the District

Collector at district levels

o Central Consumer Protection Authority - The bill establishes the Central

Consumer Protection Authority [CCPA] to protect and enforce the rights of

consumers. It will regulate matters related to:

▪ violation of consumer rights,

▪ unfair trade practices, and

▪ misleading advertisements.

▪ It can also file cases before the Consumer Disputes Redressal Commission.

▪ It will have a separate investigation wing to investigate cases under the Act.

▪ It will also have the power to issue directions and penalties

against false or misleading advertisements.

▪ The Authority can issue safety notices to alert consumers against

dangerous or hazardous goods or services;

o Consumer Dispute Redressal Commission - The bill sets up a 3-tier

consumer disputes redressal commissions/consumer courts at district, state and

national levels. Complaints to consumer courts can be filed electronically and

from the place where the complainant resides. Complaints against unfair

contracts can be made only at the centre and state consumer disputes

redressal commissions. The final appeal against the order of the national


commission shall be made in the Supreme Court.

o Mediation - The bill provides for an Alternate Dispute Resolution Mechanism

through mediation. A grievance can be referred for mediation by consumer forum

if it is satisfied that scope for early settlement by mediation exists.

o Product Liability - A manufacturer/service provider/product seller will be held

responsible to provide compensation for any damage caused by a defective

product or deficient services.

o Penalties - A penalty can be imposed by the CCPA on a manufacturer or an

endorser of up to Rs 10 lakh and imprisonment for up to two years for a false or

misleading advertisement. In case of a subsequent offence, the fine may extend

to Rs 50 lakhs and imprisonment of up to five years

• Significance of the Bill

o The consumer Protection Act, 2019 have provisions for - product liability,

unfair contracts, mediation, and e-commerce, which were not present in

Consumer Protection Act 1986.

2. THE AIRPORTS ECONOMIC REGULATORY AUTHORITY OF INDIA

(AMENDMENT) BILL, 2019

News: The parliament has passed The Airports Economic Regulatory Authority of India

(Amendment) Bill, 2019. It amends the Airports Economic Regulatory Authority of India

Act, 2008.

Facts

• Definition of major airports: At present, The Airports Economic Regulatory

Authority of India Act, 2008 defines a major airport as one with annual

passenger traffic over 15 lakh, or any other airports as notified by the central

government. The Bill increases the threshold of annual passenger traffic for major

airports to over 35 lakh.

• The Bill adds that the AERA will not determine tariff, tariff structures, or

development fees, in certain cases. These cases include those where such tariff

amounts were a part of the bid document on the basis of which the airport

operations were awarded.


• AERA (Airport Economic Regulatory Authority of India):

o AERA is a statutory body setup by the Airports Economic Regulatory

Authority of India Act, 2008.

o The AERA regulates tariffs and other charges for aeronautical services of

major airports (civilian airports with annual traffic above 15 lakh

passengers). It also monitors the performance standard of services

across these airports. Airports below the limit of 15 lakh passengers come

under the purview of AAI.

o Currently, there are 32 major airports (annual traffic above 15 lakh), and

AERA regulates tariffs at 27 of these. As per the Bill, AERA will regulate

16 major airports (annual traffic above 35 lakh). The remaining 16

airports will be regulated by AAI.


MODEL TENANCY ACT, 2019

News - The Central Govt has come out with Model Tenancy Act, 2019

Facts:

• The Tenancy law is a ‘model act’, because land is a state subject and states will

have the option to adopt or reject it.

• The Model Act lays down the obligations of tenants and landlords, and provides for

an adjudication mechanism for disputes.

• Salient Feature of Model Tenancy Act, 2019

o MTA stipulates a robust grievance redressal mechanism comprising of Rent

Authority, Rent Court and Rent Tribunal.

o It has been proposed to cap the security deposit equal to a maximum of two

month’s rent in case of residential properties and, minimum of one month’s

rent in case of non- residential property.

o After coming into force of this Act, no person shall let or take on rent any

premises except by an agreement in writing.

o Within two months of executing rental agreement both landowner and tenant

are required to intimate to the Rent Authority about the agreement and within

seven days a unique identification number will be issued by the Rent

Authority to the both the parties.

o The Model Act is applicable to the whole of the State i.e. urban as well as rural

areas in the State.

o A digital platform will be set up in the local vernacular language of the State for

submitting tenancy agreement and other documents.

o The Act seeks to penalize recalcitrant tenants for refusing to move out of

their rental properties after the agreed-upon rental period expires. The

landlord will be able to claim double of the monthly rent for two months and four

times of the monthly rent after that as compensation. This will put to rest one of

the biggest fears of property owners who do not want to risk letting out their

properties in India.

o The Act stipulates that a landlord cannot refuse to provide essential utilities

and access to common facilities.

o The landlord will also not be able to increase the rent without giving at least

three months’ notice to the tenant, and cannot increase rent in the middle of a

rental term.

o After the commencement of this Model Act, a tenant – without the prior

consent in writing of the landowner – won’t be able to sublet whole or part of

the premises held by him, or transfer or assign his rights in the tenancy

agreement or any part thereof.

o The terms of agreement executed between a landlord and his tenant will be

binding upon their successors in the event of the death of the landowner or

tenant. In such a case, their successors will have the same rights and

obligations, as agreed in the tenancy agreement, for the remaining period of

tenancy.

o It should be noted that the existing tenancies will not get impacted as the

Draft Model Tenancy Act will be applicable prospectively.

o The Central government has shared a copy of the Model Act with the States


and Union Territories (UTs) for their views and comments. The Act, once

finalized, will be shared with the States and UTs for adoption.

• Significance

o Promote growth of rental housing segment

o Creation of adequate rental housing stock for various income sections of the societies.

NEW GST RETURN FILING SYSTEM FROM OCTOBER 2019 News: The GST Council in its 31st meeting has decided that a new GST return system

will be introduced to facilitate taxpayers. This will be rolled out from October, 2019 for

big businessmen and from January, 2020 for small businessmen.

Facts:

• The traders/businessmen having zero transactions or nil filers could now file returns through SMS.

• Regular small taxpayers (with aggregate annual turnover in the previous

financial year upto Rs. 5 Crore) can now file GST returns on a quarterly basis,

either in ‘SAHAJ’ (ITR - 1) or ‘SUGAM’ (ITR -4) forms.

• Small Taxpayers dealing with only in business to consumer (B2C) can file

‘Sahaj’ (ITR -1) on quarterly basis.

• Small taxpayers dealing with B2B or B2C and B2B can file ‘Sugam’ (ITR-4) on quarterly basis.

• The quarterly returns will be mostly be similar to the monthly returns, but

require lesser information to be filled as compared to the regular returns.

• Further, large taxpayers business (with aggregate annual turnover in the

previous financial year above Rs. 5 Crore) will have to file returns every month.

• The new simplified process can be summarised as – ‘UPLOAD-LOCK-PAY’.


• Goods and Services Tax (GST)

o It is a destination-based tax on consumption of goods and services

o It has subsumed many Central and State taxes like excise duty, VAT and

service tax. It is a single comprehensive tax levied on all goods and

services produced in India as well as those imported from other

countries.

o Alcohol for human consumption, electricity and petroleum products are not

under the purview of GST

o There are multiple items which are exempted under GST – meaning that they attract nil rate of tax.

STATE DIVIDE IN UNEMPLOYMENT: NAGALAND 21.4%, MEGHALAYA 1.5%

News: The Periodic Labour Force Survey (PLFS) for 2017-18 reflects huge variations

among the states in terms of the unemployment rate.


Facts:

• Periodic Labour Force Survey (PLFS) 2017-18

o As per survey the overall unemployment rate in India is 6.1%. It is highest in the last 45 years.

o Overall Male unemployment rate (6.2%) is higher than the Female unemployment rate (5.7%).

o Highest overall unemployment rate among the state is that of Nagaland

(21.4% ), followed by Goa and Manipur

o Meghalaya (1.5%) has the lowest unemployment rate among the states

followed by Chhattisgarh and Sikkim.


• Unemployment rate

o It is a measure of the prevalence of unemployment and it is calculated

as a percentage by dividing the number of unemployed individuals by

all individuals currently in the labour force.

• Labour force participation rate

o It is defined as the section of the working population in the age group of

16-64 in the economy currently employed or seeking employment.

• The Ministry of Statistics and Programme and Implementation had

launched Periodic Labour Force Survey in 2017. The data was collected by

National Sample Survey Office (NSSO).

GOVERNMENT CONSTITUTES WPI REVISION TEAM News: The Government has constituted working group for the revision of current

series of Wholesale Price Index (base 2011-12) under the chairmanship of NITI Aayog

member Ramesh Chand.

Facts:

• The Term of Reference (ToR) of working group include:

o To select the most appropriate Base Year for the preparation of a new

official series of Index Numbers of Wholesale Price (WPI) and Producer

Price Index (PPI) in India.

o To review commodity basket of the current series of WPI and suggest

additions/deletions of commodities in the light of structural changes in

the economy witnessed since2011-12

o To review the existing system of price collection in particular for

manufacturing sector and suggest changes for improvement.

o To decide on the computational methodology to be adopted for monthly WPI/PPI.

• The current series of Wholesale Price Index (WPI) with 2011-12 as base year

was introduced in May 2017. Since 2011-12, significant structural changes

have taken place in the economy. Therefore, it has become necessary to

examine the coverage of commodities, weighting diagram and related issues

pertaining to the existing series of index numbers of Wholesale Price Index.


• Wholesale Price Inflation (WPI)


o It tracks changes in the price of a basket of goods at a wholesale level

i.e. goods that are sold in bulk and traded between organizations

instead of consumers.

o The index basket of the WPI covers commodities falling under the three

major groups namely Primary Articles (22%), Fuel and Power (13%)

and Manufactured products (64%). It is important to note that WPI does

not cover services. Services are covered in CPI.

o WPI is computed by the Office of Economic Advisor (OEA), Department

for promotion of industry and internal trade, Ministry of Commerce.

SEBI TIGHTENS NORMS FOR MUTUAL FUND INVESTMENTS News: The Securities and Exchange Board of India (SEBI) has introduced more

checks and balances for mutual funds (MFs) to secure investors and stem systemic

risks.

Facts:

• Key Announcement by SEBI:

○ Mutual fund schemes can now invest only in listed debt or equity and non-convertible debentures.

○ The valuation of securities in debt funds will now be on mark-to-market

basis instead of the earlier practice of considering it on an amortization

basis.

○ Liquid funds can now invest a maximum of 20% of their assets in a

single sector as against the current cap of 25%, and must keep aside at

least a fifth of their assets in cash equivalents to meet sudden

redemption pressures.

• The changes are based on recommendations made by the mutual fund

advisory committee constituted by SEBI to limit liquid fund exposure to a single

sector, especially to non-banking finance companies (NBFCs) catering to the

housing sector.


• SEBI

○ It is regulator of securities market in India. It was established in 1988

and given statutory powers in 1992 through the SEBI Act, 1992.

• Liquid fund

○ It is a category of mutual fund which invests primarily in money market

instruments like certificate of deposits, treasury bills, commercial papers

and term deposits. They invest in securities with a residual maturity of

up to 91 days.

• Mutual Fund (MF)

○ It is an investment vehicle made up of a pool of money collected from

retail investors. The pooled money is used to buy other securities by

professional money managers. It charges a small fee for managing the

money.

RBI BEGINS MONITORING HFCS


News: The Reserve Bank of India (RBI) has started monitoring the liquidity position,

asset-liability gap and repayment schedules of housing finance companies (HFCs) on a

daily basis

Facts:

• The move to monitor HFCs on a daily basis comes after some HFC had gone

into liquidity crisis which had resulted in defaults. This crisis had started since

the debt default by IL&FS in September last year.

• The RBI does not regulate Housing finance companies (HFCs). They are

regulated by the National Housing Bank (NHB).

• The RBI has taken this step as RBI is mandated to look after financial stability

of the entire economy and banks have significant exposure to HFCs. the

liquidity crisis of the HFCs could have a spill over effect on the other segments

in the financial sector including banks which could affect financial stability.


• The National Housing Bank (NHB) was set up in 1988 under the National

Housing Bank Act, 1987. NHB is an apex financial institution for housing.

• Recently, RBI had divested its stake in National Housing Bank (NHB) and

National Bank for Agriculture & Rural Development (NABARD) by making them

fully government-owned.

2. APEDA ORGANIZES BUYERS-SELLERS MEET News: Agricultural & Processed Food Products Export Development Authority (APEDA)

in association with North Eastern Regional Agricultural Marketing Corporation

(NERAMAC) has organised the International Buyers-Sellers Meet in Imphal, Manipur.

Facts:

• APEDA

○ It is a statutory body established under Agricultural and Processed

Food Products Export Development Authority Act, 1985. It replaced the

Processed Food Export Promotion Council (PFEPC).

○ APEDA comes under the Ministry of Commerce and Industries.

○ APEDA is mandated with the responsibility of promotion and

development of the export of agricultural and its allied products.

U K SINHA COMMITTEE ON MSMES: KEY RECOMMENDATIONS

News: The RBI-appointed U.K. Sinha-led committee, set up to study the problems

faced by MSMEs, submitted its recommendations recently.

Facts:

• Key Recommendations of the Committee

○ Committee recommended a more focused engagement of Small

Industries Development Bank of India (SIDBI) with State Governments

for MSME development and promotion

○ A Government sponsored Fund of Funds (FoF) of ₹10,000 crore to

support VC/PE firms investing in the MSME sector. This would

encourage innovation in term-sheets and product structures.


○ A Distressed Asset Fund of ₹5000 crore, be structured to assist units

in clusters where a change in the external environment e.g., a ban on

plastics or ‘dumping’ has led to a large number of MSMEs becoming

NPA.

○ Government may make it mandatory for PSUs / Government

Departments to meet their MSME procurement targets through

Government e-Marketplace (GeM) portal only.

○ The panel has recommended doubling the cap on collateral-free loans

to Rs 20 lakhs from the current Rs 10 lakh. This will be extended to

borrowers falling under the Mudra scheme, self-help groups and

MSMEs.

○ The committee has also recommended that banks who wish to

specialise in MSME lending, their targets for farm loans under the

priority sector lender could be waived off and instead can be given a

target for loans to the SME sector.


• MSME Sector

○ India have 63.38 million MSME’s accounting for 45% of manufacturing

output, 40% of exports, 28% of GDP and providing employment to 11

million people.

○ As per Micro, Small & Medium Enterprises Development (MSMED) Act,

2006, MSME are classified into two classes:

▪ Manufacturing enterprise (defined in terms of investment in plant and machinery)

▪ Services enterprises (defined in terms of investment in equipment)

Manufacturing Sector

Enterprises Investment in Plant and Machinery

Micro Enterprises Does not exceed Rs. 25 lakh

Small Enterprises More than Rs 25 lakh but does not exceed Rs. 5 crore

Medium Enterprise More than Rs. 5 crore but does not exceed Rs. 10 crore

Service Sector

Enterprises Investment in Equipment

Micro Enterprises Does not exceed Rs. 10 lakh

Small Enterprises More than Rs 10 lakh but does not exceed Rs. 2 crore

Medium Enterprises More than Rs. 2 crore but does not exceed Rs. 5 crore

RBI’S CUSTOMER-COMPLAINT PROCESSING GOES DIGITAL News: The Reserve Bank of India (RBI) has launched a Complaint Management System (CMS). It is a software application to facilitate RBI’s grievance redressal processes.

Facts:

• Customers can lodge complaints against any entity regulated by RBI with public


interface such as commercial banks, urban cooperative banks, Non-Banking

Financial Companies (NBFCs).

• This system will make sure that every complaint is received and grievances

have to be resolved under a limited time period.

• The CMS would be completely online and the complainants will also be able to

track the status of their complaints online.

• Currently, people with grievances about banking services have to lodge

complaints at the banking ombudsman office falling in their jurisdiction.

• Banks are expected to use data on CMS for reducing their turn around time in resolution of complaints.


• Banking Ombudsman is a quasi-judicial authority functioning under the Banking

Ombudsman Scheme, 2006. The authority was created to enable resolution of

complaints of customers of banks relating to services rendered by the lenders.

3. PARLIAMENTARY PANEL SHIES AWAY FROM QUANTIFYING BLACK MONEY News: The parliamentary panel on finance of the 16th Lok Sabha has submitted its report to the Lok Sabha.

Facts:

• The panel has said it is difficult to provide a credible estimate of the black

money stashed away overseas by Indians. It is due to different methods used

by different agencies which yield vastly different figures. The panel suggested

that black money could be anywhere ranging from 7 - 120% of the GDP.

• This massive range in the panel’s report is because of three studies by the (a)

National Institute of Public Finance and Policy (NIPFP) (b) National Council for

Applied Economic Research (NCAER) and the (c) National Institute of Financial

Management (NIFM) who have provided widely varying results.

• All three studies concluded that the maximum amount of black money was

generated in realty, mining, pharmaceuticals, pan masala, gutka and tobacco

industries.

• Besides bullion and commodity markets, the film industry, educational

institutes, securities market and manufacturing too contributed to unaccounted

wealth.


● Black money

○ It is the money on which appropriate taxes have not been paid to the

government. It is generally obtained illegally and thus kept away from

declaration.

○ Various steps taken by the government to curb black money are:

▪ Black Money (Undisclosed Foreign Income and Assets) Act, 2015

▪ THE BENAMI TRANSACTIONS (PROHIBITION) AMENDMENT ACT, 2016

▪ Demonetization

▪ GAAR rules came into force on April 1, 2018

NGOS FOR PROMOTION OF ROAD SAFETY


News: Union minister has informed that Ministry of Road Transport and Highways has

launched a scheme for grant of financial assistance to NGOs for administering Road

Safety Advocacy in the last FY 2017-18.

Facts:

• Under this Scheme, proposals for road safety advocacy programmes through

203 different Non- Governmental Organisations (NGOs)/Trusts/ Cooperative

Societies have been sanctioned in FY 2017-18.

• As per the scheme provisions, financial assistance for a road safety programme is Rs. 5 lakh.

• The scheme does not provide for any advance payment and financial

assistance is reimbursed only after the successful completion of the

programme.

• There are adequate safeguards in the scheme to ensure proper utilization of

funds such as (a)No advance payment is released to any agency

(b)Registration of the NGO on Darpan Portal (c)The scheme is administered

through a Project Management Unit (PMU) for scrutiny of proposals

Additional Information

• DARPAN Portal

o A portal by NITI Aayog which provides for voluntary registration of

NGOs. It is repository of Information about NGOs.

RAILWAYS PLANS A ‘GIVE IT UP’ FOR TRAIN TICKET SUBSIDY News: The Indian Railways has planned to launch “Give It up Campaign” to urge passengers to give up fare subsidy at the time of booking their train tickets.

Facts:

• This proposal is a part of 100-day roadmap document for Indian Railways

submitted to the Prime Minister to increase earnings of railways.

• According to Indian railways, it recovers only 53% of the cost incurred from the

passenger transport business. Rest 47% of the cost is given back as subsidies

by government to consumers.

• The campaign is intended to reduce passenger subsidy on Indian Railways.


• Previously in 2015, the government had launched Give It Up campaign to

motivate LPG users who can afford to pay the market price for LPG to

voluntarily surrender their LPG subsidy.

KALESHWARAM LIFT IRRIGATION PROJECT INAUGURATED News: Kaleshwaram Multipurpose Lift Irrigation Project on River Godavari has been

inaugurated by Telangana Chief Minister.

Facts:

• Project Details:


○ Kaleshwaram Lift Irrigation Project is a multi-purpose irrigation project on

the Godavari River in Kaleshwaram, Bhoopalpally, Telangana.

○ The objective of project is to make Telangana drought proof by

harnessing the flood waters of the Godavari. The project will provide

water for drinking and irrigation purpose to about 45 lakh acres in 20 of

the 31 districts in Telangana, apart from Hyderabad and Secunderabad.

○ It is being touted as world’s largest multi-stage, multi-purpose lift

irrigation project. Earlier, biggest lift schemes in the world were the

Colorado lift scheme in America and the Great Manmade River in Egypt.

○ States involved in the project are Maharashtra, Andhra Pradesh and Telangana.

○ This project is unique because Telangana will harness water at the

confluence of two rivers with Godavari by constructing a barrage at

Medigadda in Jayshankar Bhoopalpally district and reverse pump the

water into the main Godavari river and divert it through lifts and pumps

into a huge and complex system of reservoirs, water tunnels, pipelines

and canals.

○ The project starts at the confluence point of Pranahita River and Godavari River.

○ Barrages have been constructed at Medigadda, Annaram, and Sundilla,

from which water will be moved to fill Yellampalli and Sriram Sagar

Projects.

○ The total length of Kaleshwaram project is approximately 1,832 kms, of

which 1,531 kms is gravity canals and 203 kms comprise water tunnels.

