IASbaba’s Daily Current Affairs – 5th May, 2016

  • May 5, 2016
  • 2
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IASbaba’s Daily Current Affairs – 5th May, 2016





General studies 2:

  • Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
  • Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes

General studies 3:

  • Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
  • Inclusive growth and issues arising from it.


Jan Dhan Yojana—The misses and the catches

  • Financial inclusion is an important policy pillar of the present government to ensure inclusive development (sabka saath, sabka vikas).
  • What it means, in brief, is to mainstream financial services for the masses, especially credit at affordable costs from institutional sources.


Means or Ends—Changed Objectives

The financial inclusion objective has moved beyond the provision of simple no-frills accounts to—

  • Meeting overall financial needs of the poor
  • Linking government benefits, overdraft facility and insurance and pension to these savings accounts
  • Surge in awareness— customers pushing the Bank officials to open accounts


Availability of Data:

  • Progress in inclusion has been measured by the number of no-frills or basic savings bank accounts and the number of branchless outlets in villages
  • The paucity of data had thus, made it difficult for researchers in tracking the progress of financial inclusion in India.
  • Example:
    • Reserve Bank of India (RBI) Annual Report, 2014-15, stated that there are 504,142 branchless banking outlets in villages, with no granular information regarding location details, activity levels, etc.
    • CGAP’s “National Survey of Banking Agents, 2013” and “The Curious Case of Missing Agents in Rural India”, MicroSave, January 2014— showed that data on agents, as reported by SLBCs, often did not match data from on the ground
  • Solution:

Need for the Department of Financial Services (DFS) and the RBI to coordinate towards a harmonised and current database of all BC agents in the country that will provide a clear and full picture of the actual financial inclusion footprint in the country—set out the task of a tracking system for BCs: an online registry of all BCs – both existing and new – that will capture basic details, including location of fixed-point BCs, nature of operations, etc, updated on a quarterly basis

Progress Made by PMJDY— Increased Transparency

  • PMJDY Mission Directorate has progressed from monitoring only the number of accounts to tracking a number of indicators such as Aadhaar seeding, provision of RuPay cards, usage of overdraft facility, payment of Bank Mitra remuneration, etc, and transaction readiness of Bank Mitras
  • Cross-verification of the basic existence of a BC agent—State- and district-level data available on the PMJDY website and with a geographic information system (GIS) locator available online for banking services
  • Availability of agents at their locations has been high and increased from 89 per cent (December, 2014) to 97per cent in December, 2015
  • Transaction readiness of agents has increased from 48 per cent (December, 2014) to 79 per cent in December 2015— which means their ability to service customer needs has increased substantially

Miles to go—

Need to Monitor:

  • The number of transactions at the agent and account level
  • Connectivity issues at the BC outlet
  • Customer care and grievance redressal

Behavioural Changes

  • Income earned by agents and banks has improved—initially, a large share of income came from commissions on new accounts; now transaction numbers and volumes are driving earnings
  • Witnessed a perceptible shift in the savings behaviour, with the share of those not saving at all falling from 12 per cent to eight per cent
  • High female participation: For every three PMJDY customers who opened a bank account for the first time, one was a female customer

Sol: Marketing communication- to make the change in behaviour

Rise in the level of dormancy of agents

  • Agent dormancy among interviewed BMs increased from 8.4 per cent in (Dec,2014) to 11 per cent in (Dec,2015)
  • High interstate disparities (Uttar Pradesh and Bihar)

Why— Inadequate commissions


  • Increase salary
  • Increase commission
  • Increase in the frequency of transfers


Operational Difficulties

  • Reduction in the number of first-time accounts
  • Rising number of multiple accounts
  • Incomplete account opening form
  • Rejection of documents by bank branches
  • Challenges with delivery and activation of RuPay cards
  • Problems of connectivity for making transactions
  • Low awareness regarding insurance and pension schemes
  • Lack of clarity on overdraft eligibility
  • Commissions on government benefits are not sufficient and often not paid regularly

Connecting the Dots:

  • Critically analyse the success of PMJDY in promoting financial inclusion within the country




TOPIC:  General studies 2

  • Important aspects of governance, transparency and accountability
  • Government policies and interventions for development in various sectors and issues arising out of their design and implementation.


