Current Affairs 10-11-2017

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answered Nov 10 by prashant1984 (23,320 points)

Olive Ridleys keep date with Odisha coast, arrive in large numbers

- Olive Ridley turtles have kept their date with Gahirmatha beach in Odisha’s Kendrapara district, known as world’s largest rookery of this endangered species, arriving just offshore for mating in large numbers.

-Olive Ridley pairs have been seen floating near Gahirmatha coast,

-Turtles would scale the sand slope in large number to lay eggs in January and February

-Offshore congregation of Olive Ridley pairs has been observed along 8 km of the Habelighati shoreline. The spectacular sight fascinates nature lovers and scientists.

-To ensure safe mating, day and night patrolling has been intensified so that fishing attempts can be checked.

 Mechanised fishing spells the biggest trouble for turtles as they get entangled in the trawl net.

-The forest division recently got a shot in the arm with the acquisition of two speed boats -- with the assistance of World Bank -- which have enabled wildlife teams to patrol the entire stretch of Gahirmatha sanctuary in five to six hours as against the earlier 11-12 hours.

-In 2016-17, around 9.75 lakh Olive Ridley turtles came out from the sea to lay eggs along the Odisha coast. Nasi II Island of Gahirmatha Sanctuary had alone hosted six lakhs. As per the forest department estimates, 20.22 lakh hatchlings finally emerged from egg shells in Gahirmatha.

About Olive ridley-1.The Olive ridley turtles are the smallest and most abundant of all sea turtles found in the world, inhabiting warm waters of the Pacific, Atlantic and Indian oceans.

2.These turtles, along with their cousin the Kemps ridley turtle, are best known for their unique mass nesting called Arribada, where thousands of females come together on the same beach to lay eggs.

3.Though found in abundance, their numbers have been declining over the past few years, and the species is recognized as Vulnerable by the IUCN Red list.

4.Growing to about 2 feet in length, and 50 kg in weight, the Olive ridley gets its name from its olive colored carapace, which is heart-shaped and rounded.

5.Males and females grow to the same size; however, females have a slightly more rounded carapace as compared to the male.

6.They are carnivores, and feed mainly on jellyfish, shrimp, snails, crabs, molluscs and a variety of fish and their eggs.

7.These turtles spend their entire lives in the ocean, and migrate thousands of kilometers between feeding and mating grounds in the course of a year. 

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answered Nov 10 by prashant1984 (23,320 points)

GST bonanza for firms, consumers on the anvil(GS 2,Governance,Government policies and intervention)

Context-The GST Council, will trim items that attract the highest 28% GST rate and unveil concessions for businesses.

 -Major relief by GST council- Small businesses and eateries will also get major relief as the flat GST rate they can pay under a special window called the composition scheme is likely to be cut.

-Proposal infront of the council-1. Permission for big businesses to file GST returns quarterly instead of monthly, pruning the list of items in the highest tax slab of 28%

2. and raising the sales ceiling for small businesses from Rs1 crore to Rs1.5 crore to avail of the composition scheme are among the proposals before the GST Council.

3.The scheme allows taxes to be paid at a concessional rate and makes compliance easy.

Composition Scheme-It allows taxes to be paid at concessional rate and make compliance easy.

Concerns- 1.GST Council believe that while change should be initiated to correct flaws, care should be taken not to dilute the tax reform.

2.This section of the council believes a logical approach should be adopted towards relaxations to be given to businesses.

Dilution in GST reform-1.In the original GST design, there was no place for tax exemptions—everyone pays tax and wherever legitimate tax incentives are needed, it is given as a refund.

2. But to help exporters tide over a liquidity crisis, the council decided to continue two pre-GST schemes that allow duty-free sourcing of materials for export production till March 2018.

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answered Nov 10 by prashant1984 (23,320 points)

Will bank recapitalisation fix NPAs?

Context-The following article will critically analyse recapitalization of bank by Government.

1.This will give the banking system time to enhance its credit portfolio.

-The move on the part of the government to inject capital of ₹2.11 lakh crore into public sector banks (PSBs) is commendable and a decisive step.

- Reserve Bank of India asked PSBs to work on the recovery process for 12 large exposures which account for 50% of the total non-performing assets (NPAs) worth 8 lakh crore in the banking system, it was expected that by December 2017, the banks would recover about  2 lakh crore. But it’s already November and recovery prospects are eluding and the process may take longer.

-Capital Need- i)The size of the haircuts the system is expected to take will perhaps be much more than the original estimate of about 50% of the exposure amount. This means that there will be additional loss of capital.

ii)Recovery will become more expensive in terms of capital in the banking system.

Therefore, there must have been a view that till the recovery process gathers momentum, more capital would be required.

iii)The economic value, and therefore the value recovered from borrowers, may perhaps grow after 8-10 quarters. At present, the value at which the resolution happens is sub-optimal. The government’s decision to put more capital into the banking system could pay off if the banking system were to hold these assets for this period.