○ The project had to be built at such a size and scale because while the

Godavari flows at 100 metres below Mean Sea Level, Telangana is

located at 300 to 650 metres above MSL. Except for pumping water

using gigantic pumps with mindboggling capacities, there is no other

option,

○ The Kaleshwaram project will support Mission Kakatiya and Mission

Bhagiratha schemes designed to provide drinking water to many

villages and improve the capacities of tanks.


• Mission Kakatiya

○ It is a flagship programme launched by the Government of Telangana

which aims at rejuvenation of water tanks and other water storage

structures to provide assistance and help to the small and marginal

farmers of the state.

• Mission Bhagiratha

○ It is a project for safe drinking water for every village and city household

in Telangana State. It aims is to provide piped water to 2.32 crore people

in 20 lakh households in urban and 60 lakhs in rural areas of Telangana.

The ambitious project will supply clean drinking water to all households

in the state through water sourced from River Godavari and River

Krishna.

https://www.drishtiias.com/summary-of-important-reports/selected-best-practices-In-water-management


CENTRE REDUCES CONTRIBUTION RATE FOR ESI News: The government of India has announced reduction in the rate of contribution under the Employees’ State Insurance (Act) from 6.5% to 4%. The reduced rates will be effective from 1 July.

Facts:

• The employers’ contribution has been reduced from 4.75% to 3.25% and employees’ contribution has been

reduced from 1.75% to 0.75% of the wages.

• The move is aimed at formalising India’s informal workforce and expanding

social security coverage. Further, reduction in the share of contribution of

employers will reduce the financial liability of the establishments leading to

improved viability of these establishments. The employee will get higher take

home salary.

• It will improve compliance and coverage of the scheme and will benefit 36

million employees working in more than 1.3 million organizations.


• The Employees’ State Insurance Act 1948 (the ESI Act) provides for medical,

cash, maternity, disability and dependent benefits to the Insured Persons under

the Act. The ESI Act is administered by Employees’ State Insurance

Corporation (ESIC), Ministry of Labour and Employment.

• The ESI Act, 1948, applies to organisations with 10 or more employees, drawing

a salary of up to Rs. 21,000/ month (Rs 25,000/ month in case of persons with

disabilities). The threshold for coverage of establishments is 20 employees in

Maharashtra and Chandigarh.

‘NATIONAL DATA WAREHOUSE’ News: The Ministry of Statistics and Programme Implementation (MoSPI) has

proposed to set up a ‘National Data Warehouse’.

Facts:

• National Data Warehouse will be a central repository where all statistical

information like surveys etc. will be collected. It will work as works as a main

vault of all the statistical data collected by various ministries, UTs and state

governments

• This integrated data allows policy makers and researchers to access data sets,

its history and extract it across different groups.

• The warehouse will take the help of technology and use big data analytical

tools to improve the quality of macro-economic aggregates.


• Other steps taken MoSPI for statistical reform:

○ Recently, the government has also decided to merge the National

Sample Survey Office (NSSO) with the Central Statistics Office (CSO)

under the Ministry of Statistics and Programme Implementation

(MoSPI).

○ The National Statistical Commission (NSC) of India is an


autonomous body which formed in July 2005.It is formed through an

executive resolution. It is a non-statutory body. It is formed on the

recommendation of Rangarajan Commission. The objective of its

commission is to reduce the problems faced by statistical agencies in

the country in relation to collection of data. Efforts are on to evolve a

legislative framework under which the National Statistical

Commission (NSC) may function with independence.

○ To ensure the credibility of data, the Government of India adopted the

United Nations Fundamental Principles of Official Statistics (FPOS)

in May, 2016.

FISCAL PERFORMANCE INDEX (FPI) News: Confederation of Indian Industry (CII) has launched a Fiscal Performance Index

(FPI) to assess state and central budgets.

Facts:

• FPI:

o It is an index to assess quality of Budgets at the Central and State levels.

o The index has been constructed using UNDP’s Human Development Index methodology.

o The Index incorporates qualitative assessments of (a) revenue expenditure (b) capital expenditure

(c) revenues (d) fiscal prudence and (d) level of public debt. For e.g. -

The index will consider expenditure on infrastructure, education,

healthcare and other social sectors beneficial for economic growth

compared to other revenue expenditure.

o It will also consider tax revenues a more sustainable source of revenues

for the government as compared to one-time income sources.

• Why there is need for FPI?

o As per CII, a single criterion such as the ‘fiscal deficit to GDP ratio’ does

not tell us anything about the quality of the Budget. Hence, the

Government should use multiple indicators to measure the quality of

Budgets at the Central and the State levels rather than a single

indicator.

o The Index incorporates qualitative assessments of revenue expenditure,

capital expenditure, revenues, fiscal prudence and the level of public

debt to arrive at a more holistic picture of fiscal performance than the

fiscal deficit to GDP ratio.

• Study By CII:

○ CII has used this index to analyse state and central budgets from 2004-05 to 2016-17.

○ The study has found that despite improvement in reduction in the fiscal

deficit between FY13 and FY18, the overall performance of the budget

has remained steady with improvements only in FY16 and FY17.This is

largely due to moderation in the revenue, capital expenditure and net tax

revenues indices.

○ The study also points out that relatively high-income states including


Gujarat, Haryana and Maharashtra which have good fiscal health

because of low fiscal deficit to GDP ratio do not perform well on the

composite FPI because of poor expenditure and revenue quality

compared to other states.

○ Further, states such as Madhya Pradesh, Andhra Pradesh, Uttar

Pradesh and Bihar have done well on the FPI because of their good

performance in revenue and capital expenditure indices.

○ The report also recommended that govt should attempt a) broadening of

tax base b) increasing investment in Education, healthcare and

infrastructure.

SOCIAL AND LABOR CONVERGENCE PROGRAMME (SLCP)

News: The chairman of the Cotton Textiles and Export Promotion Council (Texprocil) has said

that ‘Social and Labor Convergence Programme (SLCP)’ will be launched in India shortly.

Facts:

● SLCP is an initiative to have a standard-neutral, converged assessment

framework for the textile and clothing industry. The initiative is led by the world’s

leading manufacturers, brands, retailers, industry groups, non-governmental

organisations and service providers.

● The objective of the initiative is to improve the working conditions in textile units by

allowing resources that were previously designated for compliance audits to be

redirected towards the improvement of social and labour conditions.

● The initiative is the voluntary adoption by the textile and clothing makers. It is not code of

conduct or compliance program.

● The converged assessment framework developed by the SLCP provides a data set

with no value judgment or scoring. However, it will be compatible with existing audit

systems and codes of conduct. This means that the same data set can be used by a wide-

range of stakeholders. It eliminates the need for repetitive audits to be carried out on the

same facility.

● The benefits of SLCP for facilities are that it addresses audit fatigue by reducing the

number of social audits and facilitates measuring of employment practices, thus

improving working conditions & employee relations.


● Texprocil was incorporated in 1954 as an autonomous, nonprofit body dedicated to

the export promotion of cotton textiles. It makes suggestions for strengthening the

export efforts and also to provide data for monitoring exports.

OPEN MARKET OPERATIONS (OMO) News: The Reserve Bank has said it will inject Rs 15,000 crore into the financial system through


the purchase of government bonds via the auction route. The government securities will be

bought under Open Market Operations (OMO).

Facts:

● Open Market Operation (OMO)

○ Open market operation is the sale and purchase of government securities and

treasury bills by the Reserve Bank of India (RBI).

○ The objective of OMO is to regulate the money supply in the economy.

○ When the RBI wants to increase the money supply in the economy, it

purchases the government securities from the market. It sells government

securities to suck out liquidity from the system.

○ RBI carries out the OMO through commercial banks and does not directly deal

with the public.

○ OMO is one of the tools (others are – repo rate, Cash Reserve Ratio, Statutory

Liquidity Ratio) that RBI uses to smoothen the liquidity conditions through the

year and minimise its impact on the interest rate and inflation rate levels.

COMPETITION COMMISSION OF INDIA(CCI) News: The Competition Commission of India (CCI) ordered an investigation into Google for

allegedly abusing the dominant position of its popular Android mobile operating system to

block rivals.

Facts:

● Competition Commission of India

○ Competition Commission of India is a statutory body of the Government of

India established in 2003. It is responsible for enforcing the Competition

Act,2002 throughout India and to prevent activities that have an appreciable

adverse effect on competition in India.

○ CCI consists of a Chairperson and 6 Members appointed by the Central

Government. The Competition Act, 2002 was amended in 2007.It follows the

philosophy of modern competition laws.

○ The act prohibits

■ anti-competitive agreements

■ abuse of dominant position by enterprises and

■ regulates combinations (acquisition, acquiring of control and mergers

and acquisitions) which causes or likely to cause an appreciable

adverse effect on competition within India.

○ It is the duty of the Commission to eliminate practices having adverse effect

on competition, promote and sustain competition, protect the interests of

consumers and ensure freedom of trade in the markets of India.

○ The Headquarter of the Commission is located at New Delhi


SECURITIES APPELLATE TRIBUNAL (SAT)

News: The National Stock Exchange of India (NSE) has challenged co-location orders of the

Securities and Exchange Board of India (SEBI) before Securities Appellate Tribunal (SAT).

Facts:

● Co-location refers to a system where traders are allowed to place servers in close

proximity to those of an exchange, helping faster execution of trades

● Securities Appellate Tribunal

○ Securities Appellate Tribunal (SAT) is a statutory body established under the

provisions of Section 15K of the Securities and Exchange Board of India

Act,1992.

○ It’s headquarter is in Mumbai.

○ The mandate of SAT is to hear and dispose of appeals against the orders passed by the

■ Securities and Exchange Board of India (SEBI)

■ Pension Fund Regulatory and Development Authority (PFRDA) and

■ Insurance Regulatory Development Authority of India (IRDAI).


● The National Stock Exchange of India Limited (NSE) is the leading stock exchange of

India, located in Mumbai. The NSE was established in 1992 as the first demutualized

electronic exchange in the country.

MCA21 PORTAL

News: The government has decided to introduce artificial intelligence system in the MCA21

portal-an e- Governance initiative of Ministry of Company Affairs (MCA)

Facts:

● MCA21 is an e-Governance initiative of Ministry of Company Affairs (MCA),

Government of India. It enables an easy and secure access of the MCA services to the

corporate entities, professionals and citizens of India.

● The MCA21 application is designed to fully automate all processes related to the

proactive enforcement and compliance of the legal requirements under the

Companies Act, 1956, New Companies Act, 2013 and Limited Liability Partnership

Act, 2008. This will help the business community to meet their statutory obligations.

● The MCA21 application offers the following

○ Enables the business community to register a company and file statutory

documents quickly and easily

○ Provides easy access of public documents

○ Helps faster and effective resolution of public grievances

○ Helps registration and verification of charges easily and

○ Ensures proactive and effective compliance with relevant laws and corporate governance.


● Artificial Intelligence is the simulation of human intelligence processes by machines. It


refers to the ability of machines to perform cognitive tasks like thinking, perceiving,

learning, problem solving and decision making.

● Recently MCA21 was included in calculating the GDP of India.

DRAFT NOTIFICATION ON THIRD PARTY MOTOR INSURANCE BY IRDAI

News: Insurance Regulatory and Development Authority of India (IRDAI) released a draft

notification on third-party motor insurance.

Facts:

● IRDAI come out with draft of new rates for Third Party insurance premium for cars, two

wheelers and transport vehicles.

● Third-party insurance is the portion of an insurance policy that protects you if you’re held

legally responsible for a physical injury or damage to someone else’s property.


● IRDAI

○ The IRDAI is an autonomous, statutory body created by IRDA Act, 1999. It was

created based on the recommendations of the Malhotra Committee (1994). It’s

headquarters is in Hyderabad.

○ The functions of IRDA includes (a)regulating the insurance industry and

protects the customers (b)promotion of competition to enhance customer

satisfaction and (c)lowering premiums for ensuring the financial security of the

insurance sector.

NON-BANKING FINANCE COMPANIES (NBFC)

News: The Reserve Bank of India has directed non-banking finance companies (NBFC) with

assets size of over Rs 5000 crore to appoint a chief risk officer (CRO) to improve standards of

their risk management.

Facts:

● The CRO will be a senior official in the hierarchy of an NBFC and shall possess

adequate professional qualification/ experience in the area of risk management. He will

be appointed for a fixed tenure. He is required to function independently so as to ensure

the highest standards of risk management

NBFC

● An NBFC is a company registered under the Companies Act, 1956.

● These are the companies which provide banking services without meeting the legal

definition of a bank.

● It engages in the business of (a)loans and advances (b)acquisition of shares /stocks/

bonds/ debentures/securities issued by Government or local authority or other


marketable securities of a like nature leasing and (c) hire-purchase, insurance

business, chit business.

● However, it does not include any institution whose principal business is that of (a)agriculture

activity (b)industrial activity (c)purchase or sale of any goods (other than securities) and

(d)providing any services and sale/purchase/construction of immovable property.

● Non-Banking Financial Companies are regulated by different regulators in India such as

RBI, IRDA, SEBI, National Housing Bank and Department of Company Affairs. RBI

regulates the companies which deal in lending, accepting deposits, financial leasing, hire

purchase and acquisition of shares

/ stocks etc. The companies that take up activities like stock broking, merchant

banking etc. are regulated by SEBI while the Nidhi and Chit Fund companies are

regulated by the Department of Company Affairs. Housing finance companies are

regulated by National Housing Bank.

● The difference between NBFC and Bank are as under:

o The NBFC cannot accept Demand Deposits. However, they can accept term deposit.

o NBFC cannot issue cheques drawn on themselves.

o Deposits in NBFC are not covered under the Deposit Insurance and Credit

Guarantee Corporation Act 1961.

o NBFC do not form part of payment and settlement system.

SANDBOX INITIATIVE News: Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and

Development Authority of India (IRDAI) has announced sandbox initiative to encourage start-

ups in their segments by making data and systems available to them.

Facts:

● A sandbox is an enabling infrastructure or interface which is made available to an outside

innovator or fin-tech by a bank so that they can test their product and services in real

time. This live testing

reduces the time to go to the market and also allows room for failure without actually going for

a commercial launch.

● SEBI has named the sandbox initiative as Innovation Sandbox. Innovation sandbox is a

shared workspace to ideate, explore new subjects, develop technologies and share

knowledge.

● It aims to create an ecosystem which promotes innovation in the securities market. This space

allows fin-tech firms which are not registered with SEBI to be a part of the sandbox to test new

digital and tech based innovation.

● IRDAI has also come up with a similar sandbox to ensure flexibility in the insurtech market. But

for the IRDAI sandbox, the applicant (an insurance company/broker or individual) should have

a net worth of Rs 10 lakhs and a proven financial record of at least one year.


● FinTech or financial technology is an industry comprising companies that use technology to

offer financial services. These companies operate in insurance, asset management and

payment and numerous other industries.

E-PAYMENTS PANEL HEADED BY NANDAN NILEKANI News: The Reserve Bank of India (RBI) appointed a committee headed by Nandan Nilekani has

submitted its suggestions on promoting digital payments in India.

Facts:

● In January, 2019, RBI had set up the five-member panel (headed by Nandan Nilekani) on

deepening digital payments with a view to encourage digitisation of payments and enhance

financial inclusion through digitisation.

● The major recommendations of the Committee are as under

○ No user charges for digital transactions.

○ Round the clock (24*7) RTGS and NEFT facility.

○ Duty free import of point of sale (POS) machine.

○ No convenience fee on payments made by customers to government agencies.

○ Customer complaints regarding payments system should use machine – driven,

online dispute resolution systems.

○ The proposed Computer Emergency Response Team for finance (FIN- CERT)

must be operationalised to monitor the security of digital payment systems.

PAYMENT AND SETTLEMENT SYSTEMS IN INDIA: VISION 2019–2021 News: The Reserve Bank of India (RBI) has released its document on ‘Payment and Settlement

Systems in India: Vision 2019–2021’.

Facts:

● The core theme of the document is ‘Empowering Exceptional E-payment Experience’.

● The vision is to empower every Indian with access to a bouquet of e- payment options that is

safe, secure, convenient, quick and affordable

● Vision 2021 concentrates on a two-pronged approach of,

○ exceptional customer experience; and

○ enabling an ecosystem which will result in this customer experience.

● The Vision aims towards a) enhancing the experience of Customers; b) empowering

payment System Operators and Service Providers; c) enabling the Eco-system and

Infrastructure; d)putting in place a Forward-looking Regulation; e)supported by a Risk-

focussed Supervision.

● To achieve the aims, the Vision envisages four goal-posts (4 Cs) – Competition, Cost,

Convenience and Confidence.

● This document expects the number of digital transactions to increase more than four times from

20.69 billion in December 2018 to 87.07 billion in December 2021.

● The RBI also expects accelerated growth in individual retail electronic payment systems

both in terms of number of transactions and increased availability.

● The document also talks about creating customer awareness, setting up a 24X7 helpline and

self- regulatory organisation for system operators and service providers. The ‘no-compromise’

approach towards safety and security of payment systems remains a hallmark of the vision.

● The approach of the RBI will continue to be of minimal intervention in the pricing of charges

to customers for digital payments. Also, no specific target has been considered for reducing

cash in circulation.

EXPECTED OUTCOMES OF VISION 2021

● Payment systems like UPI / IMPS are likely to register average annualised growth of over 100%

and NEFT at 40% over the vision period.

● Volume of cheque-based payments would be less than 2.0% of the retail electronic

transactions by 2021.

● the digital payment transaction turnover vis-à-vis GDP (at market prices-current price) is

expected to further increase to 10.37 in 2019, 12.29 in 2020 and 14.80 in 2021

● Increase in use of digital modes of payment for purchase of goods and services through

increase in debit card transactions at PoS (35% increase during the vision period)

7TH ECONOMIC CENSUS

News: Ministry of Statistics and Program Implementation (MoSPI) is conducting 7th Economic Census –

2019.

Facts:

● It is being conducted to provide disaggregated information on various operational and

structural aspects of all establishments in the country.

● MoSPI has partnered with Common Service Centres, CSC e-Governance Services India

Limited (which is a Special Purpose Vehicle (SPV) under the Ministry of Electronics and

Information Technology (MeitY) as the implementing agency for 7th Economic Census.

● Economic Census

○ Economic Census is a complete count of all entrepreneurial units located within the

geographical boundaries of India. It involves economic activities of either

agricultural (excluding crop production and plantation) or non-agricultural sector of

the Economy engaged in production or distribution of goods or services not for the sole

purpose of own consumption

○ The economic census provides detailed information on operational and other

characteristics such as number of establishments, number of persons employed,

source of finance, type of ownership among others. It is the only source of

information on the significantly large unorganised sector in the country.

○ This information is used for micro level/ decentralized planning and to assess the

contribution of various sectors of the economy in the gross domestic product (GDP).

○ Six Economic Censuses (EC) have been conducted till date. The first Economic

Census was undertaken in 1977 by CSO.

QUICK RESPONSE CODE (QR CODE)

News: The Central government is looking to mandate a QR code-based payment option using

Unified Payments Interface (UPI) at all shops.

Facts:

● QR code or Quick Response code is a two-dimensional machine readable code that is made

up of black and white squares and is used for storing URLs or other information. These can be

read by the camera of a smartphone.

● The QR code system was invented in 1994 by the Japanese company Denso Wave. Its purpose

was to track vehicles during manufacturing. It was designed to allow high-speed component

scanning.

● QR codes are now used in a much broader context, including both commercial tracking

applications and convenience-oriented applications aimed at mobile-phone users (termed

mobile tagging).

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (NABARD)

News: The National Bank for Agriculture and Rural Development (NABARD) has announced a Rs

700- crore venture capital fund for equity investments in agriculture and rural-focused startups

through its subsidiary Nabventures.

Facts:

● It is the first time that a rural development bank has launched a funds of its own.

● NABARD

○ The National Bank for Agriculture and Rural Development (NABARD) is an apex

development and specialized financial institution in India. NABARD was established

in 1982 by an act of Parliament.

○ NABARD was entrusted with matters concerning policy, planning and operations in

the field of credit for agriculture and other economic activities in rural areas in India. Its

main focus is to uplift rural India by increasing the credit flow for elevation of agriculture

& rural non-farm sector.

○ NABARD was set up based on the recommendation of B Shivaraman committee. It

replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell

(RPCC) of Reserve Bank of India, and Agricultural Refinance and Development

Corporation (ARDC)

○ At present, NABARD is fully owned by government.

Other facts:

● Venture capital funds are investment funds that manage the money of investors who seek

private equity stakes in startups and small- to medium-sized enterprises with strong growth

potential. These investments are generally characterized as high-risk/high-return

opportunities.

WORLD CUSTOMS ORGANISATION (WCO)

News: Central Board of Indirect Taxes and Customs (CBIC) is organising a meeting of the Regional

Heads of Customs Administration of Asia Pacific Region of the World Customs Organisation (WCO)

in Kochi, Kerala.

Facts:

● India is holding the meeting in capacity of vice chair of Asia Pacific region (2018 for a 2-year period)

● The World Customs Organization (WCO)

○ It was established in 1952 as the Customs Co-operation Council (CCC).

