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Category: Constitutional Bodies, Regulatory Bodies

13TH CONFERENCE OF CENTRAL COUNCIL OF HEALTH AND FAMILY WELFARE (CCHFW)

Why in News?

  • The Union Health Minister Shri Harsh Vardhan inaugurated the 13th Conference of Central Council of Health and Family Welfare (CCHFW) in New Delhi.

Highlights:

  • Health ministers from 13 states and UTs participated in the event.
  • The minister stated that the purpose of the CCHFW meeting was to build a consensus on the national health priorities i.e. Universal Health Coverage (UHC) through Ayushman Bharat, eliminating TB and other priority agenda such as strengthening medical infrastructure.
  • A member of the NITI Aayog opined that the two priority areas underscored by the Aayog are:
    • Increasing the health budgets by the Centre and the States/UTs.
    • Enhancing Health Infrastructure
  • The minister also launched ‘Surakshit Matritva Aashwasan (SUMAN)’ for Zero Preventable Maternal and Newborn Deaths, its website and the grievance redressal portal.
  • He also released the Report on National Diabetes & Diabetic Retinopathy Survey India 2015-19 and Report on National Blindness & Visual Impairment Survey India 2015-19, because 10th October is also ‘World Sight Day’.
  • In addition, the minister also released guidelines on drugs, diagnostic services, biomedical equipment management and maintenance under the Pradhan Mantri National Dialysis Program.

Council of Health and Family Welfare:

  • It is an apex advisory body to consider and recommend broad lines of policy in regard to matters concerning health and family welfare.
  • The Union Minister for Health & Family Welfare is the Chairperson, while the Minister of State for Health & Family Welfare is the Vice-Chairperson.
  • Its first meeting was held in 1988.

RBI CUT LENDING RATE BY 35 BASIS POINTS

Context:

  • In a bid to augur economic activity amidst slowing consumption demand, the monetary policy committee of Reserve Bank of India on Wednesday unanimously decided to go for its fourth cut this year.

Background:

  • With a 35 basis point cut (highest this year) the repo rate, at which RBI lends to commercial banks, stood at a 9-year low of 5.4 per cent, since July 2010 when it was 5.25 per cent.
  • The previous three cuts this year were 25 basis points each. Alongside a cut in the repo rate, the central bank also lowered its GDP growth projection from 7 per cent in June policy to 6.9 per cent now.

Why the Rate Cut?

  • While inflation is a key consideration for a rate cut and it provided RBI the comfort to go for a cut, the decision was also taken to boost aggregate demand especially private investment.
  • The monetary policy statement said that “inflation is currently projected to remain within the target over a 12-month ahead horizon”.
  • The RBI statement further said that
    • Domestic Economic activity continues to be weak,
    • With the global slowdown and
    • Escalating Trade Tensions posing downside risks.
  • It added that while private consumption, the mainstay of aggregate demand, and investment activity remain sluggish.

Why Has Growth Been Revised Downwards GDP?

  • This is the second consecutive policy statement where the RBI has lowered its GDP growth projection for 2019-20.
  • While in June statement it revised it projection downward from 7.2 per cent (stated in April 2019) to 7 per cent.
  • This time it further revised the growth projection further down to 6.9 per cent.
  • The RBI said that “various high frequency indicators suggest weakening of both domestic and external demand conditions…business expectations Index of the Reserve Bank’s industrial outlook survey shows muted expansion in demand conditions in Q2, although a decline in input costs augurs well for growth”.
  • It said that the monetary policy easing since February 2019 is expected to support economic activity, going forward.

Significance of Monetary Policy:

  • It influences the interest rate in the economy — which is the cost of money when you don’t have it, and the reward for parting with it when you have it.
  • In any economy, economic activity, which is measured by gross domestic product or GDP, happens by one of four ways.
    • One, private individuals households spend money on consumption.
    • Two, the government spends on its agenda.
    • Three, private sector businesses “invest” in their productive capacity.
    • And four, the net exports — which is the difference between what all of them spend on imports as against what they earn from exports.
  • At the heart of any spending decision taken by any of these entities lies the question: What is the cost of money?
  • Monetary policy essentially answers that question
  • In every country, the central bank is mandated to decide the cost of money, which is more commonly known as the “interest rate” in the economy.
  • While various factors make it difficult for a central bank to exactly dictate interest rates, as a thumb rule, RBI’s decision on the repo rate sets the markers for the rest of the economy. In other words, the EMI for your car or home is determined by what the RBI decides.

What Is the Repo Rate?

  • Repo and Reverse repo are short for Repurchase agreements between the RBI and the commercial banks in the economy.
  • In essence, the repo rate is the interest rate that the RBI charges a commercial bank when it borrows money from the RBI.
  • As such, if the repo falls, all interest rates in the economy should fall. And that is why common people should be interested in the RBI’s monetary policy.

But the interest rate for consumer loans has not reduced by 110 bps since February. Why?

  • In the real world, the “transmission” of an interest rate cut (or increase) is not a hundred per cent.
  • And that is why, even though when the RBI cut by 35 bps lay consumers may only receive a much lower reduction in the interest rate on their borrowings.
  • This is due to a lot of factors — but primarily, it has to do with the health of the concerned commercial bank.

