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INDEX

1. National news

1.1 SCO calls for global front to fight terror groups terror groups

1.2 Plea to make poll offences cognizable

1.3 Rise in India – ASEAN Naval games

1.4 PM’s maternity scheme benefits 23.6 lakh

1.5 National Dam safety Authority in the works

1.6 Couples in Live-in relations cannot adopt, says CARA

1.7 New health scheme flawed IMA

1.8 India’s BRI stand lost in translation

2. International News

2.1 In a first, WHO recommends quadrivalent influenza vaccine

3. Bills and Acts 3.1 Draft pesticide Bill will hurt farmers

4. Economy 4.1 Reserve Bank tightens working capital loan norms

4.2 Low recoveries of NPAs: RBI data

4.3 MCLR base rate merger proves elusive

4.4 RBI alters ‘relative’ definition to check outward remittances

4.5 Centre allows pulses import despite overflowing godowns

5. Science and Tech

5.1 Battle ready: Dhanush artillery gun clears final trials

6. Security 6.1 Govt. to set up fifth national data centre

6.2 Why Apaches for Army, ask critics

7. India and World

7.1 India, Italy agree to revitalize bilateral ties

7.2 India to defend GSP benefits at USTR


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Current Affairs (11 to 20 June, 2018)

1. National News

1.1 SCO calls for global front to fight terror groups

The Shanghai Cooperation Organisation (SCO) has resolved to fight terrorism, separatism and

extremism with a renewed vigour in the next three years, and called for a unified global

counter-terrorism front under the coordination of the UN.

The grouping of eight countries, including China, India and Russia, came out with a declaration

at the end of its two-day annual summit here on Sunday, with a resolve to deepen cooperation

to contain terrorism, extremism and separatism.

In his address at the summit, Prime Minister Narendra Modi spoke about challenges of

terrorism and cited as example its effects in Afghanistan.

“The member states strongly condemn all forms of terrorism and consider it necessary to make

efforts to promote the creation of a unified global counter-terrorism front with the central

coordinating role of the UN on the basis of international law, without politicisation or double

standards,” the Qingdao declaration said.

However, the declaration did not mention any terror group.

Peaceful settlement

It said all the member countries were for reaching a consensus on adopting the UN

Comprehensive Convention on International Terrorism, and emphasised the importance of

comprehensive measures to reach a peaceful settlement of international and regional conflicts.

The SCO leaders adopted a Joint Appeal to Youth, in which they asked them not to get

influenced by extremist ideologies.

The declaration said the SCO would work to stop the spread of terrorist ideology and eliminate

factors and conditions that facilitated terrorism and extremism, acknowledging that there can

be no justification to any act of terrorism or extremism.

“The member states note that the interference in the domestic affairs of other states under the

pretence of combating terrorism and extremism is unacceptable, as well as the use of terrorist,

extremist and radical groups for one’s own purposes,” the declaration said.


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The SCO called for “effectively fulfilling” the requirements of specialised UN Security Council

resolutions to counter any forms of financing of terrorism and providing material and technical

support to it. In relation to the developments in West Asia, the SCO talked about the growing

threat from foreign terrorists who returned to their countries or find shelter in third countries

to continue their terrorist and extremist activity within the bloc.

“The member states will work to improve the information exchange mechanisms regarding

these people and their movements, and speed up procedures to extradite foreign terrorists in

accordance with the national legislation of the SCO member states and boost international

cooperation both on the political level and between the security services,” it said.

Three evils

In the summit, the leaders also talked about the special role of the SCO Regional Anti-Terrorist

Structure in the fight against “the three evils” — terrorism, extremism and separatism — to

ensure regional security.

It said a cooperation programme among the member countries to fight terrorism, separatism

and extremism would be prioritised in the next three years.

The SCO members reaffirmed their concern about the risk of weapons of mass destruction

ending up in the hands of terrorist groups.

“The leaders advocate the strengthening of the international legal framework to counter this

threat and support the initiative to draft an international convention against chemical and

biological terrorist attacks at the Conference on Disarmament,” the declaration said.

It said the member states would strengthen their cooperation in combating the spread and

propagation of terrorist ideology through the Internet, including publicly justifying terrorism.

The SCO countries reaffirmed their commitment to improve the mechanism of cooperation

within the bloc to combat illegal drug trafficking.

1.2 Plea to make poll offences cognizable

A petition has been filed in the Supreme Court to direct the government to make electoral

offences cognisable with a punishment of minimum two years in jail. The offences listed are

bribery, undue influence, impersonation, false statement, illegal payments and non-filing of

accounts.


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Supreme Court advocate Ashwini Upadhyay said in his petition that successive governments did

not act on the Election Commission’s recommendations since 1992 for harsher punishment.

The result was the erosion of public trust in the electoral system. Parties and candidates used

bribery not only in the Lok Sabha and Assembly elections but also in byelections, it said.

Bribery, undue influence and impersonation are non-cognisable, with punishment of one year

in jail, or fine, or both.

The petition said publishing false statements to affect the outcome of an election was punished

with a fine. Incurring expenditure for promoting the prospects of a candidate was also an

offence, but punishment was a mere ₹500 in fine. Similarly, failure to keep election accounts

was punished with a fine of ₹500. These punishments were drafted in 1920.

“In 1992, the Election Commission proposed that punishments for these offences be enhanced

to two years [in jail], and these offences be made cognizable. Since 1992, it has reiterated the

proposals many times, but the successive governments did nothing to implement them,” Mr.

Upadhyay said.