○ It is an independent inter-governmental body whose mission is to enhance the

effectiveness and efficiency of Customs administrations.

○ WCO headquarters is located at Brussels, Belgium

○ WCO represents 182 Customs administrations across the globe that collectively

process approximately 98% of world trade. The WCO has divided its Membership into

six Regions. Each of the six Regions is represented by a regionally elected Vice-

Chairperson to the WCO Council.

○ WCO offers its members a range of Conventions and other international instruments,

as well as technical assistance and training services provided either directly by the

Secretariat or with its participation.

○ WCO has also been responsible for administering the World Trade Organization’s

agreement on Customs Valuation which provide a system for placing values on

imported goods, and the Rules of Origin, which are used to determine the origin of

a given commodity.

SBI RULES LINK SAVINGS BANK INTEREST TO REPO RATE News: State Bank of India (SBI) has linked its interest rate on savings account with balance above ₹1

lakh and short-term loans to Reserve Bank of India’s (RBI) repo rate.

Facts:

● At present, Banks use internal benchmark like marginal cost of fund based lending rate (MCLR)

to price their loans.

● MCLR is an internal benchmark rate that depends on various factors such as fixed deposit

rates, source of funds and savings rate. The price of loan comprises the MCLR and the spread

or the bank’s profit margin. Spread refers to the difference in borrowing rates and lending

rates of financial institutions.

● The biggest problem with the MCLR system was lack of required transmission of policy rates to

the borrowers.

● Thus, RBI has advocated that banks will now have to link the interest rates charged by them

on different categories of loans to the external benchmark like Repo rate or Treasury Bill rate

instead of the used internal benchmark like marginal cost of fund-based lending rate (MCLR).

● The new system of linking interest rate to repo rate is expected to bring in more

transparency in fixing rates and faster transmission rates.

SERVICES TRADE RESTRICTIVENESS INDEX (STRI)

News: India has demanded a new method of measuring Services Trade Restrictiveness Index (STRI).

Facts:

● Following concerns associated with OECD STRI index has been raised by India:

o Significant design issues that render it impractical for use. (eg - the index seems to show

the Indian services sector as one of the most restrictive, particularly in policy areas like

foreign entry).

o Data seems to have been generated by rather arbitrary procedures and reflects a

developed country bias.

o Theoretical and empirical inconsistencies in the OECD methodology. For eg-

change in regulatory measures in one policy area can lead to dramatic changes in the

STRI in another policy area.

Additional Facts

● STRI

o It is a unique, evidence-based tool that provides information on regulations affecting

trade in services in 22 sectors across OECD member countries and non-OECD.

o STRI is computed by the Organisation for Economic Cooperation and Development

(OECD). It was launched in 2014.

o STRI indices take the value from 0 to 1. Zero signifies completely closed and 1

completely open economy.

TRANSFER OF SURPLUS FUND BY RBI News: RBI has approved the transfer of record Rs. 1.76 lakh crore (including dividend and

surplus) to central government.

Facts:

● RBI transfer of Rs 1.76 lakh crore includes the payment of net surplus income of the RBI

worth ₹1.23 lakh crore for 2018-19 and a transfer of excess provisions worth ₹52,637

crore. The excess provisions were transferred as per the suggestions of the Bimal

Jalan Committee.

● This is the highest ever transfer by the RBI to the government. This is the first time

that RBI is transferring its surplus reserve.

Economic Capital Framework (ECF)

● Economic Capital is the risk capital that a central bank must have, to cover all its risks

related to its assets and ongoing activities, such as market risk, operational risk, etc. It is

expressed as contingency fund plus revaluation reserve and some other minor

components, such as an asset-development fund etc. The present total economic

capital of RBI is Rs. 9.6 trillion as of July 2018.

● The objective of holding risk capital by the RBI under the ECF for the following reasons:

a. To ensure that the RBI has sufficient financial resilience to give effect to its policy actions

and use them as financial stability safeguard in times of a crisis.

b. To contribute in international transactions as a trustworthy counterparty in times of

stress since it has very high levels of financial resilience globally.

Why the need for a revised ECF?

● The need for a revised ECF was felt after a disagreement between the RBI and the

central government regarding the transfer of surplus funds. The government has been

insisting that the central bank must hand over its surplus reserves amid a shortfall in

central government revenue collections. The central government believed that the

reserves with RBI was quite high and accordingly asked RBI to transfer at least one-third

of its reserve assets.

● This was also reiterated by the Economic Survey of 2016-17, which found that the RBI is

one of the most capitalised central banks in the world having the fourth highest amount

of equity as a percentage of balance sheet

o Therefore, Bimal Jalan Committee was formed to review the existing ECF and decide on

the quantum of reserves.

Bimal Jalan Committee Recommendations

o The committee has defined Economic capital as a combination of realized equity

and revaluation reserves.

o Realized equity - It is a form of contingency fund for meeting all risks/losses

primarily built up from retained earnings. It is required to cover credit risk and

operational risk.

o Revaluation reserves - It refers to those profits of the RBI which may arise from

changes in the valuation of Gold, Foreign Currency or foreign securities.

● The committee recommended that total economic capital of the RBI needs to be in the

range of 20 % - 24.5% of the RBI’s total balance sheet. (It is 23.3% as on 30 June, 2019).

Further, the realised equity should be maintained at within a range of 5.5% to 6.5% of

the RBI’s balance sheet. Also, any shortfall in revaluation balances would add to the

requirement for realized equity.

● It recommended a surplus distribution policy. The current surplus distribution policy

only targets the total economic capital. The committee recommends that the policy

should also target realized equity. Only if realized equity is above its requirement, the

entire net income is transferable to the Government. If it is below the lower bound of

requirement, risk provisioning will be made to the extent necessary and only the residual

net income (if any) will be transferred to the Government.

● It has recommended that RBI’s capital framework be reviewed every five years.

● The committee recommended the alignment of the financial year of RBI (July-June) with

the fiscal year of the government (April – March).

Positive Impact of transfer of surplus to economy

● Funds can help in revival of economy. It can be used to revive consumption and boost

investment in core sectors (electricity, cement, coal, steel etc),

● The funds can also aid in the recapitalization public sector banks given the huge

amount of Non- Performing Assets (NPAs). It may lead to ease of lending to different

sectors of economy

Negative Impact of transfer of surplus to economy

● Immediate increased government spending (if not done in proper manner) may result in inflation

● Due to the transfer, the reserves of the RBI have been reduced. It may reduce RBI

ability to deal with financial shock.

CONSOLIDATION/AMALGAMATION OF NATIONAL BANKS News: Government has announced consolidation of 10 National banks into 4 banks.

S.No. Amalgamated Banks Anchor Banks

1 Punjab National Bank (PNB), Oriental Bank of Commerce (OBC), and

United Bank of India

Punjab National

Bank

2 Canara Bank and Syndicate Bank Canara Bank

3 Union Bank of India, Andhra Bank, Corporation bank Union Bank of India

4 Indian Bank and Allahabad Bank Indian bank

Facts

● The total number of PSBs after consolidation has come down to 12 from 27 in 2017.

● Previous instances of consolidation of banks are:

o Vijaya Bank and Dena Bank with Bank of Baroda (BoB) – effective from April 01, 2019.

o State Bank of India absorbed five of its associates and the Bharatiya Mahila Bank in 2017.

● After the consolidation, the four largest PSB’s in India are (in decreasing order) – a) SBI

b) PNB c) Bank of Baroda d) Canara Bank.

Benefits of Consolidation

● Efficiency – Operational cost may be reduced due to presence of overlapping shared

networks. This operational efficiency gains may reduce cost of lending.

● Self Sufficiency - Better ability to raise resources from markets

● Technological Synergy - All merged banks in a particular bucket share common Core

Banking Solutions (CBS) platform synergizing them technologically.

https://www.drishtiias.com/daily-updates/daily-news-analysis/amalgamation-of-three-public-sector-banks

● Wider offerings – Bigger banks can provide wider offerings with enhanced customization

● Cost Saving and income opportunities for joint ventures and subsidiaries.

● Wide Coverage - It will result in wider geographical coverage/reach of Bank.

● Consolidation of bank is in line with the recommendation of Narasimham II committee.

Challenges in bank merger

● Job loss – It may result in job losses, in the immediate futute. People may take voluntary retirement.

● Cultural Clash - Mergers may result in clash of different organizational cultures.

● Too big to fail – If systematically important bank fail, it can severely impact the entire banking industry.

DRAFT NATIONAL LOGISTICS POLICY

News: The Express Industry Council of India (EICI) has raised concerns regarding the Draft

National Logistics Policy, which was released by the government early this year.

Logistics Sector in India

● Indian logistics sector is highly fragmented. Different parts of the logistics value chain

currently are being managed by different ministries, including Road Transport and

Highways, Shipping, Railways, Civil Aviation, D/o Posts, Commerce and Industry,

Finance and Home Affairs.

● In addition, many government agencies including Central Drug Standard Control

Organization, Food Safety and Standards Authority of India, Plant and Animal

Quarantine Certification Service provide relevant trade clearances and impact the

value chain.

● The Indian logistics sector provides livelihood to more than 22 million people and

improving the sector will facilitate 10 % decrease in indirect logistics cost leading to the

growth of 5-8% in exports.

● The worth of Indian logistics market would be around USD 215 billion in the next two

years compared to about USD 160 billion currently.

Draft National Logistics Policy

● The policy has been prepared by the Ministry of Commerce and Industry in

consultation with the Ministries of Railways, Road Transport and Highways, Shipping

and Civil Aviation.

● Aim - The aim of the policy is to reduce the logistics cost from the present 14% of GDP to

less than 10% by 2022.

Key thrust areas in the policy

● Focusing on critical projects to drive an optimal modal mix and to enable first mile

and last mile connectivity.

● Driving development of Multi Modal Logistics Parks (MMLPs), creating single window

logistics e marketplace, setting up logistics and data analytics centre.

● Creating a Centre of Trade facilitation and Logistics excellence (CTFL) and leveraging

the expertise of multilateral agencies.

● Creating an Integrated National Logistics Action Plan and align with respective state development plans.

● Enhancing warehousing sector, transport and rolling stock infrastructure.

● Streamlining EXIM processes to promote trade competitiveness.

● Ensuring seamless movement of goods at Land Customs Stations (LCS) and

Integrated Check Points (ICP).

● Strengthening the MSME sector through efficient logistics.

● Promoting cross regional trade on e-commerce platforms through seamless flow of goods.

● Promoting Green & Sustainable Logistics.

● Setting up a Startup acceleration fund.

Concerns

● The Express Industry Council of India (EICI) has said that the policy has overlooked the

role of the air express industry (courier and parcel service) and air cargo sectors. EICI

has said that in developing countries such as India, an efficient air express

infrastructure could contribute directly to global competitiveness of the country by

ensuring just-in-time deliveries and reducing clearance dwell time.

SANDBOX MODEL

News: The Reserve Bank of India (RBI) has issued the final framework for regulatory sandbox in

order to enable innovations in the financial technology space.

What is Sandbox model?

● It allows companies to test products in a closed environment i.e. within a particular

geography or among a set of users, before they are allowed to roll out commercially.

● As part of this policy, the regulator provides the appropriate regulatory support by relaxing

specific legal and regulatory requirements for specified time duration.

● Regulatory sandbox (RS) is an infrastructure that helps financial technology (FinTech)

players live test their products or solutions before getting the necessary regulatory

approvals for a mass launch which saves start-up’s time and cost.

Features of the model issued by RBI

The target applicants for entry to the RS are FinTech companies including startups, banks,

financial institutions and any other company partnering with or providing support to financial

services businesses, subject to the sandbox criteria laid down in these guidelines.

The requirements that should mandatorily be complied by the regulatory applicants are

● customer privacy and data protection,

● secure storage of and access to payment data of stakeholders,

● security of transactions,

● KYC requirements and

● statutory restrictions.

RBI has said that the entity should have a minimum net worth of Rs 25 lakh as per its latest audited

balance sheet. The promoters/ directors of the entity should be fit and proper and the conduct of

the bank accounts of the entity as well its promoters/directors should be satisfactory.

The regulatory relaxation which may be granted by the RBI are

● Liquidity requirements,

● Board composition,

● Management experience,

● Financial soundness and

● Track record.

Further, the negative list of products, services and technology which may not be accepted for testing are:

● credit registry,

● credit information,

● crypto currency

● trading or investing in crypto asset among others.

Benefits of Sandbox Policy

● A regulatory sandbox would help the users to check the viability of the product before its

original roll- out.

● It would help in scaling-up the generation of a product based on evidence and appropriate checks.

● Appropriate modifications can be made in the product if any concerns are unearthed while

the product is in the sandbox.

● The sandbox model provides avenues to the start-ups to check their products before the

original launch. Thus, it would help the start-ups in saving costs and time.

What are Fintech Companies?

● The term “FinTech” is a combination of two words “finance” and “technology”. It refers

to the technological start-ups that are emerging, contrary to the traditional banking and

financial players in financial inclusion.

● Some of the major FinTech products and services are Peer to Peer (P2P) lending

platforms, crowdfunding, block chain technology, Big Data etc.

MONETARY POLICY COMMITTEE News: The Reserve Bank of India’s (RBI) monetary policy committee (MPC) has lowered the

repo rate by 35 basis points to 5.4%.

Facts:

Monetary Policy Committee

● It is a committee constituted under section 45ZB of amended RBI Act, 1934.

● It is entrusted with the task of fixing the benchmark policy interest rate (repo rate) to

contain inflation within the specified target level (4 percent, within a band of +/- 2 per

cent)

Constitution of the MPC

● It is a 6-member committee – the RBI Governor (Chairperson), the RBI Deputy

Governor in charge of monetary policy, one official nominated by the RBI Board and

the remaining three members are nominated by the Government of India.

● The Government of India nominees are appointed by the Central Government based

on the recommendations of a search cum selection committee consisting of the

cabinet secretary (Chairperson), the RBI Governor, the secretary of the Department

of Economic Affairs, Ministry of Finance and three experts in the field of economics or

banking as nominated by the central government.

Repo rate

● Repo stands for ‘Repurchasing Option. It refers to the rate at which commercial banks

borrow money from the RBI. The MPC is mandated by law to ensure that retail inflation

stays within a band of two percentage points of the target inflation rate of 4%. since

inflation has been well below the 4% mark, the MPC members have voted for rate cut.

● The rate cut is expected to boost consumption and investment in the economy.

● Although, the MPC has cut the repo rate by 110 bps since February,2019 but only about

40 bps have been transmitted to borrowers. The poor monetary transmission by banks

has consistently undermined the effectiveness of the MPC’s decision.

What is monetary transmission?

● Monetary transmission refers to the process by which a central bank’s monetary policy

signals (like repo rate) are passed on, through financial system to influence the

businesses and households.

● Thus, monetary policy transmission is the entire process starting from the change in the

policy rate(repo rate) by the central bank to various money market rates (e.g- inter-bank

lending rates, to bank deposit rates, bank lending rates) to households and firms, to

government and corporate bond yields and asset prices (stock prices and house

prices). It is expected to finally result in stable inflation and economic growth.

NIRVIK SCHEME News: MInistry of Commerce and Industry through Export Credit Guarantee Corporation

(ECGC) has introduced a new Export Credit Insurance Scheme (ESIC) called NIRVIK to

enhance loan availability and ease the lending process.

Facts:

About the scheme:

● Under this scheme, the ECGC would provide insurance cover to those

banks which give loans to the exporters of goods and services

● The insurance cover guaranteed by ECGC has been enhanced to 90% from

earlier provision of 60% insurance cover -- the additional outgo due to this

increased cover, if any, will be supported by the government

● The increased cover will ensure that foreign and rupee export credit interest rates are

below 4% and 8 % respectively for the exporters.

● The insurance cover will include both pre and post-shipment credit

● The scheme has a timeline of 5 years

Benefits of the scheme:

● It will enhance accessibility and affordability of credit for exporters.

● This scheme will help make Indian exports competitive, make ECGC procedures exporter friendly

● It will benefit MSME exporters.

● The insurance cover is also expected to bring down the cost of credit due to

capital relief, less provision requirement and liquidity due to quick settlement of

claims.

Additional information:

Export Credit Guarantee Corporation (ECGC):

● ECGC is a premier export credit risk insurance agency of the Government of

India. It is a fully government-owned company that was established in 1957 to

promote exports by providing credit insurance services. It is headquartered at

Mumbai.

● It has representatives from the Government, the RBI, insurance and export community

● It is controlled by the Ministry of Commerce and Industry.

● It provides a range of credit risk insurance cover to the exporters against loss in

export of goods and services

● It offers Export Credit Insurance cover to banks and financial institutions

to enable exporters to obtain better facilities from them

● It provides Overseas Investment Insurance to Indian companies investing in

Joint Ventures abroad in the form of equity or loan

● The ECGC provides Export Credit Insurance to Banks (ECIB) to protect the

banks from losses on account of export credit at the Pre and Post-Shipment

stage

TRADE AND DEVELOPMENT REPORT 2019 News: United Nations Conference on Trade and Development (UNCTAD) has released

its Trade and Development Report 2019.

Facts:

About the report:

● The report has forecasted India’s growth as moderate to 6% in 2019 from 7.4%

in 2018. It will be due to lower-than-targeted tax collections and limited

public spending.

● The report stated that the two fastest growing economies in the world (i.e. India

and China) are showing signs of a loss of growth momentum.

● Public Banks in India have loan portfolios at 1% – 2% of its GDP (China – 13.4%,

Korea 10.5%). This is too low for the attainment of Sustainable Development

Goals

● The report has stated that there are ample job opportunities in Clean energy and

Green Sectors in India

Key Recommendation of Report:

● The report has recommended for the adoption of a unitary taxation system

for Multinational Enterprises (MNEs). This approach is needed as the

current international corporate taxation norms consider affiliates of MNEs as

independent entities and treat taxable transactions between different entities of

MNEs as unrelated. This unitary taxation system would simplify the global

taxation system and is expected to increase tax revenues for all countries.

● The report also highlighted the fact that the profits of MNEs are generated

collectively at the group level. Hence, unitary taxation should be applied by

combining it with a global minimum effective corporate tax rate on all MNE

profits.

● The report has listed down a series of measures that would give the lead in

financing a Global Green New Deal to the public sector and calls on the

international community to find the political will to advance such an agenda.


UNCTAD:

● UNCTAD is a permanent intergovernmental body established by the United

Nations General Assembly in 1964.

● It is headquartered in Geneva, Switzerland and is a part of the UN Secretariat.

● It was formed specifically to handle the problems of developing countries dealing

with trade, investment and development issues.

● The various other reports published by UNCTAD are (a) World Economic

Situation and Prospects Report (b) Trade and Development Report (c) World

Investment Report (d) The Least Developed Countries Report, (e) Information

and Economy Report (f) Technology and Innovation Report and

(g) Commodities and Development Report.

About Global Green New Deal (GGND):

● It refers to a mix of policy actions that would stimulate economic recovery and at

the same time improve the sustainability of Indian economy.

● This report was commissioned by UNEP in response to the multiple global crises of

2008 – fuel, food and financial.

● It calls on governments to allocate a significant share of stimulus funding to green

sectors and sets out three objectives:

○ economic recovery;

○ poverty eradication; and

○ Reduced carbon emissions and ecosystem degradation.

PROMPT CORRECTIVE ACTION (PCA) News: The Reserve Bank of India (RBI) has initiated Prompt Corrective Action (PCA) against

Lakshmi Vilas Bank (LVB).

Facts:

What is Prompt corrective action (PCA):

● PCA is a framework under which banks with weak financial metrics are put under watch by the RBI.

● The RBI introduced the PCA framework in 2002 as a structured early-

intervention mechanism for banks that become under-capitalised due to poor

asset quality, or vulnerable due to loss of profitability. The framework was

reviewed in 2017.

● It aims to check the problem of Non-Performing Assets (NPAs) in the Indian

banking sector. PCA helps RBI monitor key performance indicators of banks and

take corrective measures to restore the financial health of a bank.

● The PCA framework is applicable only to commercial banks and not

extended to co-operative banks, non-banking financial companies (NBFCs).

When is PCA invoked?

● The thresholds applied by RBI for invoking PCA are linked to 3 parameters –

CRAR (Capital to Risk weighted Assets Ratio), asset quality (net non-performing

assets) and profitability (return on assets)

● The PCA is invoked under the following circumstances:

○ If NPAs rise above 10% (Asset Quality Review),

○ If the Capital Adequacy Ratio (CAR) falls below 9%,

○ If the Return on Assets (RoA) falls below 0.25% (i.e. low profitability) etc.

● The banks have to follow an action-plan based on each trigger point. RBI can

impose several restrictions on the bank such as reducing capital expenditure other

than technological upgradation, making dividend payments, borrowing from other

banks.

Types of restrictions:

● There are two types of restrictions - mandatory and discretionary restrictions.

● The restrictions on dividends, branch expansion, director’s compensation are

mandatory while discretionary restrictions could include curbs on lending and

deposits

● RBI may also place restrictions on credit by PCA banks to unrated borrowers or

those with high risks but it doesn’t invoke a complete ban on their lending.