Issues with Commercial Bank

  • Over the past few years, almost all banks, especially the ones in the public sector, have seen their profits plummet because many of their past loans have turned out to be non-performing assets (in other words, they are not getting repaid).
  • To cover for these losses, the banks have to use their existing funds, which would have otherwise gone to common consumers for fresh loans.
  • Lag in monetary policy
    • The reduced repo rate applies only to new borrowings of banks. The banks’ cost of existing funds is higher. Of course, funding costs would eventually come down — but this process would take time.
    • This “lag” in monetary policy is a key variable in determining the efficacy of any rate cut by the RBI.
    • It could take anywhere between 9 and 18 months for the full effect of an RBI decision to reflect in interest rates across the economy.

Will the rate cut bring Investments?

  • Investments depend essentially on the “real” interest rate.
  • The real interest rate is the difference between the repo rate and retail inflation.
  • When making an investment decision, it is this interest rate that matters.
  • As a variable, it allows an investor to compare the attractiveness of different economies.
  • Real interest rates in India have been rising, and that is one of the biggest reasons why investments are not happening.
  • The RBI’s move would reduce the real interest rate and hopefully attract more investment.

Monetary Policy Committee Composition

  • Governor of the Reserve Bank of India – Chairperson, ex officio; (Shri Shaktikanta Das)
  • Deputy Governor of the Reserve Bank of India, in charge of Monetary Policy- BP Kanungo (Member, ex officio).
  • One officer of the Reserve Bank of India to be nominated by the Central Board – Member, ex officio; (Dr. Michael Debabrata Patra)
  • Ravindra H. Dholakia, Professor, Indian Institute of Management, Ahmedabad – Member.
  • Professor Pami Dua, Director, Delhi School of Economics – Member
  • Shri Chetan Ghate, Professor, Indian Statistical Institute (ISI) – Member.

ABROGATION OF ARTICLE 370.

Context:

  • The Centre on Monday scrapped Article 370 of the Constitution that grants special status to Jammu and Kashmir, with an order saying “it shall come into force at once”.
  • The abrogation follows the Centre introducing the Jammu and Kashmir Reorganization Bill in Parliament.

What is Article 370?

  • Included in the Constitution on October 17, 1949, Article 370 exempts J&K from the Indian Constitution (except Article 1 and Article 370 itself) and permits the state to draft its own Constitution.
  • It restricts Parliament’s legislative powers in respect of J&K.
  • For extending a central law on subjects included in the Instrument of Accession (IoA), mere “consultation” with the state government is needed.
  • But for extending it to other matters, “concurrence” of the state government is mandatory.
  • Background of IoA
    • The IoA came into play when the Indian Independence Act, 1947 divided British India into India and Pakistan.
    • For some 600 princely states whose sovereignty was restored on Independence, the Act provided for three options: to remain an independent country, join Dominion of India, or join Dominion of Pakistan — and this joining with either of the two countries was to be through an IoA.
    • Though no prescribed form was provided, a state so joining could specify the terms on which it agreed to join.
    • The maxim for contracts between states is pacta sunt servanda,e. promises between states must be honoured; if there is a breach of contract, the general rule is that parties are to be restored to the original position.

Constitutional Law Background:

  • The political agreement of 3 June 1947 to partition the Indian sub-continent was crystallized in British statutes – the Indian Independence Act, 1947 and the modified Government of India Act, 1935.
  • While India is an ancient civilization, modern-day India and Pakistan are creations of these statutes and have chosen to abide by such constitutional law governing the sub-continent.
  • There is no doubt about the legitimacy of an ‘India’ and a ‘Pakistan’ as created by these statutes, and both countries have been recognized by the UN as sovereign member states.
  • Kashmir Status:
    • The princely state of J&K was a sovereign state as of 15 August 1947 as per this constitutional law creating India and Pakistan.
    • It was in terms of such law that the Ruler of J&K, who was the sole repository of power in the state, chose to accede to India through the accession instrument of 26 October 1947.
    • Such accession by the Ruler, though unconditional, was only in matters of external affairs, communications and defence and certain ancillary matters.
    • The accession instrument expressly declared that nothing therein would affect the continuance of the sovereignty of the Ruler in or over J&K.
  • Exception in Kashmir:
    • Unlike other princely states acceding to India, the sovereign Ruler of J&K did not thereafter merge the territory of the state into the Indian Union nor cede further subjects to India.

Arrangement between India and Kashmir:

  • Even so, it was not contemplated that a ruler would remain the constitutional head of a state within a democratic Indian republic.
  • Hence, there was to be a transfer of power from the Ruler of J&K to a duly elected state constituent assembly.
  • And so, the Indian Constitution itself contemplated in Article 370 that J&K would have its own constitution framed by its own constituent assembly.
  • Since there was still to be a transition from monarchy to a form of government that was to be decided by a state constituent assembly that was yet to be set up, and which would also finally determine the constitutional relationship of J&K with the Indian Union, Article 370 was described as a temporary provision and placed under Part XXI of the Indian Constitution which deals with “Temporary, Transitional and Special Provisions”.
  • Accordingly, the Indian Constitution was made applicable to J&K only through Article 370, and it was through Article 370 that Article 1 of the Constitution (which lists the States of India and their territories) was extended to J&K.

