IASbaba's Daily Current Affairs Analysis

IAS UPSC Prelims and Mains Exam – 26th January 2019

(PRELIMS + MAINS FOCUS)

SC upholds bankruptcy code

Part of: GS Prelims and Mains III – Indian Economy and issues related to it

In news:

Supreme Court recently upheld the constitutionality of the Insolvency and Bankruptcy Code (IBC)
The SC’s stand sends a clear message that India is no longer “the defaulter’s paradise.”

Do you know?

Insolvency is a situation where individuals or companies are unable to repay their outstanding debt.
The term insolvency is used for both individuals and organizations. For individuals, it is known as bankruptcy and for corporate it is called corporate insolvency. Both refer to a situation when an individual or company are not able to pay the debt in present or near future and the value of assets held by them are less than liability.

Important Value Additions:

Lack of an insolvency and bankruptcy code had proved costly for the creditors (mainly banks).
The Insolvency and Bankruptcy Code seeks to create a unified framework to resolve insolvency and bankruptcy in India.
The recent Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 was promulgated on June 6, 2018. It amends the Insolvency and Bankruptcy Code, 2016.
The Code provides a time-bound process for resolving insolvency in companies and among individuals.

India, South Africa strategic partnership agreement

Part of: GS Prelims and Mains II – Indian and the World; International Relations

In news:

We had earlier read that India, South Africa to revise 22-year-old Strategic Partnership.
Three-year plan of action on security cooperation, trade and investment, tourism, harnessing the ‘blue economy’, maritime cooperation, agriculture, science and technology projects was signed recently.
The three-year strategic partnership agreement is expected to boost relations.

Do you know?

Both the countries have strong partnership in platforms such as the BRICS, the G-20, the Indian Ocean Region Association and the IBSA Dialogue Forum.
India also invited South Africa to join the International Solar Alliance (ISA) and congratulated it on securing the non-permanent membership of the UN Security Council for 2019-20.

SAARC nations

Part of: GS Prelims and Mains II – Indian and its neoghbours; International Relations

In news:

South Asia region’s future lay in cooperation among the eight SAARC nations (Afghanistan, Bangladesh, Bhutan, India, Nepal, the Maldives, Pakistan and Sri Lanka).
A panel of diplomats, essayists and foreign policy experts met recently.
The panel felt the focus of South Asian discourse needed to shift away from the perception of India’s dominance in the region.

About SAARC

It was founded in Dhaka (1985)
Secretariat is based in Kathmandu, Nepal
SAARC is regional intergovernmental organization and geopolitical union in South Asia. It promotes development of economical and regional integration.

SAARC’S Stats:

Region accounts for 2% of world trade and 1.7% of world FDI (foreign direct investment).
Intra-regional trade is less than 6% of our global trade and intra-regional FDI accounts for only 3% of total FDI inflows
In contrast, the share of intra-regional trade for the Association of Southeast Asian Nations (ASEAN)—to which SAARC is often compared—is close to 25%. Intra-regional FDI accounts for 18% of the net FDI inflows in the ASEAN region.

Miscellaneous

1. Person in news: Pranab, Deshmukh, Hazarika

Award in news: Bharat Ratna

In news:

President Ramnath Kovind conferred the Bharat Ratna, the nation’s highest civilian honour, on –

Former President Pranab Mukherjee
Social activist Nanaji Deshmukh (posthumous) and
Assamese musician Bhupen Hazarika (posthumous)

2. Person in news: Bipin Rawat

Award in news: Param Vishisht Seva Medal

In news:

In a rare gesture, the Chief of the Army Staff, General Bipin Rawat, has been awarded the Param Vishisht Seva Medal (PVSM) for distinguished service on the eve of the 70th Republic Day.

(MAINS FOCUS)

WELFARE/ECONOMY

TOPIC:

General studies 3

Issues related to direct and indirect farm subsidies and minimum support prices

Inclusive growth and issues arising from it.

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; mechanisms, laws, institutions and bodies constituted for the protection and betterment of these vulnerable sections

Examining farm loan waivers

Introduction:

We had earlier dealt with editorial analysis on – why farm loan waivers are not a suitable option to address the rural distress. (Avoid Loan Waivers)

Fast recap:

According to previous articles and editorials, farm loan waivers are not a suitable option to address the rural distress because –

The share of loans (of less than ₹2 lakh), typically taken by small farmers, accounts for less than 40 per cent of total farm credit.
Crop loans disbursed to agriculturists leave out tenant farmers.
In addition, most of these cheap loans, taken at 4 per cent interest rate, are availed of by owners of warehouses, food processors and manufacturers of fertiliser and farm equipment.