The bribing of voters with money and essential commodities and buying out representatives

had plagued the electoral system, it said. In 2012, the Election Commission recommended that

the Home Ministry amend the law to make bribery in elections (both cash and kind) a

cognizable offence, with two years in jail, enabling the police to arrest violators without

warrant. “The government has done nothing so far,” the petition said.

1.3 Rise in India – ASEAN Naval games

India is instituting a series of bilateral and multilateral naval exercises with Association of South

East Asian Nations (ASEAN) countries as part of the increasing military-to-military cooperation.

This is in addition to assisting the countries in capacity-building and sale of military hardware.

Later this month, the Navies of India and Indonesia will hold their first bilateral exercise in the

Java Sea. India will stage a new trilateral exercise with Thailand and Singapore soon.

Beyond patrols

The bilateral with Indonesia is in addition to the Coordinated Patrol (CORPAT) that the two

sides conduct. The 31st edition of CORPAT concluded on June 9 in which India had deployed INS

Kulish, a Kora class missile corvette, and one Dornier maritime patrol aircraft.


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“The visit of the INS Kulish seeks to underscore India’s peaceful presence and solidarity with

friendly countries towards ensuring good order in the maritime domain and to strengthen

existing bonds between India and Indonesia,” the Indian Navy said in a statement.

The bilateral with Indonesia will be held after the conclusion of the Malabar trilateral naval war

games between India, Japan and the U.S. which is underway off the coast of Guam.

Interestingly, two of the ships participating in Malabar will head to the Rim of the Pacific

Exercise (RIMPAC), the world’s largest multilateral exercise, hosted by the U.S. biennially off the

Hawaii islands.

The new trilateral naval exercise with Thailand and Singapore was announced by Prime Minister

Narendra Modi during his key note address at the Shangri-La dialogue in Singapore. The dates

and modalities of the exercise are being worked out, a defence source said.

During Mr. Modi’s bilateral discussion in Singapore — which has emerged as an important

partner in the region, the two sides exchanged the implementation agreement for the logistics

pact signed last year under the bilateral naval agreement which improves the Navy’s

operational turnaround.

“The implementation agreement for the India, Singapore mutual logistics support details the

administrative support for ships and aircraft at their bases,” an official source said. This is the

latest in a series of logistics support agreements concluded recently in the Indo-Pacific which

will improve logistics and operational support.

Similarly, the Navy recently conducted maiden bilateral exercises with Myanmar, Thailand and

Vietnam. “The Indian Navy has had extensive interactions with Vietnam People’s Navy,

particularly in training, repairs, maintenance and logistics support aimed at capacity building,”

the Navy said recently on the exercise with Vietnam.

India is also looking at a new multilateral exercise with ASEAN which was agreed during the visit

of Singapore Defence Minister Dr. Ng Eng Hen to India in November 2017.

1.4 PM’s maternity scheme benefits 23.6 lakh

After initial hiccups in implementing the maternity benefit programme Pradhan Mantri Matru

Vandana Yojana (PMMVY), the government has finally made some headway and provided cash

incentives to nearly 23.6 lakh beneficiaries out of an estimated 51.6 lakh a year.


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The scheme was approved by the Union Cabinet in May 2017 and expected to be rolled out in

September. However, until January 2018, the government programme had covered only 90,000

women — a mere 2% of the target.

Under the scheme, pregnant women and lactating mothers are offered a cash incentive of

₹6,000 for the birth of their first child as partial compensation for wage loss, to reduce maternal

mortality and malnutrition levels among children.

“Many States like Tamil Nadu, Telangana, Odisha and West Bengal have not yet come on board

to implement the scheme. As these States account for nearly 25% of the total beneficiaries, we

have actually been able to serve 23.6 lakh of the 38 lakh beneficiaries or more than 60% of

women,” R.K. Shrivastava, Secretary, Women and Child Development, has said in an interview.

Huge backlog

However, due to a huge backlog from last year, the government needed to provide cash

benefits to over 100 lakh estimated beneficiaries by the end of the financial year 2017-18.

The official was confident of meeting the target.

An amount of ₹673 crore has been transferred to the accounts of the beneficiaries out of the

total budget of ₹2,594 crore set aside for the scheme last year, and another ₹2,400 crore

allocated for the current fiscal. The scheme is being implemented on a 60:40 cost-sharing basis

with the State governments.

While States like Tamil Nadu, Telangana, Odisha and West Bengal have their own maternity

benefit schemes and have been reluctant to implement the PMMVY, the senior official said

they were bound to comply because the scheme was a by-product of the National Food

Security Act.

1.5 National Dam safety Authority in the works

Cabinet clears Bill to create body

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a proposal for

introduction of the Dam Safety Bill, 2018 in Parliament.

The Bill envisages a National Dam Safety Authority, which will liaise with State-level dam safety

organisations and the owners of dams for standardising safety-related data and practices. The

NDSA will investigate dam failures and have the authority to fine the States that are found

remiss in implementing safety measures.


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It will look into “unresolved points of issue” between the States which share dam territory and

look to “eliminating potential causes for inter-State conflicts,” an official release said.

A case in point is the Mullaperiyar dam in Kerala, which is a perennial flashpoint between the

State and neighbouring Tamil Nadu.

The Chennai floods of 2015 due to unusually heavy rain were thought to have been

compounded by an unprecedented release of water from the Chembarambakkam dam into the

Adyar.

Due to lack of legal and institutional architecture for dam safety in India, dam safety is a

perennial concern.

