PERIYAR IAS ACADEMY 7-JUNE-2018

Paper 2:

Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Atal Bhujal Yojana (ABHY)

Context: The World Bank has approved Atal Bhujal Yojana (ABHY). The scheme is to be implemented over a period of five years from 2018-19 to 2022-23, with World Bank assistance.

About Atal Bhujal Yojana:

It is a Rs.6000 crore Central Sector Scheme of the Ministry of Water Resources, River Development and Ganga Rejuvenation. The scheme aims to improve ground water management in priority areas in the country through community participation.

Priority areas:

The priority areas identified under the scheme fall in the states of Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh. These States represent about 25% of the total number of over-exploited, critical and semi-critical blocks in terms of ground water in India. They also cover two major types of groundwater systems found in India – alluvial and hard rock aquifers- and have varying degrees of institutional readiness and experience in groundwater management.

Implementation of the scheme:

Funds under the scheme will be provided to the states for strengthening the institutions responsible for ground water governance, as well as for encouraging community involvement for improving ground water management to foster behavioural changes that promote conservation and efficient use of water. The scheme will also facilitate convergence of ongoing Government schemes in the states by incentivizing their focussed implementation in identified priority areas.

Expected outcomes:

The implementation of the scheme is expected to have several positive outcomes like better understanding of the ground water regime, focused and integrated community based approach for addressing issues related to ground water depletion, sustainable ground water management through convergence of on-going and new schemes, adoption of efficient water use practices to reduce ground water use for irrigation and augmentation of ground water resources in targeted areas.

Status of groundwater in India:

Central Ground Water Authority (CGWA) is regulating ground water development in 23 States/UTs. As per the assessment of dynamic ground water resources of country carried out jointly by CGWB and State Ground Water Departments, out of the total 6584 numbers of assessment units (Block/ Taluks/ Mandals/ watershed/ Firkka), 1034 units have been categorized as ‘Over-exploited’. This may be due to increase in population, rapid urbanization & industrialization and other related factors.

What’s important?

• For Prelims: Atal Bhujal Yojana- Objectives, funding and implementation, CGWA.
• For Mains: Groundwater crisis- reasons, challenges, concerns and solutions, various efforts by the government.

Sources: pib.

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Topic: e-governance- applications, models, successes, limitations, and potential.

Public credit registry

Context: To provide a single-point and real-time source for financial liabilities of a person or entity, the Reserve Bank of India has decided to set up a public credit registry (PCR) in a modular and phased manner. The decision is based on the report of RBI appointed task force led by YM Deosthalee.

What is a PCR?

The PCR will be the single point of mandatory reporting for all material events for each loan, notwithstanding any threshold in the loan amount or type of borrower. The PCR will serve as a registry of all credit contracts, duly verified by reporting institutions, for all lending in India and any lending by an Indian institution to a company incorporated in India.

Need for a public registry:

• Credit information is spread over multiple systems in bits and pieces, making it difficult to get a comprehensive view of the financial liabilities of a person or entity. A PCR aims to remove information asymmetry to foster the level of access to credit, and to strengthen the credit culture in the economy.
• Also, a comprehensive credit information repository covering all types of credit facilities (funded and non-funded) extended by all credit institutions – commercial banks, cooperative banks, NBFCs, MFIs – and also covering borrowings from other sources, including external commercial borrowings and borrowing from market, is essential to ascertain the total indebtedness of a legal or natural person.

Benefits of having a PCR:

• A PCR can potentially help banks in credit assessment and pricing of credit as well as in making risk-based, dynamic and counter-cyclical provisioning.
• The PCR can also help the RBI in understanding if transmission of monetary policy is working, and if not, where are the bottlenecks.
• Further, it can help supervisors, regulators and banks in early intervention and effective restructuring of stressed bank credits.
• A PCR will also help banks and regulators as credit information is a ‘public good’ and its utility is to the credit market at large and to society in general.

Recommendations made by the task force:

• The PCR should be structured as an independent unit within the RBI so that it may be hived off to a separate non-profit at an appropriate time. It should eventually achieve an autonomy and agility to move with the evolving environment and cater to the changing demands.
• The registry should facilitate linkage to related ancillary credit information available outside the banking system, such as corporate balance sheet information and GSTN, depending on the legal provisions.
• The registry should not include elements of judgment such as credit scoring services and had also called for strict privacy guidelines.

Present status:

• Currently, there are multiple granular credit information repositories in India, each with distinct objective and coverage. Within the RBI, CRILC is a borrower-level supervisory dataset with a threshold in aggregate exposure of Rs 5 crore. Also, there are four privately-owned credit information companies (CICs) in India.
• The RBI has mandated all its regulated entity to submit credit information individually to all four CICs. CICs offer, based on this unique access to the credit data, value added services like credit scoring and analytics to the member credit institutions and to the borrowers.

What’s important?

• For Prelims: Credit information repositories in India and the role of RBI in credit information management, YM Deosthalee committee recommendations.
• For Mains: PCR- need, challenges and its significance.