Kashmir status in Indian Union:

  • The state Constituent Assembly, subsequently set up in 1951, regarded the constitutional relationship of J&K with India as one of an autonomous republic within the Indian Union.

Delhi Agreement, 1952:

  • This relationship was later crystallized in the Delhi Agreement, 1952, which was duly ratified by the Indian Parliament and the state Constituent Assembly, and which inter alia permitted the state legislature to make laws conferring special rights and privileges upon the state subjects.
  • The President of India, with the concurrence of J&K, exercised the power under Article 370 to issue the Constitution (Application to Jammu & Kashmir) Order, 1954, which inserted provisions like Article 35A to give effect to the Delhi Agreement and also applied further Articles of the Indian Constitution to J&K (with modifications).

Article 3 of constitution of India and Kashmir status:

  • Another provision inserted by this 1954 Order was the proviso to Article 3 of the Indian Constitution.
  • This provision mandates that “no Bill providing for increasing or diminishing the area of the State of Jammu and Kashmir or altering the name or boundary of that State shall be introduced in Parliament without the consent of the Legislature of that State.”
  • In other words, J&K has not only Not merged its territory into the Indian Union, it has explicitly preserved its territorial integrity as also identity. That, incidentally, also rules out trifurcation of J&K without its consent.

Can Article 370 can be Abrogated?

  • Article 370 itself mandates a recommendation of the state Constituent Assembly before the President of India can declare Article 370 inoperative.
  • The state Constituent Assembly dispersed after framing the Constitution of Jammu & Kashmir in 1957, without, however, making any such recommendation.
  • Nor can a recommendation of the state legislature (unlikely as it may be) be a substitute for the requisite recommendation of the state Constituent Assembly.
  • It therefore follows that the competence of any organ of the Indian State to declare Article 370 inoperative no longer exists.

What is assumption for abrogation of Article 370:

  • Article 370 as an obstacle to full integration of J&K into India plead that the abrogation of Article 370 (and Article 35A) would remove the preferential treatment accorded to the state, permit citizens from across the country to settle in J&K and buy land there, and assimilate the people of J&K into the mainstream.
  • Arguments in Oppose
    • Honouring the autonomy guaranteed by Article 370, asserting that it is Article 370 that makes J&K a part of India, and should Article 370 be abrogated, the accession of J&K to India itself gets undone.
    • The contention is that Article 1 of the Indian Constitution (which lists the States of India) is made applicable to J&K by Article 370 itself, and if Article 370 goes, so does the application of Article 1 of the Indian Constitution to J&K, which would render J&K independent of India.

Experts opinion:

  • J&K became an integral part of India not by virtue of Article 370 of the Indian Constitution but through the accession instrument of 26 October 1947 executed by its sovereign Ruler in favour of India in terms of the law that created modern-day India.
  • The 11-Judge Bench of the Supreme Court held in Madhav Rao (1973) that the accession instrument was an Act of State on the part of the sovereign ruler of a princely state and bound all concerned.
  • The accession made by a sovereign J&K to a sovereign India, therefore, cannot be re-opened and is binding on all, whether in Srinagar or in New Delhi.
  • Since the basis of the relationship between J&K and the Indian Union is the accession instrument, and not Article 370, the abrogation of Article 370 (even if it was constitutionally permissible) would not undo the accession or make J&K independent of India.
  • Consequences from such abrogation
    • Far from assimilation, such abrogation would revert the relationship between J&K and India to the terms of the accession instrument and confine New Delhi’s jurisdiction to only matters of external affairs, communications and defence and ancillary matters, with the rest of the matters falling within the jurisdiction of the current constitutional polity of J&K.
    • After all, should Article 370 go, so would all the Presidential Orders under Article 370, most of which had the effect of extending New Delhi’s fiat to the state, often to an extent that would be impermissible for other parts of the country.
    • The obvious constitutional consequence of abrogating Article 370 would be to enhance the state’s autonomy, which would hardly have been New Delhi’s intention. Indeed, it would be a classic case of New Delhi cutting off its nose to spite its face.

NATIONAL RURAL BANK OF INDIA.

  • Context- Govt is thinking of formation of National Rural Bank of India in order to consolidate in Regional rural Banks (RRB).

Parliamentary Standing Committee on Finance (2003)

  • The Parliamentary Standing Committee on Finance (2003) in its 55th Report recommended that Government may consider the setting up of an apex body viz. National Rural Bank of India.

Why there is need of formation of National Rural Bank of India.

  • National Rural Bank of India can act as apex body to monitor the Regional Rural Banks (RRBs)

Steps taken by the Government to strengthen the RRBs:

  • Government had initiated the process of structural consolidation of RRBs in 2004-05 by amalgamating RRBs of the same Sponsor Bank within a State.
  • Recapitalization support is provided to RRBs to augment their capital so as to comply with regulatory capital requirements.
  • Periodic review of financial performance of RRBs,
  • Regular Capacity building efforts are undertaken by NABARD like training at Bankers Institute of Rural Development (BIRD), conduct of Organizational Development Initiative (ODI), exposure visits, etc.
  • NABARD provides regular policy support to RRBs in matters relating to human resources and an arrangement has been made for redressal of grievances through Joint Consultative Committee (JCC).