1.6 Couples in Live-in relations cannot adopt, says CARA


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The nodal body for adoption in the country has barred partners in live-in relationships from

adopting a child on the ground that cohabitation without marriage is not considered a stable

family in India.

The Central Adoption Resource Authority (CARA) permits a single woman to adopt a child of

any gender, while single men can adopt only boys.

In case an applicant is married, both spouses must give their consent for adoption and should

be in a stable marriage for at least two years. Candidates must be physically fit, financially

sound, mentally alert and highly motivated to adopt a child, as per the Adoption Regulations

2017.

Foreign agency approval

“It has been decided that the cases of single PAP (prospective adopting parent) in a live-in

relationship with a partner will not be considered eligible to adopt a child and their registration

through the AFAAs (authorised foreign adoption agencies) will not be considered for approval,”

according to the CARA in a circular issued last week.

CARA’s CEO, Lt. Col. Deepak Kumar, told The Hindu that the decision was taken in a meeting of

its Steering Committee last month as there were “three to four” applications pending because

of a lack of clarity on the issue.

He added that all these cases involved foreign applicants and the status of their relationship

came to the fore when a team from a partner agency paid them a visit to prepare a home study

report to determine their suitability for adoption.

Explaining the rationale behind the decision, Lt. Col. Kumar said, “In India, a live-in relationship

is not considered a stable family and we need to ensure the best interest of the child is served.”

To a question on what happens if a single parent decides to enter into a live-in relationship

after adopting a child, the officer said, “We can’t predict what happens in future but what we

look for [at the time of assessing a candidate’s suitability] is a stable family.”

‘Not a sin’

The Supreme Court has on several occasions said that a live-in relationship is neither a crime or

a sin.

Last month, the Supreme Court had said that adult couples have the right to live together even

if they were not married.


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It said that even the legislature recognised live-in relationships through the provisions under

the Protection of Women from Domestic Violence Act, 2005.

Under the Act, women in a live-in relationship have been accorded protection as it allows

females living with a male person in a relationship in the nature of marriage to file a complaint

of domestic violence.

1.7 New health scheme flawed IMA

The Indian Medical Association (IMA) has demanded a review of the Centre’s ambitious

National Health Protection Scheme, saying it has “conceptual deficits and operational flaws”.

The doctors body said the rates quoted by the government for various procedures are abysmal

and impractical and most of them do not cover even 30% of the cost of the procedure.

“No hospital can work on these rates without seriously compromising patient safety. In the

garb of cost cutting the government is exposing the people to danger in the hospitals.

“Caesarean sections underwritten for ₹9,000 cannot ensure safety of the mother and the

child,” IMA national president Dr. Ravi Wankhedkar said.

The IMA demanded that the costing undertaken be transparent and be in public domain.

The doctors body said the money allotted for the Ayushman Bharat — National Health

Protection Scheme (AB-NHPS) would have better served the country if every district hospital is

strengthened with an infrastructure of ₹2 crores each.

“The highly optic NHPS fails to create any new national asset. The same money invested in our

public hospitals would have brought secondary and tertiary care closer to poor in our

government hospitals.

“In addition to non-creation of new public sector hospitals, the government will lose around

₹400 crore to private health insurance companies which will manage the scheme. The

insurance driven healthcare is a failed experiment,” Dr. Wankhedkar said.

IMA members said apart from such conceptual deficits the operational flaws of the scheme will

ensure it as a non-starter.

While lauding that the scheme has brought health as an important issue in an election year, the

doctors body expressed concern that only a fraction of ₹1.5 lakh crore required has been

allotted.


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The IMA said the way forward for the country is to invest in our government hospitals for better

health infrastructure and manpower. The current policy change in India will only end up

strengthening the insurance business.

“IMA has suggested to the Union government that NHPS should be modelled as healthcare

purchase directly from the provider hospitals removing the insurance companies and third

party administrators.

“These intermediaries siphon off 40% of the budgeted money and are breeders of corruption

and unethical practices,” IMA Secretary General Dr. R.N. Tandon said.

Twenty States, so far, have signed MoUs with the Union Health Ministry to implement the

government’s ambitious national health protection mission, aiming to provide a cover of ₹5

lakh per family annually to ten crore vulnerable families.

1.8 India’s BRI stand lost in translation

A major embarrassment for the government was averted on Tuesday, after the Shanghai Cooperation

Organisation (SCO) agreed to pull down the English version of the Qingdao Declaration signed by Prime

Minister Narendra Modi on Sunday, which appeared to show that all “member states”, including India,

had supported and endorsed China’s Belt and Road Initiative.

Major departure

The wording of the paragraph in the statement in English, which differed from the official versions in

Russian and Chinese on the SCO website, would have marked a big departure from the Modi

government’s stand on the Chinese connectivity project, which India is staunchly opposed to.

According to the version available online on Tuesday, the statement said, “Reaffirming their support for

the Belt and Road Initiative (BRI)” of China, Kazhakstan, Kryrgyz Republic, Pakistan, Russia, Tajikistan and

Uzbekistan, “the Member States express appreciation for the joint efforts taken towards its

implementation”.

India, the only member state which is not part of the BRI, has publicly criticised it.

Senior former diplomats that The Hindu spoke to termed the SCO declaration in English a case of

“sloppy drafting” and “an oversight”, and called for the External Affairs Ministry to take note of the

statement lest it became a reflection of the Indian position for the future.

“It is for the MEA to decide if they should insist on an amendment,” said former Foreign Secretary

Shyam Saran, adding that the Ministry should opt for a “statement in clarification”.