Sources: the hindu.

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Topic: Important International institutions, agencies and fora, their structure, mandate.

Global Peace Index 2018

Context: Australia-based Institute for Economics and Peace (IEP), world’s leading think tank that develops metrics to analyse peace and quantify its economic value, has released the 12th edition of the Global Peace Index (GPI), or measure of global peacefulness.

Performance of India:

• India has moved up four places to the 137th rank among 163 countries. The improvement is due to a reduction in the level of violent crime driven by increased law enforcement. India was ranked 141 last year.
• India was also among the countries with the biggest decreases in the number of deaths, along with Sri Lanka, Chad, Colombia, and Uganda.

Global performance:

• Iceland remains the most peaceful country in the world, a position it has held since 2008. New Zealand, Austria, Portugal and Denmark also sit in the top five most peaceful rankings.
• Syria remains the least peaceful country in the world, a position it has held for the past five years. Afghanistan, South Sudan, Iraq and Somalia comprise the remaining least peaceful countries.

State of world peace:

• Amid continuing social and political turmoil, the world continues to spend enormous resources on creating and containing violence but very little on peace.
• The countries that displayed the most significant growth in heavy weapons capabilities over the last 30 years are primarily in unstable regions where there are high tensions with neighbouring countries. These include Egypt, India, Iran, Pakistan, South Korea, and Syria.
• Overall, the global level of peace has deteriorated by 0.27% in the last year, marking the fourth successive year of deteriorations. Ninety-two countries deteriorated, while 71 countries improved.
• The four most peaceful regions – Europe, North America, Asia-Pacific, and South America – all recorded deteriorations, with the largest overall deterioration occurring in South America, owing to falls in the safety and security domain, mainly due to increases in the incarceration rate and impact of terrorism.

Sources: the hindu.

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Paper 3:

Topic: Inclusive growth and issues arising from it.

Small finance banks

Context: The Reserve Bank of India has decided to allow urban co-operative banks (UCB) to convert into small finance banks (SFB), a move aimed at bringing these entities into mainstream banking. It has been decided to allow voluntary transition of UCBs meeting the prescribed criteria into SFBs.

Significance of this move:

UCBs currently face regulation by both the RBI and the respective State governments. By turning into SFBs, they will be regulated only by the RBI.

What are small finance banks?

The small finance bank will primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities.

What they can do?

• Take small deposits and disburse loans.
• Distribute mutual funds, insurance products and other simple third-party financial products.
• Lend 75% of their total adjusted net bank credit to priority sector.
• Maximum loan size would be 10% of capital funds to single borrower, 15% to a group.
• Minimum 50% of loans should be up to 25 lakhs.

What they cannot do?

• Lend to big corporates and groups.
• Cannot open branches with prior RBI approval for first five years.
• Other financial activities of the promoter must not mingle with the bank.
• It cannot set up subsidiaries to undertake non-banking financial services activities.
• Cannot be a business correspondent of any bank.

The guidelines they need to follow:

• Promoter must contribute minimum 40% equity capital and should be brought down to 30% in 10 years.
• Minimum paid-up capital would be Rs 100 cr.
• Capital adequacy ratio should be 15% of risk weighted assets, Tier-I should be 7.5%.
• Foreign shareholding capped at 74% of paid capital, FPIs cannot hold more than 24%.
• Priority sector lending requirement of 75% of total adjusted net bank credit.
• 50% of loans must be up to Rs 25 lakh.

What’s important?

• For Prelims: Small Finance Banks- management, functions and features.
• For Mains: Financial inclusion- need, challenges and efforts by the government.

Sources: the hindu.

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Topic: Awareness in space.

Cooperation in the peaceful uses of outer space

Context: The Union Cabinet was recently apprised of a Memorandum of Understanding (MoU) signed between India represented by the Indian Space Research Organization (ISRO) and Oman represented by the Ministry of Transport and Communications on Cooperation in the peaceful uses of outer space, in February, 2018 at Muscat (Oman’s port capital).

• This MoU shall enable the following areas of cooperation such as, space science, technology and applications including remote sensing of the earth; satellite based navigation; Space science and planetary exploration; use of spacecraft and space systems and ground system; and application of space technology.

Value addition for Prelims and Mains- Treaty on Outer space:

Space exploration is governed by a complex series of international treaties and agreements which have been in place for years. The first and probably most important of them is the Outer Space Treaty.

The treaty was initially signed by the United States of America, the United Kingdom and the Soviet Union on January 27, 1967 and it came into effect from October 10, 1967. The treaty was initially called ‘Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and other Celestial bodies.

Treaty Terms:

The treaty forbids countries from deploying “nuclear weapons or any other kinds of weapons of mass destruction” in outer space. The term “weapons of mass destruction” is not defined, but it is commonly understood to include nuclear, chemical, and biological weapons. The treaty, however, does not prohibit the launching of ballistic missiles, which could be armed with WMD warheads, through space.