What is Regional Rural Banks (RRBs)

  • Regional Rural Banks (RRBs) are financial institutions which ensure adequate credit for agriculture and other rural sectors .
  • Regional Rural Banks were set up on the basis of the recommendations of the Narasimham Working Group (1975), and after the legislations of the Regional Rural Banks Act, 1976.
  • The first Regional Rural Bank “Prathama Grameen Bank” was set up on October 2, 1975.At present there are 82 RRBs in India.

Equity in RRBs

  • The equity of a regional rural bank is held by the Central Government, concerned State Government and the Sponsor Bank in the proportion of 50:15:35.

Significance:

  • The RRBs combine the characteristics of a cooperative in terms of the familiarity of the rural problems and a commercial bank in terms of its professionalism and ability to mobilise financial resources.
  • The main objectives of RRB’s are to provide credit and other facilities‚ especially to the small and marginal farmers‚ agricultural labourers artisans and small entrepreneurs in rural areas with the objective of bridging the credit gap in rural areas, checking the outflow of rural deposits to urban areas and reduce regional imbalances and increase rural employment generation.

LAW COMMISSION

  • Context- Law Ministry has initiated the process of setting up the body which gives advice to the government on complex legal issues.

What is Law Commission:

  • Law Commission of India is neither a constitutional body nor a statutory body.
  • It is truly an ad hoc and advisory body whose work is to do research and make recommendations for law reforms such as amendments and updations of prevalent and inherited laws.
  • Recommendations is NOT binding upon the Government.

How Law Commission is established?

  • Law Commission of is established by an order of central government.
    Who will head the law commission is completely at the discretion of the Government. However, it is a convention that a retired judge of Supreme Court heads India’s Law Commission.
  • Further, the States also can constitute their own law commissions.

Who is composition of Law Commission?

  • The Commission is headed by a full-time Chairperson. It membership primarily comprises legal experts, who are entrusted a mandate by the Government.
  • Law commission would be comprised of:
    • A full-time Chairperson
    • Four Full-Time Members (including a Member-Secretary). Secretary, Department of Legal Affairs as ex offcio Member. Secretary, Legislative Department as ex offcio Member. not more than five part-time Members.
  • The Commission is established for a fixed tenure (generally three years) and works as an advisory body to the Ministry of Law and Justice.

History of Law Commission:

  • India’s first Law Commission was established in 1834 via Charter Act of 1833 under the Chairmanship of Lord Macaulay.
  • This law commission had recommended codification of the Penal Code, the Criminal Procedure Code and a few other matters.

ELECTORAL REFORMS

  • Context-Discussion in the Rajya Sabha on electoral reforms

Major Reforms Areas:

  • Appointment system for Election Commissioners and Chief Election Commissioner (CEC);
  • Money power; Electronic Voting Machines (EVMs);
  • The idea of simultaneous elections;
  • Role social media
  • The use of government data and surrogate advertisements to target certain sections of voters.

Appointment System for Election Commissioners and Chief Election Commissioner (CEC)

Present System of Appointment

  • The appointment of the Chief Election Commissioner and other Election Commissioners shall, subject to the provisions of any law made in that behalf by Parliament be made by the President.
  • The President appoints the Election Commissioner based on the recommendations of the cabinet under the Transaction of Business Rules of 1961.

B R Ambedkar on Appointment of EC:

  • The tenure can’t be made a fixed and secure tenure if there is no provision in the Constitution to prevent a fool or a naive or a person who is likely to be under the thumb of the executive.

Collegium System:

  • Communist Party of India (CPI); the Communist Party of India­Marxist (CPI­M); the Dravida Munnetra Kazhagam (DMK) and the Bahujan Samaj Party (BSP), all of whom demanded the introduction of a collegium system

Money Power:

Various Documents and Report on money power in election

  • 1962 private member’s Bill by Atal Bihari Vajpayee;
  • The Goswami committee report on electoral reforms (1990);
  • The Indrajit Gupta committee report on state funding of elections (1998).
  • Independent think tank report on poll expenditure released in June, discussed at length the regressive impact of amending the Foreign Contribution (Regulation) Act (FCRA) and removing the 7.5% cap on corporate donations.

State Funded Election

  • Proposal for state funding (of political parties) based on either a National Electoral Fund or the number of votes obtained by the respective parties.
  • Crowdfunding in the form of small donations. Current expenditure cap on candidates is unrealistic and should either be raised or removed to encourage transparency.

Simultaneous Elections:

In favour:

  • There is electoral fatigue, more expenditure and governance Issue in separate elections.
  • Simultaneous elections will give stability to governments.

Ambedkar on Election (Accountability tool) and stability

  • Accountability should hold precedence over stability.

Proportional representation system

    • Proportional representation system was put forth by the DMK, the CPI and the CPI (M).
    • Explanation why proportional Representation.
      • BSP’s performance in 2014 Lok Sabha elections, when the party got a vote share of nearly 20% in Uttar Pradesh but zero seats.
      • No representation for 20% of population.
  • A number of MPs argued for a mixed system, where there was a provision for both First Past the Post and Proportional Representation systems.