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The Hindu also contacted the Ministry spokesperson’s office, which then contacted the SCO and had the

faulty version of the document deleted from the website. “It was an unofficial translation that should

not have been there in the first place,” said a source, adding that the SCO secretariat agreed to delete it

when the error was “pointed out to them”.

However, the SCO secretariat did not clarify when it might upload the corrected version. Until Tuesday

evening, the MEA website, which records all bilateral and multilateral documents signed by the

government, had not uploaded any version of the SCO Qingdao declaration, released on Sunday.


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2. International News

2.1 In a first, WHO recommends quadrivalent influenza vaccine

Sanofi Pasteur’s injectable influenza vaccine (FluQuadri) containing two A virus strains — H1N1

and H3N2 — and two B virus strains — Victoria and Yamagata — for active immunisation of

adults of age 18 to 64 years was approved in May last year by the Drug Controller General of

India (DCGI). The application for the paediatric indication is under review by the DCGI and final

approval is expected by the end of this month.

Sanofi’s quadrivalent influenza vaccine was licensed for use by the U.S. Food and Drug

Administration (FDA) in 2013; it is licensed in 26 countries.

Better protection

While a trivalent influenza vaccine contains both A subtype viruses, it has only one of the B

subtype virus, the quadrivalent vaccine offers greater breath of protection as it includes both B

subtype viruses. It is because of greater breadth of protection that a few other companies too

have shifted from a trivalent to a quadrivalent vaccine.

Since the vast majority of influenza vaccines manufactured were trivalent till recently, the

World Health Organisation (WHO) used to recommend two A subtypes and one B subtype, plus

an optional fourth strain (the other B virus strain). But this February 2018, for the first time, the

WHO issued an official recommendation for a quadrivalent vaccine. “It is recommended that

quadrivalent vaccines for use in the 2018-2019 northern hemisphere influenza season,” the

WHO noted.

The quadrivalent vaccine will contain four influenza virus strains (two A subtypes and two B

subtypes — H1N1 and H3N2, and Victoria and Yamagata respectively). The WHO

recommendation then mentioned which B strain should be removed in the case of a trivalent

flu vaccine.

The viruses used in the vaccine are killed and this eliminates the possibility of the virus in the

vaccine itself causing infection. In India, the vaccine will be available as single dose pre-filled

syringe. Eventually, it will be available in a vial for public health use. In the case of H1N1, there

are two strains — California and Michigan — that cause influenza. In India, the Michigan strain

was earlier circulating and has been replaced by the California strain. For 2018, the WHO has

recommended the Michigan strain for the southern hemisphere, including India.


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Each year, the vaccine changes to reflect the different strains in circulation. Year round,

scientists across the globe track, analyse and classify the viral strains causing illness. This allows

the WHO to select the strains in February for the upcoming season’s vaccine.

Since 2011, there have been about 97,000 H1N1 cases and over 7,100 deaths in India according

to the Integrated Disease Surveillance Project (IDSP) data. Till June 3 this year, there have been

1,740 seasonal influenza cases and 191 deaths caused by H1N1. The years 2015 and 2017

witnessed a sharp increase in the number of cases and deaths. There were 42,592 and 38,811

cases and 2,990 and 2,270 deaths in 2015 and 2017, respectively.

Indian context

Despite the high number of infections and mortality each year, India does not have in place a

national policy for influenza immunisation. Pregnant mothers, children aged below five and

young people with asthma, cardiovascular disease, diabetes and high blood pressure are at a

greater risk of infection and death. The Ministry of Health issues only H1N1 vaccination

guidelines for different vulnerable groups including healthcare workers.

“If you want to reduce the influenza burden in adults, then we must target children as they act

as reservoirs,” Dr. Su-Peing Ng, Sanofi Pasteur, Head of Global Medical Affairs.

“Influenza can be seasonal or pandemic. What we observed during the 2009 pandemic is that

countries which traditionally had good seasonal vaccine coverage could reach 50% coverage

during the pandemic. Other countries achieved only 20% vaccination coverage during the

pandemic. So seasonal vaccination is part of pandemic preparedness,” said Dr. Pier Luigi

Lopalco, Professor of Hygiene and Preventive Medicine at the University of Pisa, Italy.

“When people can use the seat belt each time they drive why not get vaccinated against

influenza just once a year?” asked Dr. Su-Peing.


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3. Bills and Acts

3.1 Draft pesticide Bill will hurt farmers

A group of Indian pesticide manufacturers says that the proposed Pesticides Management Bill,

which is likely to be finalised this month, will harm both farmers and the domestic industry by

not making it mandatory for the active ingredients of pesticides to be revealed in the

registration process.

“The draft Bill will allow importers to register readymade products without registering the

active ingredients,” said Pradip Dave, President of the Pesticides Manufacturers and

Formulators Association of India. He said that this would prevent Indian manufacturers from

registering ‘me-too registrations’, and producing pesticides at a cheaper rate. “This means they

[foreign manufacturers] will get total monopoly and can loot the Indian farmer.”

Mr. Dave pointed out that farmers were able to buy a pesticide from Indian manufacturers at

less than half the rate as sold by importers or multi-national corporations. For example,

Bispyribac sodium, a herbicide for paddy, was introduced in the market at ₹8,000 per kg by an

MNC but is now sold by Indian manufacturers at ₹3,500/kg.

The Bill, a draft of which was made available for public feedback by the Ministry for Agriculture

and Farmers Welfare in February 2018, is intended to replace and update the Insecticides Act,

1968. The existing law mandates the registration of active ingredients, and allows for “me-too”

registrations under Section 9(4).