● RBI may also impose restrictions on the bank on borrowings from interbank market.

● Further, the banks may also not be allowed to enter into new lines of business.


NPA: As per the Reserve Bank of India, the banks shall recognise stress in the loan accounts

by classifying them into Special Mention Accounts (SMA), as follows:

SMA Sub-

categories

Basis for classification – Principal or interest payment or any other

amount wholly or partly overdue between

SMA-0 1-30 days

SMA-1 31-60 days

SMA-2 61-90 days

If a loan or advance for which the principal or interest payment remains overdue for a period of

90 days or more, it is termed as Non-performing Asset (NPA).

In case of Agriculture Loans, the NPAs are defined as follows:

● Short duration crop: Interest not paid for 2 crop seasons and

● Long duration crops: Interest not paid for 1 Crop season.

The NPAs are further classified into the following:

● Substandard assets: Assets which have remained NPA for a period less than or equal to 12 months.

● Doubtful assets: Assets which have remained in the substandard category for a period of 12 months.

● Loss assets: Loss asset is considered uncollectible and of such little value that

its continuance as a bankable asset is not warranted, although there may be some

salvage or recovery value.

Stressed Assets: Stressed assets comprises of NPAs, restructured loans and written off assets.

Restructured loans are the assets/loans which have been restructured by giving a longer

duration for repayment, lowering interest or by converting them to equity.

Written off assets are the assets/loans which aren’t counted as dues but recovery efforts are

continued at branch level. It is done by banks to clean up their balance books.

BHARAT – 22 ETF News: Government has decided to launch the fourth tranche of Bharat-22 Exchange traded

fund (ETF) on October 3, 2019.

Facts: About Bharat-22 ETF:

● Bharat 22 is an ETF that will track the performance of 22 stocks of Central Public

Sector Enterprises (CPSE), Public Sector Banks (PSB’s) and strategic holding

of SUUTI (Specified Undertaking of Unit Trust of India).

● The 22 stocks are diversified across six sectors such as(a) basic materials (b)

energy (c)finance (d) FMCG (e) industrials and (f) utilities.

● Bharat-22 ETF is managed by the ICICI Prudential AMC.

● Bharat – 22 ETF is the second ETF launched by Ministry of Finance (after CPSE ETF)

Additional Facts:

What are Exchange traded fund (ETF)?

● Exchange Traded Funds (ETF) are index funds that are listed and traded on

stock exchanges just like regular shares.

● They are a basket of stocks with assigned weights that reflect the composition of an index.

● The ETFs trading value is based on the net asset value of the underlying stocks that it represents.

● The ETF aims to help speed up the government’s disinvestment programme.

WORLD DIGITAL COMPETITIVENESS RANKINGS News: The World Digital Competitiveness Ranking (WDCR) 2019 report was released by

the IMD World Competitiveness Center.

Facts:

About World Digital Competitiveness report:

● The report is prepared by the Switzerland-based International Institute for

Management and Development (IMD)’s World Competitiveness Center (WCC).

● It measures the capacity and readiness of 63 nations to adopt and explore

digital technologies as a key driver for economic transformation in business,

government and wider society.

The countries are ranked based on three factors which are:

● Knowledge - the capacity to understand and learn the new technologies,

● Technology - the competence to develop new digital innovations

● Future Readiness- the preparedness for the coming developments.

Key takeaways from the report:

● The US was ranked as the world's most digitally competitive economy, followed by

Singapore in second place.

● India has jumped four places from 48th place in 2018 to 44th rank in 2019

● India has improved its ranking by 4 places mainly due to positive results in talent,

training and education as well as the enhancement of technological infrastructure.

● The country has improved overall in all factors such as knowledge, technology and

future-readiness as compared to the previous year's ranking.

● Top 5 countries in World Digital Competitiveness Ranking 2019 are 1) United

States 2) Singapore 3) Sweden 4) Denmark 5) Switzerland.

ADVANCE PRICING AGREEMENT News: The Central Board of Direct Taxes (CBDT) has entered into 26 Advance Pricing

Agreements (APAs) in the first 5 months of the financial year (April to August, 2019).

Facts:

About Advance Pricing Agreements (APAs):

APA is an agreement between a taxpayer andTax authority determining the transfer pricing methodology for pricing the taxpayer’s international transactions for future years.

● APA helps taxpayers to voluntarily resolve actual or potential transfer pricing

disputes in a proactive, cooperative manner as an alternative to the traditional

examination process.

Types of APAs:

● Unilateral APA involves only the taxpayer and the tax authority of the country

where the taxpayer is located.

● Bilateral APA (BAPA) involves the taxpayer, associated enterprise (AE) of the

taxpayer in the foreign country, tax authority of the country where the taxpayer

is located and the foreign tax authority

● Multilateral APA (MAPA) involves the taxpayer, two or more AEs of the

taxpayer in different foreign countries, tax authority of the country where the

taxpayer is located, and the tax authorities of AEs.

Importance of APAs

• It gives certainty to taxpayers;

• It helps to reduce disputes and litigation;

• It helps to enhance tax revenues

• It makes the country an attractive destination for foreign investments and

• It helps to improve ease of doing business.

• These agreements would also lower complaints and litigation costs as they would

be binding on both the taxpayer as well as the government.


About Central Board of Direct Taxes (CBDT):

• CBDT is a statutory authority setup under the Central Board of Revenue Act,

1963. It is a part of the Department of Revenue in the Ministry of Finance.

• CBDT provides inputs for policy and planning of direct taxes in India and is

also responsible for the administration of direct tax laws through the Income

Tax Department.

EXTERNAL BENCHMARKS BASED LENDING MUST – RBI News: The Reserve Bank of India (RBI) has made it mandatory for banks to link all new floating

rate personal or retail loans (housing, auto etc.) and floating rate loans to MSMEs to an

external benchmark rate from October 1st, 2019.

Facts:

● The RBI has given the options to banks for external benchmark rates which are (a) RBI repo rate

(b) 91-day T-bill yield (c)182-day T-bill yield or (d) any other benchmark market interest rate

produced by the Financial Benchmarks India Pvt. Ltd.

● At present, interest rates on loans are linked to a bank’s marginal cost of lending rate

(MCLR). Prior to MCLR, it was Base rate method and Benchmark Prime lending rate. All

these rates are internal benchmark rates. Banks have been allowed to use RBI’s policy rate

among other market- driven options to calculate lending rates.

● The biggest problem with the current system is the lack of required transmission of policy

rates by the banks to the borrowers.

Why this move by RBI:

• It has been observed that due to various reasons, the transmission of policy rate changes to the lending rate of banks under the current MCLR framework has not been satisfactory

• The RBI has initiated this move for faster monetary policy transmission Additional Information:

Repo rate

(b) Repo stands for ‘Repurchasing Option’. It refers to the rate at which

commercial banks borrow money from the RBI

T-bills ● T-bills or treasury bills are short term securities issued on behalf of the government by the RBI

and are used in managing short term liquidity needs of the government.

● T-bills are issued at a discount and are redeemed at par.

Marginal Cost of lending rate (MCLR)

● The marginal cost of funds-based lending rate (MCLR) refers to the minimum

interest rate of a bank below which it cannot lend except in some cases

allowed by the RBI. It is an internal benchmark or reference rate for the bank.

● This rate is based on four components namely (a) marginal cost of funds, (b)

negative carry on account of cash reserve ratio c) operating costs and (d) tenor

premium.

Monetary Policy Transmission

● This process of repo rate translates to interest rate across the banking system is

called “monetary policy transmission”.

● The policy action consists of measures such as: changing the interest rate at

which the central bank borrows or lends “reserves” (Rupees) on an overnight

basis with commercial banks.

● Thus, monetary policy transmission is the entire process starting from the change

in the policy rate (repo rate) by the central bank to various money market rates

(e.g- inter-bank lending rates, to bank deposit rates, bank lending rates) to

households and firms, to government and corporate bond yields and asset

prices (stock prices and house prices). It is expected to finally result in stable

inflation and economic growth.

Actual Lending rates of banks

● In India, a large proportion of loans are based on the floating interest rates [Floating

Interest rates means that the rates charged on the borrower keeps changing

depending on a reset clause. The reset clause determines the period after which the

interest rates of the banks are reset].

● The floating rates, in turn are linked to some benchmark rate. The benchmark rate

varies over time depending upon changing macroeconomic conditions, financial

conditions and the central bank’s policy rate. The benchmark rate may be of two

types:

o Internal benchmark: It is calculated based on factors which are in

control of the banks (e.g- cost of funds, operational costs etc.) All the

interest rate regimes of India have been based on an Internal

benchmark (e.g-BPLR, MCLR etc).

o External benchmark: It is calculated based on factors which are market-

determined and are not under the control of banks.

● Banks, then charge a spread (based on factors such as credit risk) over the

benchmark rate to determine the actual lending rate. Thus, Actual lending rate =

Benchmark Rate + Spread

BHIM 2.0 LAUNCHED WITH ADDITIONAL FEATURES

News: Union Minister of Electronics and Information Technology (MeiTY) has launched BHIM

2.0. It packs in new functionalities, support additional features and has increased transaction

limits.

Facts:

About BHIM:

● Bharat Interface for Money (BHIM) is Unified Payments Interface (UPI) based

payment interface application that allows real time fund transfer using a single identity

like mobile number or name

● The app was launched in 2016. It was developed by the National Payments Corporation of

India (NPCI). It was developed to promote financial inclusion in the country.

● BHIM can be used for the following:

o Sending & collecting money to any person on UPI

o Paying bills on merchant websites by UPI

o Booking flight tickets or recharge your mobile

o Scan a QR code to make quick payments

o Check your transaction history on UPI

o Send money using Bank Account information and IFS code

BHIM 2.0

● It has been launched to make BHIM more feature rich and effective.

● It supports three additional languages- Konkani, Haryanvi and Bhojpuri, over and above existing 13.

● The existing cap of Rs. 20,000 has also been increased to Rs. 1,00,000, from verified merchants.

● It allows linking of overdraft account with BHIM UPI. (in addition to savings and current account)

● It will allow customers to block a certain amount of money for a product or service.

Customers can pre- authorise a transaction and pay later (Mandate feature). This feature

can be used only once using BHIM

● It will allow customers to check invoice sent by merchant prior to making payment. It will help

customers to view and verify the credentials and check whether it has come from the

right merchant or not. Customers can pay after verifying the amount and other important

details mentioned in the invoice.

● It will allow customers to check the authenticity of merchants while scanning QR or quick

response code. It notifies the user with information to ascertain whether the merchant is a

verified UPI merchant or not. This provides an additional security. Customers will be

informed in case the receiver is not secured by way of notifications.

● Some of the other features of BHIM 2.0 includes - donation gateway, linking multiple

bank accounts, offers from merchants, option of applying in IPO, gifting money.


About UPI:

● Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a

single mobile application of any participating bank.

● The interface has been developed by National Payments Corporation of India (NPCI).

● It merges several banking features, seamless fund routing & merchant payments into one hood.

● It also caters to the “Peer to Peer”, collect requests which can be scheduled and paid as

per requirement and convenience.

About National Payments Corporation of India (NPCI):

● NPCI is an umbrella organisation for operating retail payments and settlement systems in India.

● It is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA)

under the provisions of the Payment and Settlement Systems Act, 2007 for creating a

robust Payment and Settlement Infrastructure in India.

2. WORLD BANK’S EASE OF DOING BUSINESS 2020 REPORT News: The World Bank

has released its doing business report 2020.

Facts:


● New Zealand has topped the rankings followed by Singapore and Hong Kong.

● The 10 economies that improved the most in their ease of doing business score were

Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India, and

Nigeria.

● Only two African economies rank in the top 50 on the ease of doing business; no

Latin American economies rank in this group.

● Worldwide, 115 economies made it easier to do business.

Report on India:

● India was placed at 63rd position (out of 190 countries). India has recorded a jump of 14

positions against its rank of 77 last year.

● India’s score was 71. It was 67.23 in 2019.

● Further, for the third consecutive year, India was also amongst the top 10 economies

where the business climate has improved the most.

● India performed better in six of the ten parameters used for ranking including starting a

business, dealing with construction permits, trading across borders, resolving

insolvency, paying taxes and getting electricity.

● Four parameters where India saw big improvements are

o Resolving Insolvency

o Dealing with construction permit

o Trading across Borders

o Starting a business

● India saw the biggest jump in ranking in resolving insolvency category to 52nd rank from 108th.

● The Indian Imports and exports also became easier with a single electronic platform

for trade stakeholders, among other things.

● However, the country still lags in areas like enforcing contracts and registering property.

● The report has said that India takes 58 days and costs an average 7.8 percent of a

property’s value to register it, longer and at greater cost than among OECD high-

income economies.

● Further, it takes 1,445 days for a company to resolve a commercial dispute through a local

first-instance court which is almost three times the average time in OECD high-income

economies.

● The World Bank will now include Kolkata and Bengaluru, besides Delhi and Mumbai, for

preparing ease of doing business report, in order to provide a holistic picture of the

business environment of the country.

About Doing Business Report:

● Doing Business report measures regulations across the 190 economies in 10 business

regulatory areas to assess the business environment in each economy. The report was

introduced in 2003.

● The ten of these indicators were used to estimate an ease of doing business score this year.

● The 10 parameters are- starting a business, construction permits, getting electricity, getting

credit, paying taxes, trading across borders, enforcing contracts, and resolving

insolvency.

● The other two indicators are employing workers and contracting with the government.

However, these were not included in the ease of doing business score and ranking this

year.

● The rankings are on the basis of Distance to Frontier (DTF), a score that shows the gap

of an economy to the global best practice.

WORLD ECONOMIC OUTLOOK REPORT

News: The International Monetary Fund (IMF) has released the World Economic Outlook (WEO) Report.

Facts:


● The report has downgraded India’s growth projections to 6.1% in 2019 and 7% in 2020.

● The report has said that the global economy is at its slowest pace of growth at 3%. This is

a serious climb down from 3.8% in 2017.

● However, the report has said that the Global growth rate is projected to improve to 3.4% by 2020.

● Further, the growth of advanced economies is projected to slow down by 1.7%

● But the emerging and developing economies are projected to experience a growth pick

up from 3.9% in 2019 to 4.6% in 2020.

Why is there a slowdown in growth?

● The higher tariffs and prolonged uncertainty in the trade policy are the major reasons

for dented investment and the slowdown in the growth.

● The automobile industry is contracting mainly due to the disruptions from new emission standards.

● Further, trade barriers and geopolitical tensions like Brexit is hampering investment,

confidence and growth.

What should India do to reverse the slowdown?

● IMF has suggested that the monetary policy and broad-based structural reforms should be

used to address cyclical weakness and strengthen confidence.

● A credible fiscal consolidation path is needed to bring down India’s elevated public debt over

the medium term.

● This should be supported by subsidy-spending rationalisation and tax-base enhancing measures.

● Further, Governance of public sector banks and the efficiency of their credit allocation

needs should be strengthened.

● Land reforms should also be enhanced to encourage and expedite infrastructure development.


International Monetary Fund

● The International Monetary Fund (IMF) is an organization of 189 countries. It was established in 1945.

● The main goal of IMF is to ensure the stability of the international monetary system -

the system of exchange rates and international payments

● It also seeks to facilitate international trade, promote high employment and

sustainable economic growth, and reduce poverty around the world.

● IMF’s mandate was increased in 2012 to include all macroeconomic and financial

issues that have a bearing on global stability

● The other reports published by IMF are - Global Financial Stability Report and Fiscal Monitor.

GLOBAL COMPETITIVENESS INDEX

News: The Global Competitiveness Index (GCI) compiled by the World Economic Forum

(WEF) was released recently.

Facts:

Key takeaways from the index:

● Singapore has replaced the US as the world’s most competitive country. The US was

positioned at 2nd place and was followed by Hong Kong at third place and Netherlands

and Switzerland at 4th and 5th places respectively.

● China was ranked at 28th position and was the highest ranked among BRICS nations.

Vietnam showed higher improvements in the region and was ranked at 67.

● The report has also said that Asia Pacific was the most competitive region globally. It

was followed by Europe and North America.

India’s ranking:

● India has moved down 10 places to rank 68th in 2019 from 58th in 2018 on the global

competitiveness index.

● The index has flagged limited ICT (information, communications and technology) adoption,

poor health conditions and low healthy life expectancy as the reasons.

● India is also amongst the worst-performing BRICS nations along with Brazil which is ranked

even lower than India at 71st this year.

● In the overall ranking, India is followed by some of its neighbours including Sri Lanka at

84th place, Bangladesh at 105th, Nepal at 108th and Pakistan at 110th place.

Other key findings of the report on India:

● India was ranked high at 15th place in terms of corporate governance, while it is ranked

second globally for shareholder governance.

● In terms of the market size, India is ranked third and has the same rank for renewable energy regulation.

● Besides, India has also punched above its development status when it comes to innovation

which is well ahead of most emerging economies and at par with several advanced

economies.

● According to the report, India also needs to work on its skill base, market efficiency, trade

openness and worker protection rights.

● The ratio of female workers to male workers in India was 0.26. It was ranked at 128th place

and was very low as compared to certain other developing countries.


About the Global Competitiveness Index (GCI):

● The Global Competitiveness Index is released by the World Economic Forum (WEF).

● It was launched in 1979. It ranks the competitiveness landscape of 141 economies through

103 indicators organised into 12 pillars.

● These 12 pillars are (1) Institutions (2) Infrastructure (3) ICT adoption (4)

Macroeconomic stability (5) Health (6) Skills (7) Product market (8) Labour market (9)

Financial system (10) Market size (11) Business dynamism and (12) Innovation

capability.

World Economic Forum (WEF)

● WEF was established in 1971 as a not-for-profit foundation and is headquartered in Geneva, Switzerland.

● The objective of WEF is to improve the state of the world by engaging business, political,

academic and other leaders of society to shape global, regional and industry agendas.

● Some of the most significant reports published by the WEF are (a) Global

Competitiveness Report (b) Global Gender Gap Report (c) Global Risks Report and (d)

Global Travel and Tourism Report among others.

INDIA INNOVATION INDEX News: NITI Aayog with Institute for Competitiveness as the knowledge partner released the

India Innovation Index, 2019.

Facts:

About India innovation index:

● The index examines the innovation ecosystem of Indian states and Union Territories.

● The index was developed on the lines of the Global Innovation Index (GII). It is

expected to help the innovation ecosystem of Indian states and Union Territories (UTs) to

design policies to drive innovation across regions.

● The index performs the following three functions (a) ranking of states and UTs based

on their index scores (b) recognizing opportunities and challenges and (c) assisting in

tailoring governmental policies to foster innovation.

Parameters:

The Index is calculated as the average of the scores of its two dimensions – Enablers and Performance.

● The Enablers are the factors that underpin innovative capacities. They are grouped into

five pillars: (1) Human Capital (2) Investment (3) Knowledge Workers (4) Business

Environment and (5) Safety and Legal Environment.

● The Performance dimension captures benefits that a nation derives from the inputs. It is

divided into two pillars (6) Knowledge Output and (7) Knowledge Diffusion.

Key takeaways from the index:

● The index has bifurcated the states into three categories (a) major states (b) north-east and hill states and

(a) union territories/city states/small states.

● There is a west-south and north-east divide across the country. The top ten major

states are majorly concentrated in southern and western India.

● Karnataka has emerged topper in the overall rankings in the category of major states with

Tamil Nadu and Maharashtra in the second and third positions.

● Karnataka’s top position is partly attributed to its top rank in the Performance dimension.

● Maharashtra performs the best in the dimension of Enablers. This implies that it has the

best enabling environment for innovation even though the state comes in at the third

position in the overall innovation index.

● Among the North-Eastern states and Union territories, Sikkim and Delhi occupy the

top spots respectively.

● Delhi, Karnataka, Maharashtra, Tamil Nadu, Telangana, and Uttar Pradesh are the most

efficient states in translating inputs into output.

● Bihar, Jharkhand, and Punjab were the least attractive states for investment.


About GII:

● The Global Innovation Index (GII) is an annual ranking that quantifies the state of

national innovation ecosystem across countries. In 2019, it has ranked 129 countries

based on 80 indicators.

● The GII is co-published by the World Intellectual Property Organisation (WIPO), Cornell

University and INSEAD.

● India has improved its ranking by five places to 52nd in 2019 from 57th position in 2018.

India has also outperformed on innovation relative to its GDP per capita for nine

consecutive years.

About WIPO:

● It is a self-funding UN agency which acts as a global forum for IP services, information and cooperation.

● It has a membership of 192 countries currently

● It was established through the WIPO Convention of 1967

● Its mission is to lead the development of a balanced and effective international IP

system that enables innovation and creativity for the benefit of all

● Membership of the WIPO extends to all those countries which are a party to the

International Bureau of Intellectual Property, Paris Convention (Convention for the

Protection of International Property), Berne Convention (Convention for the protection

of Literary and Artistic works)

● Additionally, a country can also be a member of WIPO if it fulfils the following criteria:

1. if the country is a member of the UNO, any of the UN specialized agencies, the

International Atomic Energy Agency or is a party to the statute of the

International Court of Justice.