    Reforms that can be done

  • Reducing the number of phases in elections by raising more security forces;
  • Depoliticisation of constitutional appointments by appointing Commissioners through a broad-based collegium;
  • State funding of political parties by means of a National Electoral Fund or on the basis of the number of votes obtained;
  • Capping the expenditure of political parties;
  • Giving the Election Commission of India (ECI) powers to de­register recalcitrant political parties;
  • Inclusion of proportional representation system; and
  • Revisiting the Information Technology Act, to strengthen social media regulations.

EIGHTH SCHEDULE OF THE INDIAN CONSTITUTION

  • Context: Recently a Member of Parliament made a case in Lok Sabha for inclusion of Bhojpuri language in the 8th Schedule of the Constitution
About 8th Schedule:
  • It is the list of official languages recognised by the Constitution.
  • The Eighth Schedule to the Indian Constitution contains a list of 22 scheduled languages viz. Assamese, Bengali, Gujarati, Hindi, Kannada, Kashmiri, Malayalam, Marathi, Odia, Punjabi, Sanskrit, Tamil, Telugu, Urdu, Sindhi (added by 21st Amendment Act, 1967), Konkani, Manipuri, Nepali (added by 71st Amendment Act, 1992), Bodo, Dogri, Maithili, Santhal (added by 92nd Amendment 2003).
  • The list had originally 14 languages only but subsequently through amendments 8 new languages were added.

FINANCIAL STABILITY REPORT


What is it About?

  • The FSR reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability, as also the resilience of the financial system.
  • Gross non-performing assets in the banking system have declined for the second consecutive half year, while the credit growth is picking up.
  • Gross NPA ratio declined to 9.3% as on March 2019. It was 10.8% in September 2018 and 11.5% in March 2018.
  • Gross NPAs could further decline to 9% by March 2020, the macro stress tests indicated.

What is Non-Performing Asset (NPA)?

  • A nonperforming asset (NPA) refers to a classification for loans or advances that are in default or are in arrears on scheduled payments of principal or interest.
  • In most cases, debt is classified as nonperforming when loan payments have not been made for a period of 90 days.
  • While 90 days of non-payment is the standard, the amount of elapsed time may be shorter or longer depending on the terms and conditions of each loan.
  • Following the capital infusion by the government in public sector banks, the overall capital adequacy ratio of the commercial banks improved from 13.7% in September 2018 to 14.3% in March 2019, with state-run banks’ CAR improving from 11.3% to 12.2% during the period. However, there was a marginal decline in the CAR of private sector banks.
  • Credit growth of Public sector banks were at 9.6% while private lenders continue to robust growth of 21%.

What is Capital Adequacy Ratio – CAR?

  • The capital adequacy ratio (CAR) is a measurement of a Bank’s available capital expressed as a percentage of a bank’s risk-weighted credit exposures.
  • The capital adequacy ratio, also known as capital-to-risk weighted assets ratio (CRAR), is used to protect depositors and promote the stability and efficiency of financial systems around the world.
  • The reason minimum capital adequacy ratios (CARs) are critical is to make sure that banks have enough cushion to absorb a reasonable amount of losses before they become insolvent and consequently lose depositors’ funds.

RBI DIRECT TO SAVE THE PAYMENTS DATA WITHIN INDIA.

  • The Reserve Bank of India (RBI) has clarified that payment system providers need to store entire payments data in a system only in India.
  • The issue has come to the forefront because a global push for data free flow across national boundaries. Japanese Prime Minister Shinzo Abe has been a torch bearer for such a system.
  • The risk of data going abroad is that it may fall into the hands of misuse that could lead to manipulations in the life of common man in India. Moreover, India being the second largest populated countries in the world, such data could lead to manipulations by big corporates.
  • The data should include end-to-end transaction details and information pertaining to payment or settlement transaction that is gathered/transmitted/processed as part of a payment message/instruction.
  • The data could be pertaining to customer data like name, mobile number, Aadhaar number, PAN; Payment-sensitive data like customer and beneficiary account details; payment credentials like OTP, PIN and, transaction data such as originating and destination system information amount, among others.
  • The processing is done abroad, the data should be deleted from the systems abroad and brought back to India within one business day or 24 hours from the payment processing, whichever is earlier.

CENTRE EXPANDS TERMS OF REFERENCE OF DIRECT TAX LAW

  • The Central Board of Direct Taxes has expanded the terms of reference of the task force set up to come up with a new direct tax law.
  • They include appropriate direct tax legislation keeping in view the direct tax litigation in other countries, international best standards, the economic needs of the country and other related issues.
  • The new additions include the creation of a faceless and anonymized verification and security system, and the sharing of information between GST, customs and CBDT, and the Financial intelligence unit.

RBI BEGINS MONITORING HFCs

  • 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 after the liquidity crisis hit these firms, resulting in defaults.
  • Mortgage lenders are regulated by the National Housing Bank.

What is a Mortgage?