However, in 2007, the government started allowing importers to register new formulations

while keeping active ingredients secret for a fixed period. Though this policy was challenged in

the Gujarat High Court and struck down in 2013, importers have been reluctant to comply, Mr.

Dave said.

End to ‘Make in India’

Currently, the domestic pesticide market is valued at around ₹20,000 crore, of which importers

hold 30%, according to the PMFAI. Mr. Dave said if the draft Bill was approved in its current

form, it would demolish the concept of Make in India in the pesticides sector.

“This is not about intellectual property rights,” he insisted. “Most of these [imported] products

are 25-30 years old, and their patents have long expired. By not registering active ingredients,

they are effectively ever-greening their patents and harming the domestic industry.”


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4. Economy

4.1 Reserve Bank tightens working capital loan norms

The Reserve Bank of India (RBI) has proposed a minimum 40% loan component for working

capital funding of ₹150 crore and above to bring in greater credit discipline and improve

monetary transmission.

According to draft guidelines, the RBI has proposed that the loan component of 40% will come

into effect from October 1 and will be increased to 60% from April 1, 2019.

The loan’s tenure will be minimum seven days.

“Effective from April 1, 2019, the undrawn portion of cash credit/overdraft limits sanctioned to

the large borrowers, irrespective of whether unconditionally cancellable or not, shall attract a

credit conversion factor of 20%,” the RBI said. This means banks have to set aside capital for

undrawn portion of cash credit limits.

Repayment schedule

Currently, working capital is mostly in the form of cash credit for which interest rate is reset

once a year. Also, cash credit does not have a tight repayment schedule.

The proposed new norm will address the following issues. First, if there is a loan component

then there will be a repayment schedule which will put pressure on borrowers to manage their

liquidity. Secondly, since the loan component will have a fixed tenure, the reset clause can be

invoked at the end of each tenure period. “While cash credit has its benefits, it also poses

several regulatory challenges such as perpetual roll-overs, transmission of liquidity

management from the borrowers to banks/RBI, hampering of smooth transmission of monetary

policy, etc.,” the RBI added.

4.2 Low recoveries of NPAs: RBI data

While public sector banks have claimed a ₹1,50,960 crore reduction in their non-performing

asset (NPA) levels over 2017-18, about 55% of this was due to write-offs and only 27% was

actual recoveries, according to data provided by RBI Governor Urjit Patel to the parliamentary

Standing Committee on Finance.

According to the data reviewed by The Hindu, public sector banks saw a ₹1,50,960 crore

reduction in their NPA levels from the start of financial year 2017-18 till December 31, 2017.


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However, the data also showed that the same period saw ₹2,37,475 crore of loans being added

to the NPA list, thereby leading to an overall worsening of the NPA situation. Further, within the

₹1,50,960 crore ‘reduction in NPAs’, about 55% or ₹84,272 crore was due to write-offs. The

data shows that only ₹41,391 crore, or 27%, of the reduction in NPA levels was due to actual

recoveries. In addition, ₹25,297 crore worth of loans were upgraded from NPA status.

Private sector banks saw a reduction of ₹46,091 crore in their NPA levels by December 31, 2017

compared with what they were as of April 1, 2017. But, fresh additions to the NPA list

amounted to ₹60,800 crore.

For private sector banks, about 40.2% of the reduction in their NPA levels was due to write-offs.

Actual recoveries accounted for 34.2% of the reduction, while upgrades accounted for 24.1% of

the reductions. Gross NPAs with public sector banks stood at ₹7,77,280 crore at the end of

December 2017, up from ₹5,39,968 crore as on March 31, 2016. For private sector banks, gross

NPA levels grew to ₹1,07,796 crore by December 31, 2017 from ₹55,853 crore as on March 31,

2016.

The data also showed that bank frauds increased in both number and value over the last three

years.

While 4,693 frauds of more than ₹1 lakh were reported in 2015-16, this increased to 5,904 in

2017-18, an increase of about 26%. Over the same period, the value of these frauds increased

from ₹18,698.8 crore to ₹32,361.27 crore.

4.3 MCLR base rate merger proves elusive

Millions of customers are paying a higher interest rates on home and auto loans, among others,

in effect ensuring that public sector banks avoid further losses.

This is because the Reserve Bank of India (RBI) is yet to mandate banks to allow customers who

signed up for loans in the erstwhile ‘Base Rate’ regime and who are paying higher rates, to shift

to the current ‘MCLR’ structure, which is lower than the base rate.

Interest income impact

An internal study by the banking regulator has found that if banks offer their customers a lower

interest rate, public sector banks will incur a whopping Rs. 40,000 crore loss. “Public sector

banks have reported huge losses in the previous financial year. Asking them to shift their

customers to MCLR could impact their interest income further,” said a reliable source who

wished not to be named.


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State-run banks are already reeling under huge losses due to a rise in non-performing loans.

Nineteen of India’s 21 state-run lenders reported losses in 2017-18, wiping out almost all of the

government’s capital injections during the year.

Base rate is the erstwhile loan pricing mechanism which was replaced by MCLR — the Marginal

Cost of funding based Lending Rate — from April 1, 2016. The one-year MCLR of banks, to

which a bulk of the loan rates are linked, is lower than the base rate. For example, SBI’s base

rate is 8.7% while its one-year MCLR is 8.25% — a difference of 45 basis points.

RBI’s own assessment

According to the RBI’s own assessment, ‘a large proportion’ of loans is still linked to the base

rate. A base rate customer can shift to the MCLR only by paying a fee. On February 7, in the

sixth bimonthly policy review of 2017-18, RBI had said the base rate would be linked to MCLR

from April 1.