2. if any country is invited by the General Assembly to be a party to this convention

GLOBAL WEALTH REPORT

News: The Credit Suisse Group has released the 10th edition of its annual Global Wealth Report.

Facts:

About the report:

● The report tracks both the growth and distribution of wealth in terms of the numbers of

millionaires and billionaires. It also tracks the proportion of wealth held and the status of

inequality around the world.

Definition of Wealth:

● Wealth is defined in terms of net worth of an individual. It is calculated by adding up

the value of financial assets (such as money) and real assets (such as houses) and

then subtracting any debts an individual may have.

● According to the report, the drivers of the wealth are (a) Size of population (b) Savings

behaviour and (c) levels of economic activity.

Key findings of the report:

● China has overtaken the United States this year to become the country with most people

in the top 10% of global wealth distribution.

● The report has found that just 47 million people which accounts for 0.9% of the world’s

adult population owns $158.3 trillion which is almost 44% of the world’s total wealth.

● On the other hand, 2.88 billion people accounting for almost 57% of the world’s adult

population own just $6.3 trillion or 1.8% of the world’s wealth.

● The women’s wealth has also grown relative to that of men in most countries due to rising

female labor force participation, more equal division of wealth between spouses and

other factors.

Report on India:

● The total wealth in India has increased four-fold between 2000 and 2019, reaching $12.6 trillion in 2019.

● India ranks fifth globally in terms of the number of ultra-high-net-worth individuals.

● The report has said that 78% of India’s adult population has wealth below $10,000 while

1.8% of India’s population has more than $100,000. At the other extreme, 1790 adults

have wealth over $100 million.

CORPORATE TAX RATE CUT BY THE GOVERNMENT News: Finance Minister has announced to reduce the corporate tax rates in order to encourage

manufacturing and boost private investment.

Facts:

About the tax rate cut: The government has taken the following decisions:

Why the corporate tax rate cut?

● The corporate tax rate was reduced as the two other factors of the economy namely

government expenditure (where the fiscal deficit is under pressure) and exports (which

have been stagnant) have little space to boost growth.

Significance of corporate tax cut:

● The lower corporate tax is aimed at boosting private sector investment in the backdrop of

slowdown in consumption and decline in investment by private businesses.

● The cut in corporate tax will also make it more attractive for existing and new businesses

to invest and increase production which in turn will create employment.

● However, this move will also cost the government Rs 1.45 lakh crore annually. This

increases the chances of higher fiscal deficit and government may have to resort to

spending cuts or embark on higher disinvestment.


About MAT:

● MAT stands for Minimum Alternative Tax. It was introduced by the Finance Act, 1987 with

effect from assessment year 1988-89. Later on, it was withdrawn and then reintroduced

in 1996.

● The objective of introduction of MAT is to bring into the tax net zero tax companies

who in spite of having earned substantial book profits (the profit shown in the profit and

loss account) do not pay tax due to various tax concessions and incentives provided

under the Income-tax Law.

3. ASIA-PACIFIC TRADE AND INVESTMENT REPORT

News: The Asia-Pacific Trade and Investment Report 2019 was released.

Facts:

About the report:

● The report has been published by the United Nations Economic and Social Commission

https://www.downtoearth.org.in/news/economy/un-reports-demands-review-of-non-tariff-measures-to-boost-world-trade-67234

for Asia and the Pacific (ESCAP) and the United Nations Conference on Trade and

Development (UNCTAD).

● The report provides information on developments in (a) intra and inter-regional trade in

goods and services (b) foreign direct investment (c) trade facilitation measures (d) trade

policy measures and (e) preferential trade policies and agreements.

Highlights from the report:

● The report has said that the Non-Tariff Measures (NTMs) have increased in the past two

decades and are affecting trade as well Sustainable Development Goals (SDGs) in

Asian countries.

● Around half the Asia-Pacific’s economies have at least one NTM addressing water and

energy efficiency and only 10% have measures addressing illegal, unreported and

unregulated (IUU) fishing and illegal timber trade.

● NTMs can also affect foreign direct investment negatively which may slow down

countries’ economic activities. It can also have a direct impact on the performance of

trading partners.

Suggestions:

● The report has called for increasing cooperation with developed economies to work

out regional mechanisms and developing common guidelines on sustainability impact

assessment of NTMs.

● The report has also recommended reviewing current NTMs and ensuring that new

NTMs are systematically followed and monitored.

● The report also said that the implementation of NTMs in the right spirit can help in achieving SDGs.


What are Non-tariff measures (NTM)?

● Non-tariff measures (NTMs) are policy measures other than ordinary customs tariffs

that can potentially have an economic effect on international trade in goods, changing

quantities traded, or prices or both.

Examples of NTM:

● Sanitary and Phytosanitary Measures:These are measures that are applied to protect

human or animal life from risks arising from: additives, contaminants, toxins or disease-

causing organisms in food.

● Technical Barriers to Trade:These are measures referring to technical regulations,

and procedures for assessment of conformity with technical regulations and standards.

About UNESCAP:

● The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)

is the regional development arm of the United Nations for the Asia-Pacific region.

● It has 53 Member States and 9 Associate Members from Asia-Pacific Region including

India. It serves as the UN’s regional hub promoting cooperation among countries to

achieve inclusive and sustainable development.

About UNCTAD:

● UNCTAD is a permanent intergovernmental body established by the United Nations

General Assembly in 1964.

● It is headquartered in Geneva, Switzerland and is a part of the UN Secretariat.

● It was formed specifically to handle the problems of developing countries dealing with trade,

investment and development issues.

ENTERPRISE DEVELOPMENT CENTRES News: Union Micro, Small and Medium Enterprises sector (MSME) minister will launch the

Enterprise Development Centres (EDCs) in very district.

Facts:

About EDC

● Enterprise Development Centres (EDCs) are aimed at developing a cadre of indigenous

entrepreneurs in the MSMEs.

● They are planned for every district by the end of the current financial year (2019-20).

● The EDCs will be similar to incubators for start-ups.They will be run by special purpose

vehicles in partnership with the private sector, business management organisations,

local industry associations.

● The centre will help new and existing businesses develop by providing services such as

management training, and office space among others.

● The EDCs will also have enterprise clinics for struggling firms which the government

hopes will reduce the number of small businesses falling into a debt trap financed by

bank loans.


About MSME:

● The Micro- Small and Medium Enterprises (MSMEs) are small sized entities defined in

terms of their size of investment.

● The MSMEs are classified in terms of investment made in plant and machinery if they are

operating in the manufacturing sector and investment in equipment for service sector

companies.

● However, MSME(Amendment) Bill, 2018 which has not been passed yet proposes a

uniform classification for all MSMEs.

● Under the Bill, all MSMEs, whether they are manufacturing or service providing

enterprises will be classified on the basis of their annual turnover.

CABINET APPROVES NEW STRATEGIC DISINVESTMENT PROCESS

News: Union Cabinet has approved a new process of strategic disinvestment with a view to

expediting privatization of select PSUs.

Facts:

What are the new changes?

● Under the new policy, the Department of Investment and Public Asset Management

(DIPAM) under the Ministry of Finance has been made the nodal department for the

strategic disinvestment sale.

● Currently, PSUs for strategic sale are identified by NITI Aayog. But the new policy has

now allowed DIPAM and NITI Aayog to jointly identify PSUs for strategic

disinvestment.

● Further, the DIPAM secretary would now co-chair the inter-ministerial group on

disinvestment along with the secretary of administrative ministries concerned.


What is disinvestment?

● Disinvestment is defined as the action of an organisation/government, selling or

liquidating an asset/subsidiary. It is also referred to as divestment.

● In the case of Public Sector Undertakings (PSU) disinvestment means Government

selling/diluting its stake (share) in PSUs in which it has a majority holding.

● Disinvestment is carried out as a budgetary exercise under which the government

announces yearly targets for disinvestment for selected PSUs.

● Government has set the disinvestment target of 1.05 lakh crore for the current financial year 2019-20.

Significance of disinvestment:

● It improves the structure of incentives and accountability of PSUs in India.

● It can help in the revival of loss-making public sector enterprises (PSU).

● It can help in financing the increasing fiscal deficit.

● It can also finance the large-scale infrastructure development, defense, education

and healthcare projects.

Concerns on disinvestment:

● The process of disinvestment is not socially and politically popular.

● After disinvestment, there is likelihood of employees of Public Sector Units (PSUs) losing their jobs.

● There is a likelihood of Government losing on its dividend income due to decline in the

shares of the PSUs.

GOVERNMENT E-MARKETPLACE News: The government e-Marketplace (GeM) has signed a Memorandum of Understanding

(MoU) with Federal Bank to offer different services including the transfer of funds.

Facts:

About GeM:

● Government e Marketplace is an online marketplace setup in 2016 for procurement of

commonly used goods and services by government ministries, departments and

CPSEs.

● It aims to enhance transparency, efficiency and speed in public procurement.

● It is a National Procurement Portal of India. It functions under Directorate General of

Supplies and Disposals (DGS&D), Ministry of Commerce and Industry.

Benefits of GeM:

● Transparency: GeM eliminates human interface in vendor registration, order placement

and payment processing to a great extent.

● Efficiency: Direct purchase on GeM can be done in a matter of minutes and the entire

process online, end to end integrated with online tools for assessing price

reasonability.

● Secure and safe: GeM is a completely secure platform and all the documents on GeM

are e-Signed at various stages by the buyers and sellers.

● Savings to the Government: transparency, efficiency and ease of use of the GeM

portal has resulted in a substantial reduction in prices on GeM.

EXPLAINED: WHY STATE BUDGETS MATTER News: The Reserve Bank of India (RBI) has released its annual study of state-level budgets.

Facts:

Highlights of the study:

● The study has found that except during 2016-17, state governments have regularly met

their fiscal deficit target of 3% of GDP.

● However, most states ended up meeting the fiscal deficit target not by increasing their

revenues but by reducing their expenditure and increasingly borrowing from the

market.

● This had affected the loans that state governments provided to power projects, food

storage and warehousing. It has also impacted the states capital budget allocation for

key social and infrastructure sectors.

● Hence, reduction in overall size of state budgets has likely worsened the economic

slowdown that was slowly setting in since the start of 2016-17, when India had grown by

8.2%.

● The outstanding debt-to-GDP of States have also risen over the last five years to 25%

of GDP making sustainability of debt the main fiscal challenge.

Challenges for the states:

● The States have been finding it difficult to raise revenues.

● States revenue prospects are confronted with low tax buoyancies, shrinking revenue

autonomy under the Goods and Services tax (GST) framework and unpredictability

associated with transfers of IGST and grants.

Why understanding about state government finances important?

● States now have a greater role to play in determining India’s GDP than the Centre.

● States now spend one-and-a-half times more than the Union government.

● They are the bigger employment generators. They employ five times more people than the Centre.

● Further, since 2014-15, the states have increasingly borrowed money from the market.

● Hence, the overall trend has serious implications on the interest rates charged in the

economy, the availability of funds for businesses to invest in new factories and the

ability of the private sector to employ new labour.

https://indianexpress.com/article/explained/rbi-state-budget-explained-gdp-economy-6056708/


About Fiscal deficit:

● The difference between total revenue (non borrowed revenue receipt) and total

expenditure of the government is termed as fiscal deficit.

● It is an indication of the total borrowings needed by the government. While calculating the

total revenue, borrowings are not included.

RBI REVISES FRAMEWORK ON CURRENCY SWAP ARRANGEMENT FOR SAARC COUNTRIES

News: The SAARC currency swap facility framework came into operation on November 15, 2012.

Facts:

• Under the revised framework for 2019-22, the Reserve Bank of India will continue to

offer swap arrangement within the overall corpus of $2 billion.

• The currency swap facility will be available to all SAARC member countries subject to

their signing the bilateral swap agreements.

• The drawls can be made in US dollar, euro or Indian rupee. The framework also

provides certain concessions for swap drawls in Indian Rupee.

• Currency Swap Arrangement:

• A currency swap between countries is an agreement to exchange currencies with

predetermined terms and conditions.

• The countries engage in currency swaps with foreign counterparts to meet short term

foreign exchange liquidity requirements or to ensure adequate foreign currency to

avoid Balance of Payments (BOP) crisis till longer arrangements can be made.

PURCHASING MANAGERS INDEX (PMI) FOR MANUFACTURING SLIPPED TO TWO YEARS LOW

News: The Purchasing Managers Index (PMI) fell to a two-year low of 50.6 in October,2019

from 51.4 in September,2019.

Facts:

• The purchasing managers index has fallen as weakening demand had an effect in the

manufacturing industry bringing down the rates of increase in production, employment

and business sentiment.

Additional Facts:

PMI: PMI or Purchasing Managers’ Index (PMI) is an indicator of business activity both in

the manufacturing and services sectors. It is usually released at the start of a month.

• PMI was originally developed in 1948 by the US-based non-profit group namely Institute

of Supply Management (ISM). For India, the PMI Data is published by Japanese firm

Nikkei but compiled and constructed by Markit Economics.

• It is a survey-based measures that asks the respondents about changes in their

perception of some key business variables from the month before.

• The indices vary between 0 and 100 with a reading above 50 indicating an overall increase

compared to the previous month and below 50 an overall decrease.

TAXATION LAWS (AMENDMENT) BILL, 2019 INTRODUCED IN LOK SABHA

Key features of the bill:

• Currently, domestic companies with an annual turnover of up to Rs 400 crore pay income

tax at the rate of 25%. For other domestic companies, the tax rate is 30%.

• The Bill provides new domestic manufacturing companies with an option to pay income

tax at the rate of 15%, provided they do not claim certain deductions. These new

domestic manufacturing companies must be set up and registered after September 30,

2019 and start manufacturing before

April 1, 2023.

• However, a company which does not opt for the concessional tax regime and avails

the tax exemption/incentive shall continue to pay tax at the pre-amended rate.

• The Ordinance reduces the MAT rate (applicable for companies not opting for the new

tax rates) from 18.5% to 15% with effect from the financial year 2019-20. The Bill

amends this provision by making it effective from the financial year 2020-21.

Additional Facts:

MAT: MAT stands for Minimum Alternative Tax.

• It was effectively introduced in India by the Finance Act of 1987, vide Section 115J of the

Income Tax Act, 1961 (IT Act). Later on, it was withdrawn and then reintroduced in

1996.

• The objective of introduction of MAT is to bring into the tax net zero tax companies who

in spite of having earned substantial book profits (the profit shown in the profit and loss

account) do not pay tax due to various tax concessions and incentives provided under

the Income-tax Law.

COMPANY LAW COMMITTEE-2019 SUBMITS ITS REPORT TO FINANCE MINISTER*

News: Government of India has constituted a company law committee chaired by the Ministry of

Corporate Affairs (MCA) secretary Injeti Srinivas.

Facts:

• The committee was to look at recategorization of certain offences under the Companies

Act as civil offences and review other provisions of the Companies Act and the Limited

Liability Partnerships Act 2008.

Key recommendations of the committee:

• Recommended changes in the 46 penal provisions so as to remove criminality or to

restrict punishment to only fine or to allow rectification of defaults through alternative

methods.

• Re-categorised 23 offences out of the 66 remaining compoundable offences under the

Companies Act. These offences will be dealt with in the in-house adjudication

framework wherein these

defaults would be subject to a penalty levied by the adjudicating officer.

• Retention of the status-quo in case of the non-compoundable offences.

• Extending applicability of Section 446B (lower penalties for small companies and one

person companies) to all provisions which attract monetary penalties and extending the

benefit to producer

companies and start-ups.

• Proposing new benches of the National Company Law Appellate Tribunal (NCLAT)

• Providing for appeal against the orders of the Regional Directors before the NCLT

after due examination.

INTEGRATED SKILL DEVELOPMENT SCHEME IN THE TEXTILE SECTOR

News: Samarth-Scheme for Capacity Building in Textiles sector (SCBTS):

Facts:

• Samarth is a skill development scheme under the Union Ministry of Textiles.

• The scheme aims to provide skill development to the youth for gainful and sustainable

employment in the textile sector covering entire value chain of textiles excluding

spinning and weaving.

Target: The Scheme targets to train 10 lakh persons (9 lakhs in organised & 1 lakh in traditional sector).

Implementation: The skilling programmes would be implemented through following

Implementing Agencies:

• Textile Industry.

• Institutions/Organization of the Ministry of Textile/State Governments having training

infrastructure and placement tie-ups with textile industry.

• Reputed training institutions/ NGOs/ Societies/ Trusts/ Organizations/ Companies /Start-

ups / Entrepreneurs active in textile sector having placement tie-ups with textile

industry.

PUDUCHERRY: 29TH RCP MEETING OF ASIA PACIFIC CUSTOMS BEGINS

News: India hosted the World Customs Organization (WCO) Asia Pacific Regional Contact

Points (RCP) conference in Puducherry.

Facts:

• The conference discussed the key focus areas of the Asia Pacific Region. It includes

security, enforcement, facilitation and capacity building.

• The conference has also taken stock of the progress being made in carrying forward the

programmes of WCO to promote, facilitate and secure the cross-border trade in the

region and the capacity building and technical assistance required to achieve this

goal.

Additional Facts:

About WCO: The World Customs Organization (WCO) is an inter-governmental

organization headquartered in Brussels, Belgium. It was founded in 1952.

• It administers the technical aspects of WTO, agreements on customs valuation and rules of origin.

• The WCO has divided its Membership into six Regions. Each of the six Regions is

represented by a regionally elected Vice-Chairperson to the WCO Council.

• The six regions are:

o North Africa, Near and Middle East.

o West and Central Africa.

o East and Southern Africa (Somalia and South Sudan joined in 2012)

o South America, North America, Central America and Caribbean.

o Europe

o The Far East, South and South-East Asia, Australasia and Pacific islands

• India is a member of the Asia Pacific region of WCO and is also currently the Vice Chair

since July 2018. The four strategic guiding principles which India adheres to while

working as the Vice Chair of the A/P region, are:

o Greater communication and connectivity within the region

o Harness technology advancements

o Inclusive approach

o Consensus on core issues

CABINET APPROVES STRATEGIC DISINVESTMENT OF BPCL & 4 OTHER PSUS

News: The government kicked off a blockbuster disinvestment plan, lining up the sale of five

public sector units (PSUs).

Facts:

The Public Sector Units approved for strategic disinvestment are

• Bharat Petroleum Corp Ltd (BPCL) (The Numaligarh Refinery Limited operating under

BPCL is excluded)

• Shipping Corporation of India (SCI)

• Container Corporation of India (CONCOR)

• Tehri Hydro Development Corporation India Limited (THDCIL)

• North Eastern Electric Power Corporation Limited (NEEPCO)

Additional Facts:

Disinvestment - Disinvestment is the sale or liquidation of an asset or subsidiary by

government. According to DIPAM, "Strategic disinvestment would imply the sale of

substantial portion of the Government shareholding of a central public sector enterprise

(CPSE) of upto 50%, or such higher percentage as the

competent authority may determine, along with transfer of management control."

• Disinvestment is carried out as a budgetary exercise under which the government announces yearly

targets for disinvestment for selected PSUs. Government has set the disinvestment target of 1.05

lakh crore for the current financial year 2019-20.

• Department of Investment and Public Asset Management (DIPAM) under the Ministry of

Finance is the nodal department for the strategic disinvestment sale.

NCDEX TIES UP WITH NSE INDICES TO LAUNCH AGRIDEX News: The National Commodity and Derivatives Exchange (NCDEX) tied up with National Stock

Exchange (NSE) to launch India’s first agri index ‘NCDEX Agridex’.

Facts:

Agridex: The index represents a basket of ten commodities that are selected based on both

liquidity and its importance in Indian and global commodities market.

• The index will be made tradable after being approved from the SEBI

• The index has tied up with NSE Indices which will maintain and disseminate real time

NCDEX Agridex values.

Significance of Agridex:

• It would serve as a benchmark for agricultural ecosystems.

• As index represents a diverse basket of commodities, it is less risky and more predictable

compared to individual commodity.

• Futures trading on Agridex will also enhance overall liquidity on the exchange platform.

Additional Facts:

• NSE: The National Stock Exchange of India Limited (NSE) is the leading stock

exchange of India, located in Mumbai. The NSE was established in 1992 as the first

dematerialized electronic exchange in the country.

• NCDEX: National Commodity & Derivatives Exchange Limited (NCDEX) is an

online commodity exchange based in India. It is a public limited company incorporated in

2003 under the Companies Act,1956. It has an independent board of directors and

provides a commodity exchange platform for market participants to trade in commodity

derivatives.

RBI’S PANEL SUGGESTS MEASURES TO STRENGTHEN CORE INVESTMENT COMPANIES

News: The Reserve Bank of India (RBI) panel to review the regulatory and Supervisory

Framework for Core Investment Companies headed by Tapan Ray submitted its report.