-Focus on clean-up

i)It is significant that capital is being infused into banks.

This could give the banking system a good breathing time to enhance its credit portfolio and restore value out of the NPA accounts.

ii)In next few years,the regulator, banks and the government will have to focus on the quality of public sector banking assets, the NPAs and the recovery.

iii)There has been a broad-brush approach to the quality assessment. The system will have to conduct more analysis, more evaluation sector-wise in terms of its potential for value restoration and enhancement

iv)The last thing the economy and the banking system can afford is a further drop in economic value.

8 lakh crore problem today might grow into a much larger amount.

The quality of governance will play a significant role in this regard. There has not been any worth-while effort on this.

v)There will have to be more reforms to put a higher order of governance in the banking sector. Ensuring performing boards at public-sector banks do become more critical.

vi)The last point which is equally important is that as long as the government wants to hold on to 51% equity in PSBs we cannot have periodic injection by way of recap bonds.

vii)To fund the economy, the government will have to make a yearly budgetary allocation of the amount of capital required by PSBs. Programmes such as Indradhanush and small budgetary allocations will not work. The PSBs need budgetary allocation of at least 75,000-80,000 crore each year.

-However ,the quantum of capitalisation will not enable banks to recover the alarmingly huge bad loans which is the main issue confronting them.

1.Stressed assets-i)The total stressed assets, bad loans, and restructured loans in banks are in the region of 15 lakh crore.

ii)Instead of taking tough action on defaulters, the government came out with a “novel scheme” to foist insolvency and bankruptcy proceedings on defaulters. 

iii)This measure is not going to result in the recovery of bad loans. That is why the RBI has asked PSBs to be prepared for a deep haircut, up to 50% of the dues. Recently, on one account, a bank managed to recover just 6% of the total loan amount of Rs. 950 crore. On 12 accounts, the dues are Rs 2.5 lakh crore.

2. Rewarding the defaulter-i) The defaulter promoter can himself bid before the IBC proceedings. Obviously, he is likely to be the highest bidder. So, he will retain his company but will have to shell out less than what he borrowed. This is legal innovation to pay less. But in the bargain, banks will lose huge amounts.

ii)One can safely predict that all banks will be running into losses by the end of the current financial year. Last year, while the gross operating profits were 1,58,982 crore, after provisions for bad loans (1,70,370 crore), the net loss was 11,388 crore. This year, it is bound to be worse.

iii) The IBC is only a ploy to extend favours to big corporates to escape from their liability at the cost of the public exchequer.

iv) If banks would have recovered these loans, their interest revenue would have been more, income levels higher, profits high and they would have generated capital internally out of the profit. That door is closed because banks cannot recover loans through the IBC route. Thus, the banks’ capital gets eroded and the capital adequacy ratio (CAR) becomes adverse.

3.Lending requirements-i)If banks do not have adequate capital, they cannot lend. This would dampen the economy, which is already in the doldrums. Hence to bolster the economy, banks have to be advised to give more loans. To give more loans, more capital is essential. That is why the announcement on recapitalisation.

ii)In the last three years, banks have written off  Rs.1,88,287 crore. We have to bear in mind that when banks lose money or when the government recapitalise PSBs, it is all people’s money and out of public savings kept in trust in the banks. People’s money should be for people’s welfare and not to fund corporate default or to recapitalise the banks to adjust these bad loans.

Way Forward-i)  For improving governance of PSBs, questions like the tenure of senior management have to be addressed.

This was the recommendation of the Narasimhan Committee of 1991 and 1998. Public Sector Bank chiefs and their managing/executive directors must have a fixed tenure of at least five years.

ii)The second issue is the salary structure of senior management.. To offer incentives by way of very good annual bonus based on performance should enable them to take the right decisions.

iii)The third issue would be of professionalisation through lateral entry at the level of general managers and not at the ED/MD level.

iv)The banking boards need to be manned by professional directors rather than political nominees.

v)Accountability needs to be fixed by removing senior management for non-performance.

vi)There are a few gaps in the regulatory framework as well. One of them is joint lending.

vii)Another issue is the appointment of statutory auditors.This should be like best private sector companies, the auditors are shortlisted by promoters and then assessed by the Audit Committee and Board.

viii) Action must be taken against promoters who have siphoned off funds and transferred them to their personal assets. These assets must be forfeited and the RBI needs to move ahead on that.

This infusion is a welcome step but there are issues that should have been dealt with first. The good part is that after putting this capital, the government’s equity would be close to 70-80% in each PSB. The government could make a huge profit by selling this equity after improving the management of PSBs.