“With the introduction of MCLR, it was expected that the existing base rate-linked credit

exposures shall also migrate to MCLR system. It is observed, however, that a large proportion of

bank loans continue to be linked to the base rate despite the Reserve Bank highlighting this

concern in earlier monetary policy statements,” the RBI had said on February 7.

“Since MCLR is more sensitive to policy rate signals, it has been decided to harmonise the

methodology of determining benchmark rates by linking the base rate to the MCLR with effect

from April 1, 2018. Necessary instructions will be issued by the end of next week,” it added.

Instructions to the effect have not yet been issued.

4.4 RBI alters ‘relative’ definition to check outward remittances

Concerned over funds sent abroad under the ‘maintenance of close relative’ category of the

Liberalised Remittance Scheme (LRS), the Reserve Bank of India (RBI) has narrowed the

definition of relatives to check the flow of funds.

Hence, funds under the ‘maintenance of close relative’ category can be sent only to immediate

relatives such as parents, spouses, children and their spouses. This has brought about by

defining ‘relatives’ under the Companies Act, 2013 instead of the same act of 1956.

“In the context of remittances allowed under LRS for maintenance of close relatives, it has been

decided to align the definition of ‘relative’ with the definition given in Companies Act, 2013

instead of Companies Act, 1956,” the central bank had said in its June policy statement.


19


Outward remittances under maintenance of close relatives shot up to almost $3 billion in 2017-

18 from a mere $174 million in 2013-14. In fact, funds sent under this category have more than

doubled since 2015-16.

Overall outward remittances under LRS went up to $11 billion from $1 billion in the same

period.

“It may not be the case that the central bank is suspecting money laundering,” said Madan

Sabnavis, chief economist, Care Ratings, when asked on the possible reason for the change.

‘Commercial purpose’

“It is possible that the facility [maintenance of relatives] under the Liberalised Remittances

Scheme is used for commercial purposes which is not its objective. That may have prompted

the regulator to narrow the definition of relatives.”

RBI has introduced a system for daily reporting of individual transactions under the LRS by

banks.


20


This enables banks to view remittances already made by an individual during the fiscal, thus

improving monitoring and ensuring compliance.

Since the system uses the Permanent Account Number of the remitter to aggregate remitter-

wise data, the central bank has made furnishing of PAN mandatory for such transactions.

4.5 Centre allows pulses import despite overflowing godowns

The Union government has allotted quotas for import of pulses and is enforcing an additional

import agreement with Mozambique at a time when domestic stocks are at their highest,

domestic production is expected to be high and prices are crashing. Farmers and millers are

unhappy with the situation, but the government says it is balancing the needs of Indian

consumers and commitments to foreign trade partners on the one hand and the interests of

Indian farmers on the other.

The final allocations of import quotas — totalling two lakh tonnes of tur or arhar dal, and 1.5

lakh tonnes each of moong and urad — were made at a meeting at the Directorate-General of

Foreign Trade (DGFT) on Monday. Those amounts represent a quantitative restriction that was

slapped on pulses imports in August 2017 in response to a glut in domestic supply and falling

prices, which continues this year. On the back of a good monsoon forecast,

the Agriculture Commissioner predicts domestic pulses production of 24 million tonnes in 2018-

19, slightly higher than last year’s.

However, the DGFT issued a notice last month exempting pulses imports from Mozambique

from the restrictions.

Fallout of 2016 crisis

In 2016, in the wake of soaring pulse prices and angry consumers, India signed an MoU to

double pulses imports — mostly arhar — from the east African nation over a five-year period.

This obligates India to buy 1.5 lakh tonnes from Mozambique this year. The government has

also explored the possibility of similar long-term agreements with countries such as Kenya.

“There is an MoU ... we also don’t want to just stop trade abruptly,” DGFT Alok Chaturvedi

told The Hindu when asked about the impact of imports. “This is a long-term agreement.” He

pointed out that an inter-ministerial committee headed by the Food Secretary, including the

Secretaries of Agriculture, Consumer Affairs and Commerce, made the decision to allow a

limited quota of imports which have to be completed by August-end, before Indian harvests,

“so that our farmers are not affected”.


21


However, this does not take into account the fact that last year’s surplus harvests have already

resulted in full godowns.

Sunil Kumar Singh, Additional Managing Director, NAFED, said the government procurement

agency alone had 40 lakh tonnes of pulses in its warehouses — a record — apart from stocks

still remaining with traders and farmers.

Falling prices

Farmers’ groups have been agitating about falling crop prices all summer. “The import

restriction is a classic case of closing the stable door after the horse has bolted,” says Avik Saha,

convener of the Jai Kisan Andolan.

Acreage up

He says the government should have realised that farmers had increased acreage on the back

of rising prices, incentivised by a higher minimum support price and technical interventions to

ensure higher domestic production.

“Those statistics pointing to oversupply were completely ignored and instead the government

signed long-term deals with other countries, digging its own grave. The seeds of this calamity

were planted in 2016, farmers are now harvesting a crop of woe and will continue to harvest it

next year.”

This year, for the first time, the government has allowed millers — as opposed to traders — to

import pulses. However, Suresh Agrawal, chairman, All India Dal Millers Association, is not a

happy man.

“Prices outside India are higher than domestic rates, so it is not viable to import,” he says,

pointing out that while Indian rates for tur were at ₹3,400 a tonne, it would cost at least $410

(more than ₹27,000) to import from Kenya.