Facts:

• Core Investment Companies (CICs) are Non-Banking Financial Companies (NBFCs)

having asset size of Rs 100 crore and above. It holds not less than 90% of its net assets

in the form of investment in equity shares, preference shares, bonds, debentures, debt

or loans in group companies. Further, investment in equity shares in group companies

constitute not less than 60% of its net assets.

Key Recommendations of the panel:

• Every conglomerate with a CIC should have a Group Risk Management Committee. This

committee should be responsible to monitor group-level leverage.

• One-third of the board should comprise of independent members if the chairperson of the CIC is a

non-executive member, otherwise at least half of the board should comprise of

independent members.

• Audit committee of the board should be chaired by an independent director who has

oversight over the CIC’s financial reporting process and policies.

• There is a need for ring fencing boards of CICs by excluding employees or executive

directors of group firms from its board.

• The number of layers of CICs in a group should be restricted to two. As such, any CIC

within a group shall not make investments through more than a total of two layers of

CICs. The word layer means subsidiary or subsidiaries of the holding company.

GOVERNMENT APPROVES RS 25,000 CRORE ALTERNATE FUND FOR STALLED HOUSING PROJECTS

News: Finance Minister Nirmala Sitharaman on Wednesday said the government would set up an

alternative investment fund (AIF) worth Rs 25,000 crore to provide relief to developers with

unfinished projects to ensure delivery of homes to buyers.

Facts:

The fund will be set up as a category-II Alternative Investment Fund which will pool investments

from the government and other investors.

• The government will contribute Rs 10,000 crore while the remaining amount will be put

up by the State Bank of India and the Life Insurance Corporation of India.

• SBICAP Ventures Limited will be the investment manager for the fund and decide on which

projects are eligible for the funding.

• The government expects this fund to revive the real estate sector, generate employment

and provide a boost to the economy through demand for materials like cement.

Eligibility for the fund:

• The project's net-worth must be positive.

• Affordable and middle-income housing project.

• On-going projects registered with the Real Estate (Regulation and Development) Act (RERA).

• Include stressed projects classified as non-performing assets or those stuck in the NCLT.

• The fund will not be available for the projects that have entered liquidation.

Additional Facts:

Alternate investment fund:

• Alternate investment funds (AIFs) are defined under the Securities and Exchange

Board of India (Alternative Investment Funds) Regulations, 2012. It refers to any fund

established or incorporated in India which is a privately pooled investment vehicle

which collects funds from sophisticated investors whether Indian or foreign for investing

it in accordance with a defined investment policy

for the benefit of its investors.

• Categories of AIF:

o Category I: Mainly invests in start- ups, SMEs or any other sector which Govt.

considers economically and socially viable.

o Category II: These include Alternative Investment Funds such as private equity

funds or debt funds for which no specific incentives or concessions are given by

the government or any other Regulator.

o Category III: Alternative Investment Funds such as hedge funds or funds which

trade with a view to make short term returns or such other funds which are open

ended and for which no specific incentives or concessions are given by the

government or any other Regulator.

TAMIL NADU BECOMES FIRST STATE TO ENACT LAW ON CONTRACT FARMING

News: Tamil Nadu became the first State in the country to enact a law on contract farming as

President gave assent to the Agricultural Produce and Livestock Contract Farming and Services

(Promotion and Facilitation) Act.

Facts:

Features of the act:

• The act provides for a six-member body called the Tamil Nadu State Contract Farming

and Services Authority.

• The authority would ensure proper implementation of the Act and make suggestions to

the State government for promotion and better performance of contract farming. • The act safeguards the interests of farmers during times of bumper crop or when

market prices fluctuate. The farmers would also be paid a predetermined price which had been arrived at the time of signing agreements with buyers.

• The farmers could get support from purchasers for improving productivity by way of inputs, feed and fodder and technology.

• However, any produce banned by the Centre or State government or the Indian Council of Agricultural Research would not be covered under contract farming.

Additional Formation

Contract Farming: Contract farming refers to varied formal and informal agreements between

producers and processors or buyers. It may include loose buying arrangements, simple

purchase agreements and supervised production with input provision with tied loans and risk

coverage. Contract farming usually involves the following basic elements - pre-agreed price,

quality, quantity or acreage (minimum /maximum) and time.

GLOBAL MICROSCOPE REPORT

News: The 12th edition of the Global Microscope for Financial Inclusion report was released

recently by the Economist Intelligence Unit. The report was first published in 2007.

Facts:

• The report is a benchmarking index that assesses the enabling environment for financial

access in 55 countries.

• The report assessed countries across five parameters namely (a) Government and

Policy Support (b)Stability and Integrity (c)Products and Outlets (d)Consumer

Protection and (e)Infrastructure. The 2019 Global Microscope report also features 11

new gender focussed indicators that measure financial inclusion for both women and

men.


• The report has said that the overall environment for financial inclusion has improved

globally with India, Colombia, Peru, Uruguay and Mexico having the most favourable

conditions for inclusive

finance.

• The report has ranked Colombia at the first position followed by Peru, Uruguay and Mexico.

• India has been ranked at the 5th spot. On the other hand, Democratic Republic of Congo

was ranked at the 55th position.

• India was placed among top nations due to conducive environment for financial inclusion

in terms of allowing non-banks to issue e-money, proportionate customer due

diligence and effective consumer protection.

Additional Facts:

Economic Intelligence Unit: The Economist Intelligence Unit (EIU) was created in 1946.It is

the research and analysis division of The Economist Group and the world leader in global

business intelligence.

CORE SECTOR OUTPUT FALLS 5.2% IN SEPTEMBER

News: The output of eight core infrastructure industries contracted by 5.2% in

September,2019. The sharp contraction also showed the severity of the industrial slowdown

and recovery may take time.

Facts:

• All sectors in the core index with the exception of fertilisers contracted in September,2019.

• The experts have blamed consumption slowdown, heavy rainfall and flooding in several

states as the prime reasons for the contraction.

• To lift growth, government has also taken several measures such as (a) slashing corporate tax rates

(b) infusing capital in banks (c) relaxing foreign direct investment limits for select sectors (d)

supporting real estate and (e) providing liquidity for non-banking finance companies.

Additional Facts:

Core Sector: Core sector can be defined as the main industry which has a multiplier effect on the economy.

• The Eight Core Industries comprise 40.27% of the weight of items included in the

Index of Industrial Production (IIP).

• The eight Core Industries in decreasing order of their weightage are (a) Refinery Products (b)

Electricity (c) Steel (d) Coal (e) Crude Oil (f) Natural Gas (g) Cement and (h) Fertilizers.

• IIP: The Index of Industrial Production (IIP) is a composite indicator that measures

changes in the volume of production of a basket of industrial products.

• The index is compiled and published monthly by the Central Statistical Organisation

(CSO), Ministry of Statistics and Programme. It is implemented six weeks after the

reference month ends,

i.e. a lag of six weeks.

• The Base Year of the Index of Eight Core Industries has been revised from the year

2004-05 to 2011- 12 from April 2017.

FINANCE MINISTER LAUNCHES IT INITIATIVES ICEDASH AND ATITHI

News: Union Minister of Finance and Corporate Affairs unveiled two new IT initiatives –

ICEDASH and ATITHI – for improved monitoring and pace of Customs clearance of

imported goods and facilitating arriving international passengers by electronic filing of

Customs baggage and currency declarations.

Facts:

About ICEDASH:

• ICEDASH is an ease of doing business (EoDB) monitoring dashboard of the Indian

Customs helping public see the daily customs clearance times of import cargo at various

ports and airports.

• It will be an effective tool that can help businesses compare clearance times across

ports and plan their logistics accordingly.

• The dashboard has been developed by the Central Board of Indirect Taxes and

Customs (CBIC) in collaboration with National Informatics Centre (NIC).

About ATITHI:

• ATITHI is a mobile app for international travelers to file the Customs declaration in advance.

• Passengers can use this app to file declaration of dutiable items and currency with

the Indian Customs even before boarding the flight to India.

• The app would in particular create a tech-savvy image of India's customs and would

encourage tourism and business travel to India.

Additional Facts:

CBIC: Central board of Indirect taxes (CBIC) was established in 1944.It is the nodal

national agency responsible for administering Customs, GST, Central Excise, Service Tax

& Narcotics in India.

• It is part of the Department of Revenue under Union Ministry of Finance. It is

headquartered in New Delhi.

• National Informatics Centre (NIC): The National Informatics Centre (NIC) is an institute

set up by the Indian government in 1976 to drive its technology and e-governance

initiatives in the country.

• The institute is part of the Indian Ministry of Electronics and Information

Technology’s Department of Electronics & Information Technology.

• NIC has the mandate to set up, implement and support all the information technology led

programs of the central and state governments and other government organizations in

India.

ECONOMIC OUTLOOK FOR SOUTH EAST ASIA, CHINA AND INDIA REPORT- OECD

News: India’s gross domestic product (GDP) could grow 6.6% in 2020-24, lower than its 2013-17

average of 7.4%, the Organisation for Economic Co-operation and Development (OECD) said

Facts:


• India’s gross domestic product (GDP) is projected to grow at 6.6% in 2020-24 lower than

its 2013-17 average of 7.4%.

• The report said that India’s reliance on consumption will continue due to large informal

labour share which indicates that there is room to strengthen the consumption base.

• It has also added that India must continue to focus on boosting the health of the banking

sector while bridging the disparity in urban and rural infrastructure.

• Further, the report has said that India needs to improve its digital literacy and increase

access to digital devices.

• OECD: The Organisation for Economic Co-operation and Development (OECD) is

an intergovernmental economic organisation with 36 member countries. It was

founded in 1961 to

stimulate economic progress and world trade. It is headquartered in Paris, France.

• India is not a member of OECD but has been a key economic partner.

'INDIAN TECH STARTUP ECOSYSTEM - LEADING TECH IN THE 20S' REPORT BY NASSCOM

News: According to the report ‘Indian Tech Startup Ecosystem – Leading Tech in the 20s’ by

Nasscom, India continues to be the third largest startup ecosystem across the world.

Facts:

• India continues to be the third largest start-up ecosystem in the world, having added more

than 1,300 tech start-ups in 2019.

• India now hosts 24 unicorns which is the third-highest number of unicorns in a single

country in the world. Unicorn is a term to describe to start-ups valued at $1 billion. The

report has also predicted

that the number of Indian unicorns could increase to 95-105 by 2025.

• The volume of investments in start-ups has also grown touching $4.4 billion by January-

September 2019 across 450 start-ups up 5% from the year-ago period.

• Start-ups have also created 60,000 direct jobs in 2019 alone compared with 40,000 jobs in 2018.

Additional Facts:

NASSCOM: The National Association of Software and Services Companies (NASSCOM) was

established in 1988. It is a non-profit organisation of Indian Information Technology (IT) and

Business Process Outsourcing (BPO) industry.

ASSET LIABILITY MANAGEMENT (ALM) FRAMEWORK FOR NBFC

INTRODUCED BY RBI

News: The Reserve Bank of India (RBI) has introduced ‘liquidity management framework’ for Non-

Banking Financial Companies (NBFCs).

Facts:

• ALM framework is introduced due to liquidity crunch faced by some NBFCs after the

collapse of the Infrastructure Leasing and Financial Services (IL&FS) group.

About the framework:

• All non-deposit taking NBFCs with an asset size of ₹10,000 crore and above and all deposit taking

NBFCs irrespective of their asset size have to maintain LCR at 50% starting from December

2020 which will be gradually increased to 100 per cent by December 2024.

• For all non-deposit taking NBFCs with asset size between ₹5,000¬-10,000 crore,

the LCR requirement will start at 30 per cent in December 2020 and reach 100 per cent

by December 2024.

• However, these guidelines will not apply to Type 1 NBFC-NDs, non-operating financial

holding companies and standalone primary dealers. Type I - NBFC-ND entities are

those which do not accept public funds and do not have customer interface and do not

intend to engage in such activities.

Additional Facts:

Liquidity Coverage Ratio: LCR refers to the proportion of highly liquid assets held by

companies to ensure their ongoing ability to meet short-term obligations.

• It promotes resilience of banks to potential liquidity disruptions by ensuring that they have

sufficient High-Quality Liquid Asset (HQLA) to survive any acute liquidity stress scenario

lasting for 30 days.

• HQLAs mean liquid assets that can be readily sold or immediately converted into cash at

little or no loss of value or used as collateral to obtain funds in a range of stress

scenarios

NBFC: NBFCs are companies that perform specialised financial functions (such as-deliver credit, currency

exchange, insurance etc). But they do not hold a banking license.

• NBFCs supplement the role of the banking sector in meeting the financial needs of the

wholesale and retail traders, unorganized sector and small local borrowers.

• NBFCs are also called as ‘shadow banks.’ It is a term used to describe any financial

activity outside the banking system. The lending activities of NBFCs are called as

‘shadow banking’ due to the following reasons:

o It doesn't have access to liquidity from RBI. They borrow through instruments

such as- commercial papers and give loans.

o Their deposits are not protected by deposit insurance.

CABINET APPROVES THE INDUSTRIAL RELATIONS CODE BILL, 2019

News: Industrial Relations Code Bill, 2019 has been prepared by combining and simplifying

relevant provisions of three Central Labour Acts Viz. Trade Unions Act, 1926, the Industrial

Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947.

Facts:

Key Provisions of the Bill:

• Two-member Tribunal: The bill provides for setting up of a two-member tribunal (in place of one

member). This would enable adjudicating important cases jointly and the rest by a single

member thus resulting in speedier disposal of cases.

• Empowering government officers for adjudication of disputes: The bill provides for vesting of

powers with the government officers for adjudication of disputes involving penalty as fines

thereby lessening the burden on the tribunal.

• Flexibility to the exit provisions relating to retrenchment and others: Employee threshold

for seeking government approval for retrenchment, etc. has been retained at 100.

However, the bill has added a

provision for changing ‘such number of employees’ through notification (through executive order).

• Re-skilling fund: The bill has said that re-skilling fund is to be utilised for crediting to

workers in a manner to be prescribed.

• Fixed Term Employment: Bill has proposed giving a legal framework for fixed-term

employment through which contract workers serving a fixed-tenure will get equal

statutory social security benefits as regular workers in the same unit. Fixed-term

employment would not lead to any notice period and payment of compensation on

retrenchment excluded.

Additional Facts:

Labour Law Reform

The government has decided to codify 44 central labour laws into four broad codes:(a)

wages (b) social security (c)industrial safety and welfare and (d) industrial relations.

Code on Wages Bill, 2019:

• It has already been approved by the Parliament. The bill provides that the Central

Government will fix minimum wages for certain sectors including railways and mines

while the states would be free

to set minimum wages for other category of employment.

• The code also provides for setting up of a national minimum wage.

Occupational Safety Health and Working Conditions Code, 2019:

• The Code repeals and replaces 13 labour laws relating to safety, health and working conditions.

• It entails duties for employers which include a) providing a workplace that is free from

hazards that may cause injury or diseases, and b) providing free annual health

examinations to employees, as prescribed.

Draft social security code, 2019:

• It proposes to amalgamate legislations pertaining to provident fund, pension, medical

insurance, maternity benefits, gratuity and compensation.

• It has proposed that the Central Government shall formulate and notify social security

schemes for unorganised workers.

• It also proposes the Corporatization of Employment provident fund organisation

(EPFO) and Employees State Insurance Corporation (ESIC).

PERIODIC LABOUR FORCE SURVEY: QUARTERLY BULLETIN, JANUARY-MARCH 2019

News: The National Statistical Office (NSO), Ministry of Statistics and Programme

Implementation has released the Quarterly Bulletin for the period January- March 2019. It

presents estimates of labour force indicators, for urban areas.

Facts:

Key takeaways:

• Labour Force Participation Rate (LFPR) (in Current Weekly Status for all ages) is

estimated at 36% in the urban areas during January-March 2019. The same was

35.6% during April- June 2018.

• The LFPR for men was estimated to be 56.2%, while for women it was at 15% during

the January- March 2019 period.

• Unemployment Rate (UR) (in current weekly status) for all ages is estimated at 9.3%

during January- March 2019. It was 9.8% during April- June 2018.

Additional Facts:

Periodic Labour Force Survey - National Statistical Office (NSO), Ministry of Statistics and

Programme Implementation, launched Periodic Labour Force Survey (PLFS) on April 2017. The

National Sample Survey Office (NSSO) conducts the survey. The survey seeks to generate

quarterly reports for urban areas and an annual report for rural India.

The indicators taken into account are:

• Labour Force Participation Rate (LFPR):

o Persons who were either 'working' (or employed) or 'seeking or available for

work' (or unemployed) constituted the labour force. LFPR is defined as the

percentage of persons in the labour force in the population

o LFPR according to current weekly status (CWS) is the number of persons either

employed or unemployed on an average in a week of 7 days preceding the date of

survey.

o Usual activity status: It relates to the activity status of a person during the reference

period of 365 days preceding the date of survey.

• Worker Population Ratio (WPR): WPR defined as the percentage of employed

persons in the population.

• Unemployment Rate (UR): UR is defined as the percentage of persons

unemployed among the persons in the labour force.

The periodic labour force survey had replaced the Annual Employment Unemployment Survey

in 2017 on the recommendations of the Task Force on Employment chaired by Arvind

Panagariya, then Vice-Chairman of NITI Aayog.

KHADI GETS SEPARATE HS CODE

News: The Ministry of Commerce and Industry allocated separate HS code for Khadi to boost

exports of this signature fabric of India.

Facts:

HS Code: HS stands for Harmonized System and was developed by the World Customs

Organization (WCO).

• The code is used by customs officers to clear commodities entering or crossing international borders.

• The code aids countries in the collection of international trade statistics and forms a

basis for customs tariffs. This helps in better reach of the product and increases its

global popularity.

MOODY'S CUTS INDIA'S GDP GROWTH FORECAST TO 5.6% FOR 2019-20 FROM 5.8% PROJECTED EARLIER

News: Moody's cuts India's GDP growth forecast to 5.6% for 2019-20 from 5.8% projected earlier.

Facts:

• The growth forecast has been reduced due to investment-led slowdown that has

broadened into consumption, driven by financial stress among rural households and

weak job creation.

• But the moody expects the economic activity in India to pick up in 2020 and 2021 to

6.6% and 6.7% respectively.

DRAFT BILL PROPOSES EMPOWERMENT OF NATIONAL

STATISTICAL COMMISSION

News: Government released the draft National Statistical Commission (NSC) Bill for public

comments.

Facts:

• The draft bill is aimed at empowering the National Statistical Commission (NSC) to

become the nodal body for all core statistics in the country like GDP, jobs data,

industry data and budgetary transactions data.

Features of the Bill:

• It proposes a statutory NSC with an independent secretariat headed by a secretary rank officer.

• The commission will have a Chairperson, five whole time members along with Deputy

Governor of the Reserve Bank of India (RBI), Chief Statistician of India (CSI) as other

members and Chief Economic Advisor, Ministry of Finance as the ex-officio member.

• The Chairman and the members of the Commission shall be appointed by the central

government on the recommendation of a search committee.

• The Bill envisages financial autonomy for the commission through an independent

National Statistical Fund.

Additional Facts:

NSC: The National Statistical Commission (NSC) of India formed in 2005 is an autonomous body.

• The objective of its commission is to reduce the problems faced by statistical agencies in

the country in relation to collection of data.

GST COUNCIL TO SET UP GRIEVANCE REDRESSAL

MECHANISM FOR TAXPAYERS

News: The GST Council has decided to set up a grievance redressal mechanism for taxpayers.

Facts:

• The Grievance Redressal Committee (GRC) at zonal and state levels will be set up as

a redressal mechanism for taxpayers.

• It will consist of both central tax and state tax officers, representatives of trade and

industry and other goods and services tax (GST) stakeholders.

• The committee will be constituted for a period of 2 years and the term of each

member will be likewise.

• The functions of the committee include examining and resolving all the grievances and

issues being faced by the taxpayers, including procedural difficulties and IT-related

issues pertaining to GST, both specific and general nature.

Additional Facts:

GST Council: Goods & Services Tax (GST) Council was constituted by the President as a

constitutional body under Article 279(1) for making recommendations to the Union and State

Government on issues related to Goods and Service Tax.

The council consists of the following members: (a) The Union Finance Minister is the

Chairperson (b) The Union Minister of State in-charge of Revenue of finance and (c) The

Minister In-charge of finance or taxation or any other Minister nominated by each State

Government.

RBI RELEASED TREND AND PROGRESS OF BANKING IN INDIA 2018-19 REPORT

News: The Reserve Bank of India has released a report titled Trend and Progress of Banking in India 2018-19.

Facts:

• In 2018-19, the asset quality of scheduled commercial banks turned around after a gap of

seven years with the overhang of stressed assets declining and fresh slippages

arrested.

• Due to the declining provisioning requirement and recapitalisation, the banking sector

returned to profitability in the first half of 2019-20.

• Concerns according to the report: The GDP growth for the second quarter of the

current financial year has dipped to a six-year low of 4.5%.

o Despite the improvement in some of the important parameters, the risk-

averse nature among lenders was worrisome.

o The waning of confidence among the borrowers is leading to credit slowdown

and is affecting the overall economic activity.