  • A Mortgage is a loan in which property or real estate is used as Collateral.
  • The borrower enters into an agreement with the lender (usually a bank) wherein the borrower receives cash upfront then makes payments over a set time span until he pays back the lender in full.
  • A mortgage is often referred to as home loan when it is used for the purchase of a home.
  • The central bank is of the view that the since the liquidity crisis of the HFCs could have a spill over effect on the other segments in the financial sector, including banks, and hence, could affect financial stability, it was necessary to monitor these entities on a regular basis.
  • The non-banking financial sector, particularly the mortgage lenders, are fighting a crisis of confidence with banks having stopped lending to these entities since the debt default by IL&FS in September last year.
  • NBFCs saw their cost of funds going up sharply in the last few months. This has impacted their business growth as the lenders have to cut down on their loan disbursements.

CENTRAL BOARD OF FILM CERTIFICATION (CBFC)

  •       It is a Statutory Body under Union Ministry of Information and Broadcasting.
  •       It grants certificate to regulate the public exhibition of films in India under the provisions of the Cinematograph Act 1952.
  •       Films can be publicly exhibited in India only after they have been certified by the Central Board of Film Certification.
  •       The Certification process is in accordance with The Cinematograph Act, 1952, The Cinematograph (certification) Rules, 1983, and the guidelines issued by the Central government u/s 5 (B).

RESERVE BANK OF INDIA (RBI)

Context

  • Viral Acharya’s resignation as Deputy Governor of the Reserve Bank of India

About:

  • The  Reserve  Bank  of  India  was  established  on  April  1,  1935  in  accordance  with  the provisions of the Reserve Bank of India Act, 1934.
  • Though originally privately owned, since nationalisation in 1949, the Reserve Bank is fully owned by the Government of India.

Composition:

Central Board

  • The Reserve Bank’s affairs are governed by a central board of directors. The board is appointed by the Government of India in keeping with the Reserve Bank of India Act.
  • Appointed/nominated for a period of four years

Constitution:

Official Directors

  • Full-Time: Governor and not more than four Deputy Governors

Non-Official Directors

  • Nominated by Government: ten Directors from various fields and two government Official
  • Others: four Directors – one each from four local boards

Functions:

Monetary Authority:

  • Formulates, implements and monitors the monetary policy.
  • Objective: maintaining price stability while keeping in mind the objective of growth.

Regulator and supervisor of the financial system:

  • Prescribes broad parameters of banking operations within which the country’s banking and financial system functions.
  • Objective: maintain public confidence in the system, protect depositors’ interest and provide cost-effective banking services to the public.

Manager of Foreign Exchange

  • Manages the Foreign Exchange Management Act, 1999.
  • Objective: To facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.

Issuer of currency:

  • Issues and exchanges or destroys currency and coins not fit for circulation.
  • Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality.

Developmental Role:

  • Performs a wide range of promotional functions to support national objectives.

Regulator and Supervisor of Payment and Settlement Systems:

  • Introduces and upgrades safe and efficient modes of payment systems in the country to meet the requirements of the public at large.
  • Objective: maintain public confidence in payment and settlement system.

Related Functions

  • Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker.
  • Banker to Banks: maintains banking accounts of all scheduled banks.

NITI AAYOG

Issue in economy now that can be handled by NITI Aayog:

  • There is horizontal and vertical imbalance revenues of centre and states. Vertical Imbalance mainly allocates more money to Centre.
  • Horizonal imbalance involves two types of imbalances.
  • Type I is to do with the adequate provision of basic public goods and services, while the second,
  • Type II, is due to growth accelerating infrastructure or the transformational capital deficits.
  • We need another institution to tackle the horizontal imbalance of the Type II; for this the NITI Aayog is the most appropriate institution.
  • NITI Aayog should be engaged with the allocation of “transformational” capital in a formulaic manner, complete with incentive• compatible conditionalities.
  • NITI Aayog should also mandated to create an independent evaluation office which will monitor and evaluate the efficacy of utilisation of grants.

Features of NITI Aayog:

  • Not Constitutional Body nor statutory body
  • NITI Aayog is essentially an advisory body that seeks to provide critical directional and strategic inputs across spectrum of key elements of policy to the centre as well as states.
  • It also seeks to put an end to the slow and tardy implementation of the policy by fostering inter-ministry, inter-state and centre-state coordination.
  • It has been envisaged to follow the bottom-top development approach.

Composition of NITI Aayog:

  • Chairperson -Prime Minister Governing Council –
  • Its members are Chief Ministers and Administrators of the Union Territories Regional Councils. These would be created as per need and its members would be chief ministers and administrators of UTs of respective regions. Vice-Chairperson.
  • The Vice-chairperson of the NITI Aayog will be appointed by Prime Minister.

National Company Law Tribunal

  • The  statutory  body  has  constituted  National  Company  Law  Tribunal  (NCLT)  under section 408 of the Companies Act, 2013
  • It is a quasi-judicial body in nature.

Significance:

  • Insolvency  and  Bankruptcy  Code,  2016  (Bankruptcy  Code),  also  provides  wide powers to the NCLT to adjudicate upon the ‘insolvency resolution process’ and liquidation of corporate debtors.
  • NCLAT is also the Appellate Tribunal to hear and dispose of appeals against any direction issued or decision made or order passed by the Competition Commission of India.