Stocks everywhere

“The government has stock, traders have stock, millers have stock, and farmers have stock, so

there is a surplus. We don’t understand why the government is insisting on import...we may be

able to meet only 40-50% of our quotas.” A senior official at the DGFT insisted that according to

the terms of the allocation, import quotas must be met by the end of August.


22


5. Science and Tech

5.1 Battle ready: Dhanush artillery gun clears final trials

The indigenously upgraded artillery gun Dhanush has successfully completed final user trials

and is ready for induction into the Army. Dhanush is an upgraded version of the Swedish Bofors

gun procured by India in the mid-1980s.

“This was the third and final phase of user exploitation firings in which six Dhanush guns were

fired in battery formation from May 31 to June 7, 2018 at the Pokhran field firing range. A total

of 301 rounds were fired from the six guns, including burst fire,” said Dr. Uddipan Mukherjee,

public relations officer of the Ordnance Factory Board (OFB), in response to a questionnaire

from this newspaper.

The first phase of trials were conducted between July and September 2016 at the Pokhran and

Babina ranges and the second phase was conducted between October and December 2016 at

the Siachen base camp with three guns. A total of 1,520 rounds have been fired in all the three

phases.

Tested in all terrains

During the trials, the guns travelled extensively in towed/ self-propelled mode in desert and

high-altitude terrains with each gun clocking over 1,000 km demonstrating their mobility.


23


Dr. Mukherjee said the next step was completion of general staff (GS) evaluation after which

Bulk Production Clearance (BPC) will be accorded. The OFB already has an indent from the

Army for 114 guns and will start supplying the guns on receipt of the BPC. “The OFB has already

supplied six guns for battery firing during the user trials. Another 12 guns will be issued within a

year on receipt of the BPC,” he stated.

The entire order of 114 guns is to be delivered within four years. To meet the requirement, the

Board has undertaken capacity augmentation to manufacture over 400 barrels and 250

ordnances for large-calibre weapon systems, Dr. Mukherjee said, adding that the OFB was

confident of producing eight to 10 guns per month within two to three years. As of now, the

gun has over 80% indigenous content. The imported systems include the power pack, parts of

the electronic suite, and some seals and bearings.


24


6. Security

6.1 Govt. to set up fifth national data centre

The Centre will set up the country’s biggest data centre in Bhopal with a capacity to host five

lakh virtual servers, Electronics and IT Minister Ravi Shankar Prasad said on Monday.

The data centre, which will take about two years to come up, will be set up by the National

Informatics Centre (NIC), under the Ministry of Electronics and Information Technology (MeitY).

This will be the fifth National Data Centre after the ones at Bhubaneswar, Delhi, Hyderabad and

Pune. These National Data Centres host government websites, services and applications.

“India’s digital ecosystem has got a momentum of its own and this process is going to be

irreversible. As far as data privacy is concerned, we have always said that data must be

protected, and India should become a good centre of data analysis,” the Minister said.

Replying to a query on data mining by firms in the context of the general elections in 2019, Mr.

Prasad said, “Any attempt to influence India’s elections in a covert or overt manner by abuse of

data will not be tolerated. People can campaign on social networking sites, but misuse and

abuse of data is not acceptable.”

He added that the government planned to expand its BPO promotion scheme to one lakh seats

from the “current 48,000 seats.”

Under the initiative, which had an outlay of ₹493 crore, 91 BPOs had been set up in small towns

and rural areas till now.

‘121 cr. Aadhaar issued’

On Aadhaar, the Minister said that while only 61 crore Aadhaar numbers had been generated

up to 2014. The numbers had jumped to more than 121 crore as on June 16, 2018. “The

difference between Narendra Modi Government’s Aadhaar and that of Manmohan Singh... the

old Aadhaar was Niradhar [without basis]...there was no legislative support to that platform.

Today, Aadhaar has a robust parliamentary law,” Mr. Prasad said.

Asked about the government’s action plan in case the Supreme Court’s decision was not in

favour of Aadhaar, the Minister said, “The question is hypothetical... the judgment [in the case]

is reserved but I believe our Aadhaar team lawyers have argued it with proof, and Aadhaar has

already established its benefits for the public.”


25


He further added that as many as 59.15 crore Indians had linked 87.79 crore bank accounts

with Aadhaar.

6.2 Why Apaches for Army, ask critics

The Indian Army is a step closer to operating its own attack helicopters, with the U.S. State

Department approving the sale of six Apache helicopters. For the Army, it is a long-held

ambition, but critics say it is an illogical move.

Early this week, the U.S. State Department approved the sale of six additional AH-64 Apache

attack helicopters to India for the Army. The Defence Security Cooperation Agency (DSCA) said

the deal would be worth $930 million.

Right now, the Army operates only smaller Cheetah and ALH (Advanced Light Helicopters) that

weigh less than five tonne. All bigger helicopters, including the Mi-35 attack helicopters, and

fixed-wing aircraft are operated by the Indian Air Force (IAF).

Former Army chief General V.P. Malik said the Army had been “looking for a long time” for

dedicated attack helicopters. “During Kargil [conflict of 1999], we could not use attack

helicopters in that area. We used armed helicopters,” he said. General Malik was the Army

chief during the Kargil conflict.

“In today’s combat situation, they become very important to support combat formations both

in the plains and mountains. Particularly when they are with the Army, it can be operated

better than when they are with the Air Force,” Gen. Malik said. He argued that all over the

world, attack helicopters are with the Army.