• Recommendations: The capital infusion by the government in public sector banks is just

not enough to meet the regulatory minimum. Hence, the banks might require more

recapitalization.

o The financial health of PSBs should also be assessed by their ability to access

capital markets rather than looking to the government as a recapitalizer of the

first and last resort.

FINANCIAL SYSTEM STABLE DESPITE SLOWDOWN: RBI

FINANCIAL STABILITY REPORT

News: The Reserve Bank of India has released its biannual Financial Stability Report,2019.

Facts:

The Financial Stability Report are bi-annual reports published by the Reserve Bank of India

(RBI). It reviews the nature, magnitude and implications of risks that may have a bearing on the

macroeconomic environment, financial institutions, markets and infrastructure.


• On India’s Economic Growth:

o The country's financial system remains stable despite slowing economic growth.

o The aggregate demand has slowed down in the second half of the current

financial year ending March 2020.

o The Global factors such as a delay in Brexit deal, trade tensions, impending

recession, oil- market disruptions and geopolitical risks has caused uncertainties

leading to a significant deceleration in growth.

o The reviving of the twin engines of India’s economic growth namely private

consumption and investment while being vigilant about developments in

global financial markets remains a critical challenge for RBI.

• On Banking Sector: The Banks capital adequacy ratio has improved significantly

after the recapitalisation of PSB.

o RBI has also taken several policy measures to improve the condition of the

financial system such as (a)introducing a liquidity management regime for NBFCs

(b)improving the banks’ governance culture (c)resolution of stressed assets and

(d)for the development of payment infrastructure.

o The banks gross non-performing asset (GNPA) ratio is expected to increase

from 9.3% in September 2019 to 9.9% by September 2020.

o The frauds reported by the banks touched an all-time high of around Rs 1.13

lakhs in the FY19.

• About Capital Adequacy Ratio (CAR): Capital Adequacy Ratio (CAR) is the ratio of

a bank’s capital in relation to its risk weighted assets and current liabilities and is decided

by the central bank.

o The risk weighted assets take into account (a)credit risk (b)market risk and

(c)operational risk while deciding Capital Adequacy Ratio (CAR).

OPERATION TWIST

News: The Reserve Bank of India has announced that it will carry out US-style ‘Operation

Twist’ to bring down interest rates.

Facts:

• Under Operation Twist, RBI will conduct simultaneous purchase and sale of government

securities under Open Market Operations (OMO) for ₹10,000 crore each.

• It will purchase the longer-term maturities which are government bonds maturing in

2029 and simultaneously sell the shorter duration ones which are short-term bonds

maturing in 2020.

• This simultaneous purchase and sale will bring down interest on long term loans which

can lead to increase in economic spending and become a driving factor for long-term

economic activity.

• Operation Twist first appeared in 1961 as a way to strengthen the U.S. dollar and stimulate

cash flow into the economy. US implemented it again in late 2011 and 2012 to stimulate

the economy hit by the global financial crisis, later it was replaced by policy of

“quantitative easing”.

Additional Facts:

Open Market operations: Open market operations is the sale and purchase of government

securities and treasury bills by RBI or the central bank of the country with an aim to regulate

the money supply in the economy.

• The central bank carries out the OMO through commercial banks and does not directly

deal with the public.

• When the RBI wants to increase the money supply in the economy, it purchases the

government securities from the market, and it sells government securities to out liquidity

from the system.

INSOLVENCY AND BANKRUPTCY CODE (SECOND AMENDMENT) BILL, 2019

News: The Union Cabinet approved the amendments in the Insolvency and Bankruptcy Code,

2016 through the Insolvency and Bankruptcy Code (Second Amendment) Bill,2019.

Facts:

The amendments aim to remove certain difficulties being faced during insolvency resolution

process to realise the objects of the code and to further ease doing of business.

Key features of the bill:

• The amendment includes a provision to protect the successful resolution applicants from

criminal proceedings with regard to offences committed by previous promoters of a

company.

• It also removes bottlenecks, streamline Corporate Insolvency Resolution Process (CIRP)

and protect last mile funding in order to boost investment in financially distressed

sectors of the country.

• The bill also introduces additional thresholds for Financial Creditors represented by an

authorized representative due to large numbers in order to prevent frivolous triggering of

Corporate Insolvency Resolution Process (CIRP).

• The amended Act would also ensure that the substratum of the business of a corporate

debtor is not lost. It can continue as a going concern by clarifying that the licences,

permits, concessions, clearances cannot be terminated or suspended or not renewed

during the moratorium period.

Additional Facts:

Insolvency and Bankruptcy Code,2016 (IBC):

• It is the bankruptcy law of India that administers the insolvency proceedings for

individuals and companies.

• It establishes the Insolvency and Bankruptcy Board of India.

• The board oversees the insolvency proceedings in the country and regulates the entities

registered below it. The Board has 10 members, which includes representatives from the

Ministries of Finance and Law, and the Reserve Bank of India.

• The Code creates time-bound processes of 180 (extended to 330) days for all insolvency resolution.

• The resolution processes have to be conducted by licensed insolvency professionals (IPs).

• Information utilities (IUs) are also established to collect, collate and disseminate

financial information to facilitate insolvency resolution.

• The National Company Law Tribunal (NCLT) adjudicates insolvency resolution for

companies. The Debt Recovery Tribunal (DRT) adjudicates insolvency resolution for

individuals.

INDIA TO COLLATE E-DATABASE TO TRACK ECONOMIC OFFENDERS

News: The Central Government has proposed a comprehensive database of economic

offenders called the National Economic Offence Records (NEOR).

Facts:

• The National Economic Offence Records (NEOR) will be a web portal that will

disseminate information to grassroots level officers of enforcement and investigating

agencies.

• The database will help in coordinated actions by multiple agencies against corrupt

officials and corporate houses indulging in financial frauds and money laundering.

• The database is being prepared by the Central Economic Intelligence Bureau (CEIB), an

arm of the finance ministry along with National Informatics Centre (NIC).

• Currently, the Central Economic Intelligence Bureau (CEIB) runs a captive database

called Secured Information Exchange Network (SIEN). The SEIN operates on intranet

(not available online) and information on economic offenders are shared with

headquarters of 13 select central agencies.

Additional Facts:

Central Economic Intelligence Bureau (CEIB): Central Economic Intelligence Bureau

(CEIB) was setup in the year 1985 under Department of Revenue, Ministry of Finance.

• It is the nodal agency for economic intelligence mandated to ensure effective

interaction and coordination among all the concerned agencies in the area of

economic offences.

• It is headed by a Director General who carries the designation of Special Secretary

to the Government of India.

National Informatics Centre (NIC): The National Informatics Centre (NIC) is an institute set

up by the Indian government in 1976 to drive its technology and e-governance initiatives in

the country.

• The institute is part of the Indian Ministry of Electronics and Information Technology’s

Department of Electronics & Information Technology.

• NIC has the mandate to set up, implement and support all the information technology led

programs of the central and state governments and other government organizations in

India.

CABINET APPROVES LAUNCH OF BHARAT BOND EXCHANGE TRADED FUND

News: The Union Cabinet approved the launch of India's first corporate bond- Bharat Bond

exchange-traded funds (ETF).

Facts:

• The objective of the fund is to create an additional source of funding for Central

Public Sector Undertakings (CPSUs), Central Public Financial Institutions (CPFIs)

and other Government organizations.

• The index will be managed by an independent index provider, National Stock Exchange.

• The fund will have a fixed maturity of three and ten years and will trade on the stock exchanges.

• It will invest in a portfolio of bonds of state-run companies and other government

entities. It will provide retail investors easy and low-cost access to bond markets with

smaller amount as low as

₹1,000.

Benefits of the fund:

• It will provide safety (underlying bonds are issued by CPSEs and other Government owned

entities), liquidity (tradability on exchange) and predictable tax efficient returns (target

maturity structure).

• It will increase participation of retail investors who are currently not participating in bond

markets due to liquidity and accessibility constraints.

• The tax efficiency is higher compared to Bonds as coupons from the Bonds are taxed

at marginal rates.

Additional Facts:

Bonds: A bond is a debt instrument in which an investor loans money to an entity (typically

corporate or government) which borrows the funds for a defined period of time at a variable or

fixed interest rate.

• Bonds are used by companies, municipalities, states, etc. to raise money to finance a

variety of projects and activities.

Exchange-Traded Fund (ETF): An ETF is a fund that comprises a group of stocks that are

listed on an exchange and can be simply traded like any other listed security.

• Usually, ETFs are passive funds where the fund manager doesn’t select stocks on your

behalf. The fund simply copies an index and endeavours to accurately reflect its

performance.

• The ETFs trading value is based on the net asset value of the underlying stocks that it represents.

• The ETF is aimed at helping speed up the government’s disinvestment programme.

RBI LAYS DOWN GUIDELINES FOR PAYMENTS BANKS’ SFB LICENCE

News: The Reserve Bank of India released final Guidelines for the ‘on tap’ Licencing for

Small Finance Banks (SFBs).

Facts:

About the Guidelines for ‘on-tap’ Licencing:

• The minimum paid-up voting equity capital / capital requirement shall be Rs 200 crores.

• For Primary (Urban) Co-operative Banks (UCBs), who voluntarily wants to transition

into SFBs initial requirement of net worth shall be at ₹ 100 crores which will have to be

increased to ₹ 200 crores within 5 years from the date of commencement of business.

• The payment banks can also apply for conversion into Small Finance Banks (SFBs) after 5 years of operations if they are otherwise eligible as per these guidelines.

• Small Finance Banks (SFBs) will also be given scheduled bank status immediately upon commencement of operations. Also, SFBs will have general permission to open

banking outlets from the date of commencement of operations. • The listing of Small Finance Banks (SFB) will be made mandatory within three years

after it reaches the net worth of Rs 500 crore for the first time.

Additional Facts:

Small finance Bank: Small finance Banks are niche banks that focus and serve the needs

of a certain demographic segment of the population. They primarily undertake basic banking

activities of acceptance of deposits and lending to unserved and underserved sections including

small business units, small and marginal farmers, micro and small industries and unorganised

sector entities.

OECD RELEASED ITS ECONOMIC SURVEY OF INDIA REP News: The Organisation for Economic Co-operation and Development (OECD) has released

its Economic Survey of India report.

Facts:

The report has projected GDP growth in the current fiscal (2019-20) at 5.8% lower than 6.8 per cent in 2018-

19. However, it estimated the GDP to grow at 6.2% during 2020-21 and further to 6.4% during 2021-22.

Key Highlights from the report:

• Income has increased fast in recent years, but private investment has lagged behind.

• The recent loosening in monetary policy, combined with fiscal rectitude, will lower the

cost of borrowing for the corporate sector.

• Reforms to improve the ease of doing business including recent measures to

liberalise FDI and efforts to improve judicial services and contract enforcement will

also help.

Concerns Highlighted by the report:

• Economic growth has been strong but social and governance challenges remain.

• The public debt-to-GDP ratio remains relatively high

• Ambitious reforms have been passed but implementing them fully would boost

incomes and wellbeing.

• Addressing domestic structural bottlenecks is key to supporting India’s competitiveness.

• Air pollution is high and will increase in the absence of bold action.

• International oil prices have come down, but they remain volatile and pose risks for

inflation, the current account and public finances.

Additional Facts:

OECD: The Organisation for Economic Co-operation and Development (OECD) is an

intergovernmental economic organisation with 36 member countries, headquartered in Paris,

France.

• It was founded in 1961 to stimulate economic progress and world trade.

• India is not a member of OECD but has been a key economic partner.

INTERNATIONAL FINANCIAL SERVICES CENTRES AUTHORITY BILL, 2019

News: The Union Finance Minister recently introduced the International Financial Services

Centres Authority Bill, 2019 in Lok Sabha. The Bill seeks to set up a unified authority for

regulating all financial services in international financial services centres (IFSCs) in the country.

Facts:

Key Features of the International Financial Services Centres Authority Bill, 2019

• The Bill will be applicable to all International Financial Services Centres (IFSCs) set up

under the Special Economic Zones Act, 2005.

• Management of the Authority: The International Financial Services Centres Authority

shall consist of 9 members:

o A Chairperson

o One Member each to be nominated by the RBI, SEBI, IRDAI and PFRDA

(Pension Fund Regulatory and Development Authority)

o Two members to be dominated by the Central Government

o Two other whole-time or full-time or part-time members

• Functions of the Authority:

o Regulation of all such financial services, financial products and FIs in an IFSC

which has already been permitted by the Financial Sector Regulators for IFSCs or

notified by GOI.

o Recommendation to the Central Government such other financial products,

financial services and financial institutions which may be permitted in the IFSCs.

• Powers of the Authority: All powers exercisable by the respective financial sector

regulatory (viz. RBI, SEBI, IRDAI, and PFRDA etc.) under the respective Acts shall be

solely exercised by the Authority in the IFSCs.

• Transactions in foreign currency: The transactions of financial services in the IFSCs

shall be done in the foreign currency as specified by the Authority in consultation with the

Central Government.

Additional Facts:

IFSCs in India: The first IFSC in India was set up at GIFT City, Gandhinagar, Gujarat.

• An IFSC seeks to bring to India, those types of financial services and transactions that are

currently carried on outside India by overseas financial institutions and overseas

branches/ subsidiaries of Indian financial institutions.

• The policy objective behind establishing an IFSC in India is providing a platform for

international financial services to operate from and to specialize in exports of high value-

added International Financial Services.

Regulation of IFSCs: Presently, Banking, Capital markets and Insurance sectors in IFSCs are

regulated by multiple regulators - the Reserve Bank of India (RBI), the Securities Exchange

Board of India (SEBI), the Insurance Regulatory and Development Authority of India (IRDAI),

respectively.

Finance Minister unveils ₹102 lakh crore National Infrastructure Plan

News: The Finance Minister has released a report of the task force on National Infrastructure on

Pipeline (NIP) 2019-2025.

Facts:

About National Infrastructure on Pipeline (NIP) Task force:

● The Central Government had constituted a task force to draw up a National Infrastructure

Pipeline (NIP) from 2019-20 to 2024-25.

● The Task Force has been chaired by the Secretary, Department of Economic Affairs,

Ministry of Finance.

● The task force has prepared a roadmap as it is estimated that India would need to spend

$4.5 trillion on infrastructure by 2030 to sustain its growth rate.

● Hence, the endeavour of the NIP is to make this happen in an efficient manner.

Key Highlights from the report:

● The task force unveiled the

National

Infrastructure Pipeline (NIP) with

projects worth ₹102-lakh crore.

● The private companies will

account for 22% of the

investments and the balance

will come from the Centre

and the states in equal

proportions (i.e. 39% each).

● The projects have been classified under two broad categories namely economic

infrastructure and social infrastructure for both ease of doing business and ease of living.

● Under the projects, energy sectors make up the lion’s share of 24%, followed by roads

(19%), urban development (16%) and the railways (13%).

● The shares of rural and social infrastructure projects which includes health, education and

drinking water is 8% and 3% respectively.

About National Infrastructure Pipeline

● The National Infrastructure Pipeline (NIP) consists of the projects and programmes with a

total allocation of INR 102 lakh crore for infrastructure development in the next five years.

● It is in accordance with the government’s vision to make India a $5 trillion economy by 2024-25.

● NIP includes economic and social infrastructure projects in sectors such as Energy (24%),

Roads (19%), Urban (16%), and Railways (13%) amount to around 70% of the projected

capital expenditure in infrastructure in India.

India’s rising retail prices stoke worries of stagflation

News: India’s retail price inflation has jumped to a 40-month high at a time when India’s growth

has slowed down to a six-year low. This has prompted some economists to warn that the country

could be entering into a stagflationary phase.

Facts:

About Stagflation:

● The term Stagflation was first coined by Paul Samuelson who was the first American to

win the Nobel Prize in economics.

● Stagflation is a condition of slow economic growth and relatively high unemployment, or

economic stagnation, accompanied by rising prices, or inflation.

● It can also be defined as inflation and a decline in the gross domestic product (GDP).


About Phillips Curve:

● Phillips curve is a graphic curve which advocates a relationship between inflation and

unemployment in an economy.

● As per the curve, there is an inverse relationship between inflation and unemployment.

● The concept states that with economic growth comes with inflation which in turn should

lead to more jobs and less unemployment.

LPG Pricing in India News: Centre raised the price of non-subsidized LPG (liquefied petroleum gas) for the fifth month in a row

Facts:

About LPG Pricing in India

● LPG pricing in India is done on the basis of import parity price (IPP) which is a price-

setting mechanism for a commodity in which the price is set based on the cost of importing

the commodity into a location.

● The IPPO for LPG in India is based on Saudi Aramco’s LPG price. It includes the FOB (free

on board) price, ocean freight, insurance, custom duties, port dues, etc. This is price is

quoted in dollars which is then converted to rupees.

● To this price, the cost of inland freight, marketing costs and margins charged by the oil

companies, bottling charges, dealer commission and the GST is added. This gives the retail

selling price of the non- subsidized LPG cylinder in India.

National Pension Scheme for traders fails to gain traction

News: The National Pension Scheme for traders also called the Pradhan Mantri Laghu Vyapari

Maan-dhan Yojana has failed to gain traction among the traders.

Facts:

● The Government has set a target of 50 lakh enrolment by the end of March 2020. However,

only 25,000 persons have applied so far.

● Among all states, Uttar Pradesh has the highest number of registrations.

● No one has so far registered in the scheme in the states of Mizoram and Lakshadweep.

● The experts have suggested that the entry age and the premium for the scheme should be

raised to encourage more traders to join the scheme.

Additional Facts:

About Pradhan Mantri Laghu Vyapari Maan-dhan Yojana:

● The National Pension Scheme for Traders and Self-Employed Persons Yojana (Pradhan

Mantri Laghu Vyapari Maan-dhan Yojana) is a pension scheme for shopkeepers launched

in July,2019.

● Objective: The scheme assures a minimum monthly pension of ₹3000 per month to small

shopkeepers, retail traders and self-employed people after attaining the age of 60 years.

● Contribution: They have to contribute to the scheme every month from the time of

enrolment and till age 60 for getting the pension. The Government of India will also make a

matching contribution in the subscribers’ account.

● Implementation: The Life Insurance Corporation of India (LIC) is the pension fund

manager for the scheme.

● Eligibility: The scheme is available to all small shopkeepers, self-employed persons and

retail traders with Goods and Services tax (GST) turnover below Rs.1.5 crore. The age

limit is 18-40 years.

● However, the applicants should not be covered under the National Pension Scheme,

Employees’ State Insurance Scheme and the Employees’ Provident Fund or be an Income

Tax assessed.

Stressed urban cooperative banks to face PCA - like curbs News: The Reserve Bank of India has revised its supervisory framework for urban co-operative

banks (UCBs) to expedite resolution of UCBs experiencing financial stress.

Facts:

About the revised framework:

● The framework imposes restrictions on urban cooperative banks (UCBs) for deterioration

of financial position in line with the prompt corrective action (PCA) framework that is

imposed on commercial banks.

● The framework was revised in the backdrop of the recent crisis at the PMC Bank.

Features of the framework: Under this revised Supervisory Action Framework (SAF), UCBs will

face restrictions for worsening of three parameters:

● when net non-performing assets exceed 6% of net advances,

● when they incur losses for two consecutive financial years or have accumulated losses on

their balance sheets, and

● if the capital adequacy ratio falls below 9%.


About Prompt corrective action (PCA):

● Prompt corrective action (PCA) is a framework under which commercial banks with weak

financial metrics are put under watch by the RBI.

● The RBI introduced the PCA framework in 2002 as a structured early-intervention

mechanism for banks that become undercapitalised due to poor asset quality, or

vulnerable due to loss of profitability.

● It aims to check the problem of Non-Performing Assets (NPAs) in the Indian banking sector.

About Co-operative Banks:

● A Co-operative bank is a financial entity which belongs to its members, who are at the

same time the owners and the customers of their bank.

● Co-operative banking in India started in the early 20th century with the passing of Co-

operative Societies Act in 1904 and later with the Co-operative Societies Act, 1912.

● They are often created by persons belonging to the same local or professional community

of sharing a common interest.

● They are classified into two categories namely Urban Co-operative Banks (UCBs) and rural

co-operative banks.

Global Economic Prospects report - 2020 News: The World Bank has released the 2020 Global Economic Prospects report.

Facts:


Report on Global and Regional Growth:

● Global growth is set to rise by 2.5% this year from 2.4% in 2019 as trade and investment

gradually recover.

● The growth among advanced economies as a group is anticipated to slip to 1.4% in 2020

due to continued slowdown in the manufacturing sector.

● But the growth in emerging markets and developing economies is expected to accelerate

to 4.1%. However, this growth is not broad-based as the improvement in performance is

likely to come from a small group of large economies

● The report also estimates growth to rise to 5.5% for the South Asian region as a whole in

2020 on the assumption of a modest rebound in domestic demand and improved business

confidence.