AgustaWestland Scam- Arms and the middleman


  • Decision making in India as regards military equipment acquisitions has always been opaque, murky and somewhat enigmatic.
  • In an effort to make the process more transparent and hopefully less open to doubts about corruption, a Defence Procurement Policy with set procedures has been in place now for several years, having gone through multiple revisions supposedly to improve the policy framework and keep pace with changing technological and arms trade scenarios in India and around the world.
  • The bribery scandal involving the AgustaWestland helicopter deal may have provided the ruling regime with a handy tool to skewer the Congress party but the upheavals in Parliament pointlessly distract from a curious problem that afflicts probes into questionable defence deals; the singular inability of the government’s chief investigation agency, the Central Bureau of Investigation, to secure a conviction.
  • India keeps learning the wrong lessons from defence scams. It must first stop being the world’s largest importer of arms and take a strategic turn towards indigenous procurement


Bofors scandal:

  • The Bofors scandal was a major political scandal that occurred between Sweden and India during the 1980s and 1990s, initiated by Congress politicians and implicating the Indian prime minister, Rajiv Gandhi and several other members of the Swedish and Indian governments who were accused of receiving kickbacks from Bofors AB for winning a bid to supply India’s 155 mm field howitzer.
  • The scandal relates to illegal kickbacks paid in a US$1.4 billion deal between the Swedish arms manufacturer Bofors with the government of India for the sale of 410 field howitzer guns, and a supply contract almost twice that amount.
  • It was the biggest arms deal ever in Sweden, and money marked for development projects was diverted to secure this contract at any cost. The investigations revealed flouting of rules and bypassing of institutions.

AgustaWestland scandal:

In early 2013, an Indian national parliamentary investigation began into allegations of bribery and corruption involving several senior officials and helicopter manufacturer AgustaWestland surrounding the purchase of a new fleet of helicopters. The scandal has been referred to as the Chopper scam, or Choppergate.

  • Contract was to purchase 12 AW101 (AW stands for Augusta Westland) choppers – a 4000 crore helicopter deal – which is considered to be a medium lift helicopter used both in military (defence) and civil operations.
  • Several Indian politicians and military officials have been accused of accepting bribes from Agusta Westland in order to win the ?36 billion(US$530 million) Indian contract for the supply of 12 Agusta Westland AW101  helicopters; these helicopters are intended to perform VVIP duties for the President of India and other important state officials

Punishing no one

  • There is one unifying theme behind the seven decades of defence scandals in India: that we have drawn all the wrong conclusions from them. Thanks to this, India continues to perpetuate the very same scams on the military and honest taxpayer.
  • It is a naïve merry-go-round. Nobody gets punished, or so it seems. That was the case in the jeep scandal, and that was the case in Bofors, HDW scandals and after the Tehelka exposé.
  • Just four years after the Bofors deal came the scandal over the purchase of submarines by the Indian Navy from the German firm HDW. Though the German government admitted to paying commission to agents, the CBI was unable to establish any links.
  • Another signature scandal involved the purchase of Barak missile systems from Israel in 2000, in which names of then defence minister George Fernandes and former Navy chief Sushil Kumar figured among others. After more than seven years of investigation this case, too, was closed for lack of evidence.
  • The AgustaWestland scandal broke in 2013 and the former Air Force Chief S P Tyagi and his cousins were accused of having received bribes by Finmeccanica, AgustaWestland’s Italian parent. But despite being named by the Italian investigations then, no case was registered against Mr Tyagi or family members concerned initially; the CBI’s explanation was that the defence ministry had not named any Indian in its complaint.


Lack of skills in tracking global financial transactions

  • All defence scandals have an international dimension to them.
  • Though the money paid originates from the government exchequer, it is paid abroad, and commissions are distributed across secretive tax havens.
  • Despite the complexity of the cases, none of our investigation agencies have cared to develop any significant skills in tracking global financial transactions, especially where it involves tax havens, shell companies and proxy directors.

Way ahead:

For India to come out of this cycle of scams, of which Choppergate is only the latest, some important aspects need to be addressed.

  • It must stop being the world’s largest importer of arms and take a strategic turn towards indigenous procurement.
  • To create a robust military-industrial complex in India, a restructuring of its engineering curriculum, its procurement procedures, military research systems, etc. are required.
  • Make in India’ is a good first step, but for now it is a mere slogan.
  • Painful decisions, including abandoning some ongoing expensive procurements from abroad, are important to help push Indian private sector into the procurement cycle.
  • India will end up spending at least Rs.5,00,000 crore in the international arms bazaar in a decade, which means that at least Rs.50,000 crore, by bazaar estimates, could be the commission available to middlemen to grease palms.
  • There is no willpower visible as yet to dramatically reverse India’s appetite for foreign acquisitions, only the promise that this absurd theatre will return in the not-too-distant future.

Connecting the dots:

  • Can Make in India and robust military-industrial complex put an end to defence scams by encouraging more of Indigenous production? Comment.



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