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answered Nov 10 by prashant1984 (23,320 points)

Paradise Papers, Gorakhpur(GS 2 ,Governenace)

Introduction-1. the Paradise Papers, the new set of documents on offshore finances being investigated in collaboration with the International Consortium of Investigative Journalists (ICIJ) and Suddeutsche Zeitung, Munich.

These documents show a link to 714 Indian names, including prominent individuals and corporates,

2. Report titled “30 children die in 48 hours at Gorakhpur’s BRD Hospital, six due to encephalitis.” Of the 30 children, 15 were younger than one month.

-While the two stories seem to be unrelated, they are intimately linked. The broken health system is something all Indians are familiar with.

The revenue lost through tax avoidance by the corporate can fund the gap in health sector.

Need For Higher Health Budget- 1.India spends only about 1.3 per cent of its GDP on health when the global average is 6 per cent.

With the current level of under-funding for health, we will fail to meet the National Health Policy 2017 targets. One of the reasons for the underfunding is not collecting enough taxes.

2. The High Level Expert Group (HLEG) on universal health coverage (UHC) submitted its report in November 2011.

 It estimated that financing the proposed UHC system will require expenditure on health to be stepped up to at least 2.5 per cent of GDP by 2017 and 3 per cent by 2022.

3.The National Health Policy 2017 also intends on gradually increasing public expenditure to 2.5 per cent by 2025.

How Can we improve our health budget-1. The intention to raise public expenditure to strengthen India’s healthcare have been repeated in the in many official plans

2.Indeed, it will probably not be possible to do so until India’s tax to GDP ratio — which at 1.7 per cent is one of the lowest in the world — is raised.

3.This could be done if India had the political will to stop hemorrhaging its tax revenues due to the legal and illegal ways employed by the corporate sector.

Revenue loss-1.Estimates of revenue loss from international corporate tax avoidance are available from several studies. On the conservative side, revenue losses due to tax avoidance are around $500 billion globally (Alex Cobham and Petr Jansky, March 2017).

2.In addition, the studies show that the intensity of losses is substantially greater in low and lower middle-income countries. So at one end we have countries such as Guyana and Chad, that are likely to be losing a staggering 7 per cent of GDP to tax avoidance and at the other end we have the UK losing only 0.02 per cent.

India`s Position on revenue loss-i) It is estimated to be losing 2.34 per cent of GDP due to corporate tax avoidance.

ii) This is significantly more than the 1.3 per cent of GDP that it currently spends on healthcare and more than enough to help it reach its target of 2.5-3.0 per cent to achieve universal health coverage.

Way forward- 1.Tax havens are at the heart of the inequality crisis, enabling corporations and wealthy individuals to dodge paying their fair share. This prevents countries from funding vital public services and combating poverty and inequality, with especially damaging effects for developing countries like India.

2. The Indian government needs to urgently take steps to investigate these 714 names as well as work with other governments to prevent more losses in tax revenues.

3.The corporate sector needs to stop discussing whether these tax minimising schemes are legal or illegal. Schemes that are causing revenue losses that could prevent two children younger than five dying every minute in India are at least highly unethical.

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answered Nov 10 by prashant1984 (23,320 points)

Cabinet approves Creation of National Testing Agency (NTA) to conduct entrance examinations for higher educational institutions 

The Union Cabinet has approved creation of National Testing Agency (NTA) as a Society registered under the Indian Societies Registration Act, 1860, and as an autonomous and self-sustained premier testing organization to conduct entrance examinations for higher educational institutions.

Features:

·         The NTA would initially conduct those entrance examinations which are currently being conducted by the CBSE.

·         Other examinations will be taken up gradually after NTA is fully geared up.

·         The entrance examinations will be conducted in online mode at least twice a year, thereby giving adequate opportunity to candidates to bring out their best.

·         In order to serve the requirements of the rural students, it would locate the centres at sub-district/district level and as far as possible would undertake hands-on training to the students.

Constitution:

·         NTA will be chaired by an eminent educationist appointed by MHRD.

·         The CEO will be the Director General to be appointed by the Government.

·         There will be a Board of Governors comprising members from user institutions.

·         The Director General will be assisted by 9 verticals headed by academicians/ experts.

Finances:

NTA will be given a one-time grant of Rs.25 crore from the Government of India to start its operation in the first year. Thereafter, it will be financially self-sustainable.

Impact:

Establishment of NTA will benefit about 40 lakh students appearing in various entrance examinations. It will relieve CBSE, AICTE and other agencies from responsibility of conducting these entrance examinations, and also bring in high reliability, standardized difficulty level for assessing the aptitude, intelligence and problem solving abilities of the students.

Background:

In view of the need to have a specialized body in India like the most advanced countries, the Finance Minister in the Budget speech of 2017-18 had announced setting up of a National Testing Agency (NTA) as an autonomous and self-sustained premier testing organization to conduct all entrance examinations for higher educational institutions.

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