IASbaba’s Daily Current Affairs – 13th May, 2016

  • May 13, 2016
  • 5
IASbaba's Daily Current Affairs Analysis, IASbaba's Daily Current Affairs May 2016, National, UPSC
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IASbaba’s Daily Current Affairs – 13th May, 2016




TOPIC:  General studies 2

  • Local Government & related issues


Empowerment of the Gram Sabhas

  • After a seven-year struggle, a village in Himachal Pradesh has won the right to decide whether or not a hydel power project should be set up in its area, under the Forest Rights Act (FRA) by the National Green Tribunal (NGT)
  • Issue: submergence of their pine nut trees due to construction of the hydel project— deprivation of the local farmers of their livelihood
  • NGT has directed the government to ensure that prior to forest clearance to the Kashang Integrated Hydroelectric Project, the proposal is placed before a gram sabha of villages in Kinnaur district.

Supreme Court (2013)—Had directed that the smallest units of local governance use their powers and take a decision on whether the Vedanta Group’s $1.7 billion bauxite mining project in Odisha’s Niyamgiri Hills should go forward. The verdict was not just a victory for the Dongria Kondh tribal group that had fought a long and hard battle against the project, but as a validation of the gram sabha’s powers under the FRA.


Is this ‘empowerment’ contrary to the ‘Ease of Doing Business’ principles of the government?


  • People today, are more aware of their needs and want development that empowers them, not alienate them from their land or forests
  • The “free and prior informed consent” (FPIC) of communities is being seen as a necessary tool for businesses, not only in India but all around the world
  • World Bank has made it mandatory to seek permission from the local communities before implementing a project
  • In a report entitled ‘Development without Conflict’ by the World Resources Institute (May 2007), the authors make a business case “for sponsors of large-scale, high-impact projects to treat the consent of the host community as a requirement of project development”.
    • Early attention to FPIC issues can help avoid significant costs during implementation
    • Less time will be wasted on litigation and more focus will be on giving development a local meaning
    • FPIC is widely seen as critical to the fair treatment of all communities—in saving precious lives and minimizing conflicts

Case of Arunachal Pradesh—  two activists lost their lives while protesting against the construction of the proposed Nyamjang Chhu hydroelectric project and the entire town of Tawang had to be shut down and the army carried out a flag march to restore normalcy— All because the local people felt their voice was not being heard.

IASbaba’s Views:

  • A simple perspective if employed can solve a lot of problems—the simple perspective, here, being that of the mechanism of Democracy. A democratic country needs to stay democratic, and in every sphere, if the country is to progress, elements of democracy needs to be incorporated. Thus, if people want to be heard, by imposing development on them by the power of the gun we are only creating conflict.
  • The participatory approach helps us to reduce development cost, increase perceived and actual benefits and increase awareness among the people and help in the mobilization of local resources, facilitates smooth and easy project implementation. It further enables people to have access and control over the resources and ensures that the benefits reach to the legitimate claimants. It also creates sustainability aspect and gradually empowers the socially and economically disadvantaged people
  • Ease of doing business can turn in to a reality only when ‘elements of development’ can be established democratically and therefore, corporate houses and the government should embrace this decision of the NGT and include the consent of the gram sabha as a ‘norm’; important to establish ‘Make in India’s’ relevance for everyone.

Connecting the Dots:

  • Critically examine if the Gram Sabha as ‘watchdogs’ is coming between the politician-bureaucratic nexus.




TOPIC:   General studies 3

  • Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment. 
  • Banking & Related Issues


A revolution in Indian banking

Why in news?

  • The Reserve Bank of India (RBI) recently released draft guidelines for issuing on-tap universal bank licences which includes resident individuals, professionals, large business houses having 10 years of experience in banking and finance as eligible persons to promote universal banks.


On-tap licensing means interested entities can apply to the RBI for opening a bank at any point in time, as against the current regime where corporates rush to apply only when the RBI opens up for applying.

For the draft guidelines refer: https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=36898

What does the move indicate?

  • The proposed licensing policy is a change from the current stop-start policy where RBI opens the window for bank licences periodically but rarely.
  • Now with this guidelines any eligible person at any point of time can apply for a bank license and start a bank.


What made the RBI governor to come up with the move?

  • Way back in 2011, India’s banking regulator freed the interest rates on savings bank deposits, which it had started two decades back, by allowing the market to decide on the rates of loans and deposits in the Indian banking system.
  • However, the “free market” has not benefited the customers, both the borrowers and the depositors, had to face an extremely restrictive entry policy in the banking space.
  • The RBI governor with the draft guidelines has tried to address the above issue.


A point to note:

  • RBI straight away did not come up with the draft guidelines to issue licence to all eligible person or institution.
  • The process was carried out in a phased manner

First RBI had set up Bimal Jalan committee to process applications for providing bank licenses.

However only Bandhan Finance and IDFC qualified to be given banking licence.

Next came payment banks:

In the next round, RBI came up with guidelines for establishing payment banks.

  • Payments banks are a non-full service bank in India. The main objective of these banks is to accelerate financial inclusion.
  • Financial inclusion is the delivery of financial services like credit, insurance etc at affordable costs to sections of disadvantaged and low-income segments of society.

For more information about payment banks refer: http://iasbaba.com/2015/08/iasbabas-daily-current-affairs-21st-22nd-august-2015/

In the next round RBI came up with guidelines for small finance banks.

  • Small finance banks are normal banks, will be allowed to take deposits from customers. And as against payments banks, small finance banks will also be allowed to lend money to people.
  • The objectives of setting up of small finance banks will be to further financial inclusion by (i) provision of savings vehicles, and (ii) supply of credit to small business units; small and marginal farmers; micro and small industries; and other unorganised sector entities, through high technology-low cost operations.

For more information about small finance banks refer: https://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=32614

And now finally we have draft guidelines for issuing on-tap universal bank licences which includes resident individuals, professionals, large business houses having 10 years of experience in banking and finance as eligible persons to promote universal banks.

Connecting the dots:

  • What do you understand by the term double financial repression? Explain. (Source: Economic survey 2015-16)
  • What do you understand by financial inclusion? Critically examine the measures taken by the government to promote financial inclusion.



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