Report on India:

● The report has lowered its growth estimate for India to 5% for the current fiscal from the

earlier projection of 6% for 2019-20.

● The report cited a lingering weakness in credit from non-banking financial companies

(NBFCs) as the main cause for the slowdown.

● However, the report expects India's growth to recover only slightly to 5.8% in the next fiscal year.

India joins Reskilling Revolution Initiative at World Economic Forum as a

Founding Member

News: India has joined as a founding government member of the World Economic Forum's

Reskilling Revolution Initiative.

Facts:

About Reskilling Revolution Initiative:

● The initiative aims to future-proof workers from technological change and help economies by

providing new skills for the Fourth Industrial Revolution.

● It targets to provide one billion people with better education, skills and jobs by 2030.

Additional Facts:

About Fourth Industrial revolution:

● The fourth industrial revolution is the current developing environment in which disruptive

technologies such as the Internet of Things (IoT), robotics and artificial intelligence (AI) are

changing the way we live and work.

About Centre for Fourth Industrial revolution:

● The centre would be based in Mumbai and it has selected drones, artificial intelligence and

blockchain as the first three project areas.

● In 2018, India has become the fourth country in the world after the USA, China and Japan

where the World Economic Forum in partnership with NITI Aayog has opened its centre for

the Fourth Industrial Revolution.

● The centre aims to accelerate the adoption of new technologies, minimize their negative

effects on society and ensure that everyone has access to the benefits generated by these

technologies.

SEBI puts in place guidelines for listed REIT, InvIT on rights issue News: The Securities and Exchange Board of India (SEBI) has announced guidelines pertaining

to rights issue of units by listed real estate investment trusts (REITs) and infrastructure investment

trusts (InvITs).

Facts:

Key features of the guidelines:

● The issuer will have to disclose objects of the issue, related-party transactions, valuation,

financial details, review of credit rating and the grievance redressal mechanism in the

placement document.

● The investment manager on behalf of the REIT and InvIT in consultation with lead merchant

banker(s) will decide the issue price before determining the record date.

● The minimum subscription to be received in the rights issue should be 90% of the issue

size through the letter of offer.

Additional Facts:

About Real Estate Investment Trusts (REITs):

● REITs are securities linked to real estate that can be traded on stock exchanges once they get listed

● Under it, REITs sell units to investors. This money is invested in real estate projects to

earn rental income.

● The income is then distributed to unit holders. Besides regular income from rents and

leases, gains from capital appreciation of real estate also form an income for the unit

holders.

About Infrastructure Investment trusts (InvITs):

● InvITs are investment schemes similar to mutual funds. They allow investment from

individuals and institutional investors in infrastructure projects to earn a portion of the

income as return.

● They can be considered as a modified version of REITs designed to suit the specific

circumstances of the infrastructure sector.

● They attract long term finance to invest in infrastructure projects such as roads or highways

which take some time to generate steady cash flows.

Benefits of REITs and InvITs:

● Opportunity to invest in stable return-generating instruments with low risk to capital.

● Decrease the financing burden on banks by reducing exposure to the real estate sector.

● Increased financing for key sectors such as transportation and energy that will help propel

the growth of the country

● Creation of direct and indirect employment opportunities.

Economic Survey 2019-2020: Service Sector in India News: The Economic Survey 2019-2020 has said that the services sector’s significance in the

Indian economy has continued to increase.

Facts:

• Contribution of Service Sector to the Indian Economy:

o 55% of the total size of the economy

and GVA growth,

o Two-thirds of total FDI inflows into India

o 38% of total exports

• Performance of India’s Key Services Sub-Sectors:

o Information Technology and Business Process Management (IT-BPM)

Services: industry size reached about US$ 177 billion in March 2019. IT

services constituted 51% of the IT-BPM sector

o Tourism: India ranked 22nd in the world in terms of international tourist arrivals

in 2018 and accounts for 1.24% of the world’s international tourist arrivals

o Port and Shipping Services: The shipping turnaround time (a key indicator of

the efficiency of the ports sector) at ports has almost halved from 4.67 days in

2010-11 to 2.48 days in 2018-19.

o Space Sector: India spent about US$ 1.5 billion on space programs in 2018

Economic Survey 2019-2020: Social Infrastructure, Employment and Human Development

News: The Economic Survey 2019-2020 highlights the government’s commitment to social wellbeing in India.

Facts:

• Expenditure on social services by the Centre and States (as a proportion of

GDP): Increased from 6.2% in 2014-15 to 7.7% in 2019-20.

• India’s ranking in Human Development Index: Improved to 129 in 2018 from 130 in 2017. With 1.34 % average annual HDI growth, India is among the fastest-improving countries.

• Total formal employment: increased from 8% in 2011-12 to 9.98% in 2017-18

• Gender disparity in India’s labour market: widened due to a decline in female labour

force participation especially in rural areas and around 60% of productive age (15-59)

group are engaged in full-time domestic duties

• Housing: About 76.7% of the households in the rural and about 96% in the urban

areas had houses of pucca structure.

• Vaccination: Mission Indradhanush has vaccinated 3.39 crore children and 87.18 lakh pregnant women.

Economic Survey: Thalinomics News: The Economic Survey 2019-20 has included a chapter 'Thalinomics: The economics

of a plate of food in India'.

Facts:

• Thalinomics is an attempt to quantify what a common

person pays for a 'thali’ (plate of food) in India. It

assesses whether 'thali' has become more or less

affordable over the last few years.

• The survey has found that Veg 'thali' affordability has

improved by 29% and non-veg Thali affordability by 18%

during 2006-07 to 2019-20.

• This means that an average household of five individuals

that eats two vegetarian thalis a day gained around Rs

10,887 on average per year while a non-vegetarian

household gained Rs 11,787 on average per year.

• It has also claimed that 2015-16 could be considered as a year when there was a shift

in dynamics of thali prices as many reform measures were introduced to enhance the

agricultural sector.

Economic Survey: A Temasek-like model to put divestment on aggressive track

News: The Economic Survey 2019-20 has proposed a new structure of disinvestment called

Temasek-like model to maximise returns from public sector enterprise.

Facts:

• Temasek like model is based on the experience of Singapore's Temasek Holdings Company.

o Under this model, the government can transfer its stake in the listed CPSEs to

a separate corporate entity.

o This entity would be managed by an independent board and would be

mandated to divest the government stake in these CPSEs over a period of

time.

o This will lend professionalism and autonomy to the disinvestment programme

which in turn would improve the economic performance of the CPSEs.

Additional Facts:

• Disinvestment is defined as the action of an organisation (or government) selling or

liquidating an asset or subsidiary.

• Economic Survey found that financial indicators such as net worth, net profit, return on

assets (ROA), return on equity (ROE) of the privatized CPSE’s on an average have

improved significantly.

Union Budget 2020-21

News: The General Budget 2020-21 was presented by the Union Finance Minister in the Lok Sabha.

Facts:

• Theme of Budget 2020-21: The Union Budget has been structured on the overall

theme of “Ease of Living.”

• Aim of the Budget: Union Budget 2020-21 aims to:

o To achieve seamless delivery of services through Digital governance

o To improve physical quality of life through National Infrastructure Pipeline

o Risk mitigation through Disaster Resilience

o Social security through Pension and Insurance penetration.

• Prominent Theme: The budget is woven around

three prominent themes:

o Aspirational India in which all sections of

the society seek better standards of living,

with access to health, education and

better jobs.

o Economic development for all,

indicated in the Prime Minister’s

exhortation of “SabkaSaath, SabkaVikas,

SabkaVishwas”.

o Caring Society that is both humane and

compassionate, where Antyodaya is an

article of faith.

Additional Facts - Union Budget:

• The word Budget has not been used in the Constitution of India. Rather Article 112 of

the Constitution of India mentions the term “Annual Financial statement”.

• The budget is a statement of the estimated receipts and expenditure of the

Government of India among other things.

Budget 2020: Macro-economic Framework Statement (MFS) 2020-21 News: In Budget 2020-21, the Government of India has presented the Macro-economic

Framework Statement (MFS) 2020-21.

Facts:

• The Macroeconomic Framework Statement (MFS)

2020-21 describes the return path of fiscal

consolidation without compromising the needs of

investment out of public funds.

• Fiscal Deficit: The government’s fiscal deficit for 2019-

20 will be 3.8% of the gross domestic product (GDP)

compared to 3.3% projected last year. For the financial

year 2020-21,the fiscal deficit target has been set at

3.5%.

• Disinvestment target: The government has pegged

disinvestment target for 2020-21 at Rs 1.20 lakh crore.

• Capital Expenditure: The Finance Minister has proposed a 21% increase in capital

expenditure for the FY 2020-21.

• India is now the fifth-largest economy in the world

• FDI: India’s Foreign Direct Investment (FDI) elevated to US$ 284 billion during 2014-

19 from US$ 190 billion during 2009-14.

• National Infrastructure Pipeline (NIP): To improve the physical quality of life, the

Government has announced the NIP of projects worth Rs. 102 lakh crores which would

commence in phases from 2020-21 to 2024-25.

• Debt: Centre’s debt as a percentage of GDP has come down to 48.7% as of May 2019.

• Poverty:2 71 million people raised out of poverty between 2006 and 2016.

• Taxpayers: 6 million new taxpayers have been added in the last four years due to the GST.

Budget 2020: Govt unveils 16-point action plan to revive agricultural sector

News: Union Finance minister has proposed 16 action points focusing on doubling Farmers

income, Horticulture sector, Food storage, Animal Husbandry and Blue economy.

Facts:

The key highlight of the 16-point action plan includes:

• Help 20 lakh farmers setup standalone solar pumps under PM-KUSUM scheme.

• Artificial insemination to be increased to 70% from the present 30%.

• Expansion of NABARD Refinancing Scheme while MGNREGS to be used to develop fodder farm

• State governments who undertake implementation of model laws (issued by the

Central government) to be encouraged.

• Village Storage Scheme which will be run by the SHG (Self Help Group) to provide

farmers a good holding capacity and reduce their logistics cost.

• Indian Railways will set up a Kisan Rail for transporting perishable goods.

• Krishi Udaan will be launched by the Ministry of Civil Aviation on national and

international routes for agricultural exports.

• Target for Agricultural credit has been increased to Rs 15 lakh crore from Rs 12 lakh crore

• Fish production to be raised to 200 lakh tonnes by 2022-23

• By 2025, milk processing capacity to be doubled to 108 MT

• Government proposes measures to improve the situation in 100 water-stressed districts

• One District One Product to be extended to Horticulture

• Integrated Farming systems in Rain fed areas to be expanded

• Jaivik Kheti Portal – online national organic products market to be strengthened.

• Foot and Mouth Disease, Brucellosis in cattle and Peste des Petits ruminants (PPR)

in sheep and goat to be eliminated by 2025.

• Self Help Groups (SHGs) of Deendayal Antyodaya Yojana to be mobilised.

15th Finance Commission report

News: The Finance Minister has tabled the interim report of the 15th Finance Commission recommendations.

Facts:

Interim report recommendations:

• It has recommended 41% share for states from Centre’s divisible pool in 2020-21

while making a special provision of 1% for the new Union territories of Jammu &

Kashmir and Ladakh.

• It has recommended an allocation of Rs 28,983 crore for disaster risk management in

2020-21, in addition to disaster response funds through setting up of mitigation funds

at both state and national level.

• However, the Commission has not yet set aside funds separately for defence

spending needs. It said that a special committee will be set up to examine the same.

Additional Facts - 15th Finance Commission:

• The 15th Finance Commission was constituted by the President of India under the

chairmanship of NK Singh.

• The term of the commission was originally set to end in October 2019 but was

extended to November 30, 2019.

• Its recommendations will cover a period of five years from April 2021 to March 2026.

Budget 2020: Investment Clearance Cell

News: The Finance Minister has proposed setting up an 'Investment Clearance Cell' for young entrepreneurs.

Facts:

• The Investment Clearance cell will be a pan-India single-window clearance system for entrepreneurs.

• It will be setup by the Department for Promotion of Industry and Internal Trade (DPIIT).

• The cell will give investors free investment advisory, land banks and facilitate clearances even at state level.

• It will onboard all central government related procedures and clearances in a single online form.

Additional Facts - Budget on Startups:

• Government has proposed to come up with a policy on the setting up of Private

Centre Data Parks which will provide a major lift to startups that bank heavily on

consumer data for their businesses.

• Startups with turnover of up to Rs 100 crore can claim 100% deduction on their profit

for computing tax liability for three consecutive years out of 10 years since its

incorporation.

• Government will soon set up a digital platform to ease registration of Intellectual

Property Rights (IPRs) developed by entrepreneurs and startups.

• The Knowledge Translation Clusters are to be set up under new and emerging

sectors as well. It will design, fabricate and validate proof of concept.

• Government will directly provide seed funding to support ideation and development of

early stage startups in India.

Budget 2020: Taxation and Governance News: The Finance minister has announced the Vivad Se Vishwas scheme in Budget 2020-

21 that would help in reducing litigation.

Facts:

• Vivaad se Vishwaas is an amnesty scheme aimed at reducing tax litigations pending at various forums.

o Under the proposed scheme, a taxpayer would be required to pay only the

amount of the disputed taxes and will get complete waiver of interest and

penalty provided he pays by March 31, 2020.

o Those who avail this scheme after that will have to pay some additional

amount. The scheme will remain open till June 30, 2020.

• Taxpayer Charter:

o Budget allocated funds to institutionalize a Taxpayer Charter. This is to

ensure fairness and avoid harassment in the quest of collecting taxes from

the citizens.

o Only three countries in the world so far have enshrined the rights of

taxpayers, namely Canada, Australia and the US. Through taxpayer charter,

India also joins the list.

Cabinet Clears Amendments to Ensure Greater RBI Control Over Cooperative Banks

News: The Union Cabinet has approved amendments to the Banking Regulation Act to give

the Reserve Bank of India greater control over cooperative banks.

Facts:

Key provisions of the amendments:

• Cooperative banks will be brought under the regulation of the RBI.

• The RBI will have the power to supersede and take control of the cooperative banks

if the bank’s financial health deteriorates.

• Cooperative banks will need RBI permission to appoint a CEO

• Cooperative bank audits will have to be done as per RBI guidelines

Additional Facts - Co-operative bank:

• Co-operative bank is a financial entity which belongs to its members, who are at the

same time the owners and the customers of their bank.

• Cooperative Banks are registered under the State’s Cooperative Societies Act. They

are also regulated by the Reserve Bank of India (RBI).

• They are classified into two categories namely Urban Co-operative Banks (UCBs)

and rural co-operative banks.

Union Cabinet clears Bill to regulate pesticide business

News: The Union Cabinet has approved the Pesticides Management Bill, 2020. It seeks to

replace the existing Insecticides Act of 1968

Facts:

About Pesticides Management Bill, 2020

• Aim: To protect the interest of farmers and ensure they get safe and effective pesticides.

• Key Features:

o Farmers would be empowered to get all information regarding the available

pesticides, their strength, weaknesses, and risks from the dealers

o Any person who wants to import, manufacture, or export pesticides would have

to register under the new bill and provide all details regarding expected

performance, efficacy, safety, usage instructions

o Provision to provide compensation if there is any farm loss because of low

quality or spurious pesticides

o All the information regarding the available pesticides would be available in the

public domain, in all languages in digital format.

Tamil Nadu CM declares Cauvery Delta as Protected Special Agriculture Zone

News: Tamil Nadu government has announced to make the Cauvery Delta region a

Protected Special Agriculture Zone (PSAZ)

Facts:

• Cauvery Delta: It lies in the eastern part of Tamil

Nadu. It is bounded by the Bay of Bengal on the east

and the Palk strait on the south.

• Rice is the principal crop in the area.

• Protected Special Agriculture Zone: It will include

Thanjavur, Tiruvarur, Nagapattinam districts and delta

regions of Trichy, Ariyalur, Cuddalore and Pudukkottai

• It cannot be used for any non-agricultural activities.

• It recognises farmer concerns about hydrocarbon exploration and accords primacy to food security.

Additional Facts - Background:

• In 2019, Centre had awarded oil and gas exploration contracts in the Cauvery basin. Tamil Nadu has witnessed protests over the projects

amid the ongoing water crisis in the state

• Cauvery Basin: The Cauvery River originates in Karnataka's Kodagu district, flows

into Tamil Nadu, and reaches the Bay of Bengal at Poompuhar. Parts of three Indian

states - Tamil Nadu, Kerala, and Karnataka

- and the Union Territory of Pondicherry lie in the Cauvery basin.

Cabinet Gives Nod for Formation Of 10,000 Farmer Producer Organizations

News: Cabinet Committee on Economic Affairs approved Central Sector Scheme called

"Formation and Promotion of Farmer Producer Organizations (FPOs)"

Facts:

"Formation and Promotion of Farmer Producer Organizations (FPOs)" - Key features

• Aim: to form and promote 10,000 new FPOs in five years (2019-20 to 2023-24)

• Implementing Agencies: Small Farmers Agri-business Consortium (SFAC), National

Cooperative Development Corporation (NCDC) and National Bank for Agriculture and

Rural Development (NABARD).

• FPOs will be formed and promoted through Cluster-Based Business Organizations

(CBBOs) engaged at the State/Cluster level by implementing agencies.

• There will be a National Project Management Agency (NPMA) at SFAC for providing

overall project guidance, data compilation, and maintenance.

• The minimum number of members in FPO will be 300 in plain area and 100 in North East & hilly areas.

• FPOs will be promoted under "One District One Product" cluster to promote

specialization and better processing, marketing, branding & export

Additional Facts:

• Farmer Producer Organisation (FPO): It is a legal entity formed by producers that

are all farmers. It can be a producer company, a cooperative society or any other legal

form which provides for sharing of profits/benefits among the members.

RBI Syncs Financial Year with the Fiscal Year News: The Reserve Bank of India (RBI) decided to will align its financial accounting year with

that of the central government’s fiscal year with effect from 2020-21

Facts:

• Fiscal year: It is used in government accounting, which varies between countries,

and for budget purposes. In India, the government's financial year runs from 1 April

to 31 March.

• The financial year of RBI: Since 1940, RBI’s accounting year/financial year is July-June

• The Bimal Jalan Committee on Economic Capital Framework (ECF) of the RBI had

proposed a change in its accounting year to April-March from the financial year

2020-21 on the grounds that:

• RBI would be able to provide better estimates of projected surplus transfers to the

government for the financial year for budgeting purposes

• It is also expected to result in better management of the transfer of dividend or surplus to the government

• As governments, companies, and other institutions follow the April-March year, it

will help with effective management of accounting.

India’s ‘imported’ food inflation News: The United Nations Food and Agriculture Organisation’s (FAO’s) food price index

has touched 182.5 points in January 2020, the highest since December 2014.

Facts:

• The FAO Food Price Index (FPI) is a measure of the change in international

prices of a basket of major food commodities with reference to a base period of

2002-04.

How FPI has affected India?

o The surge in global food prices is reflected in trends in India as well.

Annual consumer food price index (CFPI) inflation which stood at 2.99% in

August 2019 has reached 13.63% in January,2020.

o The inflation in the wholesale price index for food articles has also

increased from 7.8% in August 2019 to 11.51% in January 2020.

Additional Facts - Imported Inflation:

• Imported inflation is when the general price level rises in a country because of the

rise in prices of imported commodities.

• The two key contributors to India’s imports are: Crude Oil and Gold. The rise in the

prices of these two products usually lead to rise in the import bill of the country.

Finance minister launches EASE 3.0 for tech-enabled banking News: The Finance Minister has launched Enhanced Access and Service Excellence (EASE 3.0).

Facts:

• EASE is a set of banking reforms which aims to incorporate technological aids for

ensuring better banking experience, wider financial inclusion and easier credit

distribution.

• EASE 3.0: aims to provide advanced solutions that will make the public sector

banking smart and technology enabled.

o It will include facilities like Palm Banking for End-to-end digital delivery of

financial service, Banking on Go via EASE banking outlets, digitalised

branch experience, tech-enabled agriculture lending among others.

RBI unveils 5-yr financial inclusion strategy: Here're key recommendations

News: The Reserve Bank of India (RBI) has come up with a National Strategy for

Financial Inclusion 2019-24. It aims at providing access to formal financial services in an

affordable manner

Facts:

Recommendations put forward by the Financial Inclusion Advisory Committee of the RBI

• universal access to financial services wherein every village should have access to

a formal financial services provider within a 5-km radius.

• digital financial services to be strengthened in all tier-II to tier-VI centres to

facilitate a less-cash society by March 2022.

• every adult enrolled under the Pradhan Mantri Jan Dhan Yojna should be enrolled

under an insurance scheme and pension scheme by March.

• the public credit registry has to be made fully operational by March 2022 so that

authorized financial entities can leverage the same for assessing credit proposals.

• new entrants to the financial system may be given the relevant information

regarding government livelihood programs

• devise a customer grievance portal or mobile application that will act as a common

interface for lodging, tracking, and redressal of grievances pertaining to the

financial sector

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