OBC CATEGORIES COMMISSION RECEIVES 2-MONTH EXTENSION

Why in News:

  • A commission appointed in 2017 to examine the sub-categorisation of the Other Backward Classes (OBC) has been given a two-month extension by President Ram Nath Kovind

Details:

  • The commission had been constituted to “examine the extent of inequitable distribution of benefits of reservation among the castes or communities included in the broad category of Other Backward Classes with reference to such classes included in the Central List.
  • The commission was meant to “work out the mechanism, criteria, norms and parameters in a scientific approach for sub-categorisation within such OBCs and to take up the exercise of identifying the respective castes or communities or sub-castes or synonyms in the Central List of OBCs and classifying them into their respective sub-categories”
  • The commission, was supposed to present its report to the President in 12 weeks from the time the chairperson assumed charge.
    Since considerable time was taken up in obtaining the data and thereafter in analysing of the data, the tenure of the Commission has been extended.

National Commission for Backward Classes

  • National Commission for Backward Classes is a Constitutional body set up through the 123rd constitutional amendment bill 2018 and 102nd amendment act under the provisions of Article 338B of Indian Constitution.
  • The commission consists of one chairman and five Members with the term of three years. The National Commission for Backward Classes is vested with the responsibility of considering inclusions in and exclusions from lists of communities notified as backward for the purpose of job reservations.
  • The commission tenders the needful advice to the Central Government on the issues related to the backward classes and the commission has the powers of a civil court
  • The NCBC was given limited powers – only to recommend to the government inclusion or exclusion of a community in the central list of OBCs.
  • The power to hear complaints of the OBCs and protect their interests remained with the National Commission for Scheduled Castes

REDACTIVE PRICING AUDIT AND THE CAG’S DUTIES

Why in News:

  • Parliament is constitutionally privileged to know under what conditions a procurement of Rafale fighter aircraft was decided on.

Details:

  • The Supreme Court’s observations in connection with the Rafale fighter aircraft deal by citing the Comptroller and Auditor General of India’s (CAG’s) report on redacted pricing,
    and subsequent media reports and the controversy over “stolen files” brought back into the
    spotlight the role of the supreme audit institution of India.

Redaction:

  • Redaction is the selection or adaption by ‘obscuring or removing sensitive information’ from
    a document prior to publication.

CAG Audit:

  • The CAG is mandated to audit all receipts and expenditures of the three-tier governments in India and report to the legislature judiciously, independently, objectively in compliance with applicable laws, rules and regulations, without fear and favour. Legislative committees such as the Public Accounts Committee and Committee on Public Undertakings examine the CAG’s selected reports.

Not Transparent:

  • In the preface of the audit report, the CAG stated that redactive pricing was unprecedented but had to be accepted due to the Ministry’s insistence citing security concerns. It was unprecedented that an audit report submitted by the CAG to the President under Article 151 of the Constitution suppressed relevant information. Redactive pricing is nowhere used in SAI audit reports. It does not seem to have been used in a government audit by any SAI of any country. Redactive pricing in the ‘Performance Audit Report of the Comptroller and Auditor General of India on Capital Acquisition in Indian Air Force (Union Government – Defence Services, Air Force, Report No. 3 of 2019)’ suppresses more than it reveals. An audit is expected to analyse the facts and comparative pricing charts to highlight the financial propriety and prudence of the procurement decision.

Complex Audit:

  • A performance audit is done to establish whether the procurement activity was executed keeping in mind economy, efficiency, effectiveness, ethics and equity. Only a thorough pricing audit can bring out the credibility and integrity of a purchase decision, thereby achieving an SAI’s constitutionally mandated responsibilities.

Comptroller and Auditor General of India:

  • CAG is an independent authority under the Constitution of India. He is the head of the Indian audit & account department and chief Guardian of Public purse. It is the institution through which the accountability of the government and other public authorities (all those who spend public funds) to Parliament and State Legislatures and through them to the people is ensured. CAG derives its audit mandate from different sources like– Constitution (Articles 148 to 151). The Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971
  • Important Judgments
  • Instructions of Government of India.
  • Regulations on Audit & Accounts-2007

CENTRE DENIES RTI PLEA ON CIC APPOINTMENTS

Why in News?

  • The Centre has denied a Right to Information (RTI) request for details of the ongoing recruitment process for four vacancies in the Central Information Commission.

Background:

  • On February, 2019, the SC had directed the Centre and States to pro-actively disclose all information regarding the recruitment advertisement, the particulars of the applicants, the search and selection committees and the criteria for short-listing candidates on their websites.

Appointment of CIC:

  • Section 12(3) of the RTI Act 2005 provides as follows.
  • The Chief Information Commissioner and Information Commissioners shall be appointed by the President on the recommendation of a committee consisting of The Prime Minister, who shall be the Chairperson of the committee. The Leader of Opposition in the Lok Sabha.
  • A Union Cabinet Minister to be nominated by the Prime Minister.
  • There cannot be more that 10 information commissioners all of whose appointments are made by the President and it includes one Chief Information Commissioner (CIC).

Term of office:

  • Section 13 of the RTI Act 2005 provides that the Chief Information Commissioner shall hold office for a term of five years from the date on
  • which he enters upon his office and shall not be eligible for reappointment.
  • Section 13(5)(a) of the RTI Act 2005 provides that the salaries and allowances payable to and other terms and conditions of service of the Chief
  • Information Commissioner shall be the same as that of the Chief Election Commissioner.