The treaty’s key arms control provisions are in Article IV. States-parties commit not to:

• Place in orbit around the Earth or other celestial bodies any nuclear weapons or objects carrying WMD.
• Install WMD on celestial bodies or station WMD in outer space in any other manner.
• Establish military bases or installations, test “any type of weapons,” or conduct military exercises on the moon and other celestial bodies.

What’s important?

• For Prelims: MoU on outer space, key features of the outer space treaty, location of Muscat.
• For Mains: Need for international cooperation in peaceful management of outer space.

Sources: pib.

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Topic: Indigenization of technology.

Polar Satellite Launch Vehicle

Context: In a big boost to the country’s space programme, the Union Cabinet has given the financial approval of Rs 10,911 crore for the launch of 30 PSLV and 10 GSLV Mk III rockets in the next four years.

About PSLV:

• PSLV has emerged as a versatile launch vehicle to carry out Sun-Synchronous Polar Orbit (SSPO), Geo-synchronous Transfer Orbit (GTO) and low inclination Low Earth Orbit (LEO) missions.
• It is the first Indian launch vehicle to be equipped with liquid stages.
• With the recent successful launch of PSLV-C41, PSLV has completed three developmental and forty three operational flights and the last forty one flights have been successful.

Significance of PSLV:

The operationalisation of PSLV has made the country self-reliant in the launching capability of satellites for earth observation, disaster management, navigation and space sciences. The PSLV Continuation programme will sustain this capability and self-reliance in the launching of similar satellites for national requirements.

About GSLV Mk III rockets:

• GSLV Mk III is a three-stage heavy lift launch vehicle developed by ISRO. The vehicle has two solid strap-ons, a core liquid booster and a cryogenic upper stage.
• GSLV Mk III is designed to carry 4 ton class of satellites into Geosynchronous Transfer Orbit (GTO) or about 10 tons to Low Earth Orbit (LEO), which is about twice the capability of GSLV Mk II.
• This is India’s first fully functional rocket to be tested with a cryogenic engine that uses liquid propellants — liquid oxygen and liquid hydrogen.

What’s important?

For Prelims and Mains: Differences between GSLV and PSLV, features of various launch vehicles by ISRO.

Sources: pib.

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Topic: Conservation efforts.

Inter-Linking of Rivers

Context: The Union Cabinet was recently apprised of the progress report of Special Committee for Inter-Linking of Rivers.

Background:

The progress report on interlinking of rivers has been submitted to the Cabinet in compliance of the Hon’ble Supreme Court judgement. The court had directed the Union Government of India to constitute a Special Committee for Interlinking of Rivers.

Need for interlinking of rivers:

The interlinking project aims to link India’s rivers by a network of reservoirs and canals that will allow for their water capacities to be shared and redistributed. According to some experts, this is an engineered panacea that will reduce persistent floods in some parts and water shortages in other parts besides facilitating the generation of hydroelectricity for an increasingly power hungry country.

Benefits associated:

Redistribution: India receives most of its rain during monsoon season from June to September, most of it falls in northern and eastern part of India, the amount of rainfall in southern and western part are comparatively low. It will be these places which will have shortage of water. Interlinking of rivers will help these areas to have water throughout the year.

Boost to agriculture: The main occupation of rural India is agriculture and if monsoon fails in a year, then agricultural activities come to a standstill and this will aggravate rural poverty. Interlinking of rivers will be a practical solution for this problem, because the water can be stored or water can be transferred from water surplus area to deficit.

Disaster mitigation: The Ganga Basin, Brahmaputra basin sees floods almost every year. In order to avoid this, the water from these areas has to be diverted to other areas where there is scarcity of water. This can be achieved by linking the rivers. There is a two way advantage with this – floods will be controlled and scarcity of water will be reduced.

Transportation: Interlinking of rivers will also have commercial importance on a longer run. This can be used as inland waterways and which helps in faster movement of goods from one place to other.

Employment generation: Interlinking also creates a new occupation for people living in and around these canals and it can be the main areas of fishing in India.

Concerns associated:

• Interlinking of rivers will cause huge amount of distortion in the existing environment. In order to create canals and reservoirs, there will be mass deforestation. This will have impact on rains and in turn affect the whole cycle of life.
• Usually rivers change their course and direction in about 100 years and if this happens after interlinking, then the project will not be feasible for a longer run.
• Due to interlinking of rivers, there will be decrease in the amount of fresh water entering seas and this will cause a serious threat to the marine life system and will be a major ecological disaster.
• Due to the creation of Canals and Reservoirs, huge amount of area which is occupied by the people will be submerged leading to displacement of people and government will have to spend more to rehabilitate these people.
• The amount required for these projects is so huge that government will have to take loans from the foreign sources which would increase the burden on the government and country will fall in a debt trap.

What’s important?

• For Prelims: Differences between Himalayan and Peninsular rivers, geographical features associated with these rivers.
• For Mains: Interlinking of rivers- need, benefits, challenges and solutions.

Sources: pib.