‘Ill-advised move’

However, a retired senior Air Force officer countered saying the move is ill-advised. “For

operational reasons, logistics and other factors, these helicopters should be with the Air Force.

We built our first attack helicopter squadron with fighter pilots,” he pointed out. Will the Army

have its own dedicated maintenance division or will the Air Force maintain them, he asks.


26


“Setting up a maintenance division for just six is creating a white elephant. If the Air Force is

going to do it, then the Army will get to blame the Air Force whenever it wants to,” he said.

Under the present procurement plan, the IAF will operate 22 Apache attack helicopters, while

the Army will have six of them. The IAF procurement plan was approved in 2015.

A serving Army officer said the attack helicopters being part of the Army’s corps and operated

by the Army will give “an unprecedented teeth as these aircraft can have a disproportionate

firepower on enemy tanks on the ground. This is the model that the U.S. Army follows.”

The retired Air Force officer pointed out that “we are not a superpower” and need to “optimise

resources”. He said the U.S. Army operating attack helicopters has a historical reason from

World War II, until when the air elements were part of the U.S. Army.


27


7. India and World

7.1 India, Italy agree to revitalize bilateral ties

India and Italy on Monday agreed to boost cooperation in counter-terrorism and cybersecurity

as External Affairs Minister Sushma Swaraj met the top Italian leadership and discussed steps to

revitalise bilateral ties.

In her first engagement of the day, Ms. Swaraj called on Italian Prime Minister Giuseppe Conte

and their discussions focussed on forging bilateral cooperation across sectors, said a statement

issued by the External Affairs Ministry.

It was the first major political exchange between the two countries after Mr. Conte assumed

charge early this month.

Ms. Swaraj “conveyed felicitations of the Government of India to the newly elected

Government of Italy, and reiterated India’s desire to strengthen bilateral relations with Italy,”

the statement said.

Ms. Swaraj, who is here on the first leg of her seven-day tour of four European countries, also

met her Italian counterpart, Enzo Moavero Milanesi.

“They exchanged views on regional and global issues of mutual interest,” External Affairs

Ministry spokesman Raveesh Kumar said.

“Recognising the need to sustain the momentum generated by the visit of former Italian Prime

Minister [Paolo] Gentiloni to India in October 2017, the Ministers emphasised the importance

of promoting regular high-level contacts and bilateral dialogue mechanisms,” the statement

said.

JCEC meet in India

“To augment collaboration in areas of mutual benefit, the Ministers agreed to hold the next

meeting of the Joint Commission for Economic Cooperation (JCEC) in India later this year,” it

said.

They also welcomed Italy’s participation as a partner country at the Tech Summit in India in

November 2018 which would boost cooperation in technology and innovation.


28


The year also marks the 70th year of establishment of diplomatic relations between the two

countries.

Later in the day, Ms. Swaraj left for France for the second leg of her visit.

7.2 India to defend GSP benefits at USTR

India is expected to challenge charges levelled against it by the U.S dairy and medical devices

industries at a hearing before the United States Trade Representative (USTR) office scheduled

for Tuesday and defend its eligibility for benefits under the Generalized System of Preferences

(GSP) programme.

The GSP programme provides for the duty-free treatment of designated articles when imported

from beneficiary developing countries to America. What is at stake is exports worth about $5

billion annually, of 1,937 products from India. The USTR is reviewing India’s eligibility under the

programme, after complaints from bodies representing the dairy and medical devices industry.

The USTR had accused India of implementing “a wide array of trade barriers that create serious

negative effects on U.S. commerce,” in April, announcing the review. The petitions calling for a

review of India’s GSP benefits, “based on concerns that India has allegedly created trade

barriers for these industries,” are “without substantive merits,” Indian embassy official Puneet

Roy Kundal said in a written submission to the USTR. Mr. Kundal was also scheduled to

participate in the hearing.

“India requires that dairy products [be] derived from animals which have never consumed any

feeds containing internal organs, blood meal, or tissues of ruminant origin.

“In this regard, India has explained to the U.S that India’s position is based on religious, cultural

and moral grounds. India is committed to respect the religious and cultural beliefs of its people

and it will be inappropriate to impute any other considerations to this decision,” India told the

USTR, pointing out that several countries export dairy products to India, meeting these

requirements.

India imports dairy products from countries such as Australia and Switzerland. India will tell the

USTR that this is not a question of market access but of certifications. “If several countries can

meet this certification requirement, how can’t the U.S?” wondered an Indian official.

Defends price control

Defending India’s measures to control prices of the medical devices, the submission said, the

country was committed to providing its citizens with equitable and affordable access to


29


essential medicines and medical devices. But this is a huge business opportunity for American

companies, the submission argues. “The large size of the Indian population…is likely to benefit

U.S and other multinational companies involved in manufacturing of such devices,” it said.

Indian submission also seeks to address the Donald Trump administration’s protectionist

political platform. “..An examination of the top GSP benefiting imports into the U.S shows that

Indian products receiving GSP benefits are intermediary goods which are not bound to cause

any injury to domestically manufactured goods in the U.S.,” it said. Of the total value of

merchandise imports of the U.S. approximately $2.36 trillion only $5.6 billion, it pointed out. A

USTR delegation will be travelling to India next week for further negotiations on a host of trade

issues between the countries, which remained inconclusive after Commerce Minister Suresh

Prabhu’s visit to the U.S. last week.


Documents

NeoStencil Live Online Classes - IAS/IES/GATE/SSC/PSC | +91 … › uploads1 › 2017 › 11 › Current-Affairs... · 2018-10-05 · The scheme was approved by the Union Cabinet