Search Committee on Lok pal

  • The Centre on Thursday constituted an eight-member search committee to be headed by former Supreme Court judge, Justice Ranjana Prakash Desai, to recommend the chairperson and members of the anti-corruption ombudsman Lokpal.

About

  • The search committee was appointed by the selection committee which comprises Prime Minister Narendra Modi, Chief Justice of India Dipak Misra, Lok Sabha Speaker Sumitra Mahajan, leader of the largest opposition party, which in this case was Congress’s Mallikarjun Kharge, and eminent jurist Mukul Rohatgi.
  • The search committee consists of former State Bank of India chief Arundhati Bhattacharya, Prasar Bharati chairperson A. Surya Prakash and former Indian Space Research Organisation head A.S. Kiran Kumar.
  • The step comes after the Supreme Court’s order to appoint Lokpal at the earliest. The search committee is a major step towards setting up of the Lok pal.
  • The decision to constitute the search committee comes four years after the Lokpal and Lokayuktas Act, which envisages establishment of anti-graft body Lokpal at the Centre and Lokayuktas in states to look into cases of corruption against certain categories of public servants, was passed in 2013.
  • As per the Lokpal and Lokayukta Act, only the leader of the opposition (LoP) in the Lok Sabha is a member of the selection committee and since, Kharge does not have that status, he is not a part of the panel. A party should have at least 55 seats or 10 per cent of the strength of the Lok Sabha for its leader to get the LoP status.
  • The Lokpal selection committee headed by the prime minister has as its members the Lok Sabha speaker, leader of the opposition in the lower house, the chief justice of India or a judge of the apex court nominated by him, and an eminent jurist who could be nominated by the president or any other member.

Background:

  • The Lokpal will consist of a chairperson and four judicial and four non-judicial members.
  • According to the Lokpal Act, the chairperson and members shall be appointed by the President on the basis of recommendations of the selection committee comprising the Prime Minister, the Speaker of the Lok Sabha, the Leader of Opposition in the House, the Chief Justice of India and an eminent jurist.
  • For selecting the chairperson and the members, the selection committee shall constitute a search panel of at least eight persons.
  • Under the Lokpal Act of 2013, the DoPT is supposed to put together a list of candidates interested to be chairperson or members of the Lokpal .
  • This list would then go to the proposed eight-member search committee, which would shortlist names and place them before the selection panel headed by the Prime Minister. The selection panel may or may not pick names suggested by the search committee.

Future in Gold, Silver

  • BSE Ltd. has received the Securities and Exchange Board of India’s (Sebi) approval to launch delivery-based futures contract in gold for 1 kg and silver for 30 kg.

About:

  • Trading of these contracts will be launched on 1 October, and contract start day will be sixth day of contract launch month and last trading day will be fifth day of contract expiry month.
  • The commodity trading session will be from Monday to Friday 10.00am to 11.30/11:55pm. Delivery centre of gold and silver futures contract will be exchange-designated vaults at Ahmedabad initially and then expanding it pan India in the second phase.

Futures:

  • The futures markets are really designed to be a hedging vehicle for those looking to try and mitigate price risk.
  • Futures contracts were first traded in the mid-19th century with the establishment of a central grain market. This central grain market gave farmers the ability to sell their grain for immediate delivery in what is known as the spot market, or they had the option to sell their grain for a certain price for a future delivery date.
  • A futures contract is a legal agreement between the buyer and the seller for the purchase or sale of an asset on a specific date during a specific month.
  • The price of a futures contract is not fixed, however, and is constantly in a state of discovery through an auction-like process on exchange trading floors and/or electronic trading platforms. In the case of gold or silver, a futures contract outlines a specific delivery time and place for “good delivery” gold or silver bullion.
  • The use of futures contracts generally falls into two broad categories: hedging and speculative purposes.
  • A hedger uses futures contracts to try and mitigate their price risk in an asset, while a speculator accepts this price risk in order to try and profit from favourable movement in prices. The market needs participation from both hedgers and speculators to function properly.
  • By doing this seller has insulated himself from a large drop in the price of, that could adversely affect his potential income.

Mediation Cell Under NCPCR

  • The government told parliament that a mediation cell would be set up under the apex child rights body, the national commission for protection of child rights (NCPCR), to resolve child custody disputes arising from cases of transnational marital discord.
  • It will be established under the NCPCR chairperson to resolve the cases of children who were taken away by one of the spouses without the permission of the other due to marital discord from other countries to India or vice versa.

NCPCR:

  • The National Commission for Protection of Child Rights (NCPCR) was set up in March 2007 under the Commissions for Protection of Child Rights (CPCR) Act, 2005, an Act of Parliament (December 2005).
  • National Commission for Protection of Child Rights (NCPCR) is a statutory body under the administrative control of the Ministry of Women & Child Development, Government of India.
  • The Commission’s Mandate is to ensure that all Laws, Policies, Programmes, and Administrative Mechanisms are in consonance with the Child Rights perspective as enshrined in the Constitution of India and also the UN Convention on the Rights of the Child.
  • The Child is defined as a person in the 0 to 18 years age group.

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