Categories under ‘Priority sector lending’ have been relaxed over the years to include a range of above mentioned sundry commercial activities.

Therefore, loan waivers will merely end up aiding big farmers, commercial interest groups etc rather than small and vulnerable farmers.

(Note: In today’s article, author provides divided opinion on the topic)

Divided opinion

Economists and bankers are sharply divided on whether farm loan waivers are desirable.

Against Loan Waiver

Loan waivers have “reputational consequences”; that is, they adversely affect the repayment discipline of farmers, leading to a rise in defaults in future.
Earlier debt waiver schemes have not led to increases in investment or productivity in agriculture. (two nationwide loan waiver programmes in India after Independence: in 1990 and 2008)
After the implementation of debt waiver schemes, a farmer’s access to formal sector lenders declines, leading to a rise in his dependence on informal sector lenders; in other words, waivers lead to the shrinkage of a farmer’s future access to formal sector credit.

Do you know?

Farmers are most disciplined in their repayment behaviour. In September 2018, agricultural NPAs (about 8%) were far lower than in industry (about 21%).
Agricultural NPAs were on a continuous decline between 2001 and 2008.
Agricultural NPAs began to rise after 2015. (Reasons – policy-induced and a direct consequence of acute agrarian distress that spread across rural India after 2015)
Demonetisation of November 2016 aggravated already brewing agrarian distress by sucking cash out of the rural areas, crashing output prices and disrupting supply chains.
After every waiver, banks become conservative in issuing fresh loans to beneficiaries, as they are perceived to be less creditworthy.

For loan waivers:

Large agrarian distress demands urgent policy attention
Need for carefully designed waiver schemes that can ensure universal coverage for small, marginal and medium-sized farmers while covering both the formal and informal sources of debt.
(We can add few points from above “Do You Know?” section)

https://d39gegkjaqduz9.cloudfront.net/TH/2019/01/26/DEL/Delhi/TH/5_06/0072b8c0_2690801_101_mr.jpg

Other alternatives needed

Unless there are steps ‘to raise productivity, reduce costs of cultivation by providing quality inputs at subsidised rates, provide remunerative prices following the recommendations of the Swaminathan Commission, ensure assured procurement of output, expand access to institutional credit, enhance public investment for infrastructural development, institute effective crop insurance systems and establish affordable scientific storage facilities and agro-processing industries for value addition’, farmers will continue to be bonded to low income equilibrium and repeated debt traps.

Connecting the dots:

Are farm loan waivers justifiable for betterment of farmers? Analyse.
Loan waivers for the farms isn’t a good strategy to address the rural distress. Comment. (TLP Answer)
Loan waivers have become a political tool which is inimical to the Indian economy. Critically comment.

ENVIRONMENT/POLLUTION

TOPIC:

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; mechanisms, laws, institutions and bodies constituted for the protection and betterment of these vulnerable sections

Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

General Studies 3

Conservation, environmental pollution and degradation, environmental impact assessment

An inside Problem: Tackling Household air pollution (HAP)

Context:

The problem of air pollution and its ill-effects on people has gained significant traction in the media. However, single largest source of air pollution — the pollution from our homes – has not gained much attention.

Issues: (Outdoor air pollution)

Abysmal air quality in many cities (especially in Delhi)
Many Indian cities repeatedly topping global air pollution charts
Emissions from transport, crop burning, road dust, burning of waste and industries large and small

Issues: (Indoor air pollution)

Burning of solid fuels such as firewood and dung-cakes (mainly for cooking) results in emissions of fine particulate matter
Household air pollution (HAP) – single largest source of ambient air pollution (AAP) in the country
11 lakh deaths were attributable to AAP in 2015. Of these, as many as 2.6 lakh were due to HAP.
According to Ministry of Health and Family Welfare’s website, about 26 per cent of particulate matter AAP was caused due to combustion of solid fuels in households.
HAP is a major cause of mortality and morbidity in the country on its own.

Conclusion:

In other words, the overall, total health impacts attributable to HAP are more than half the health impacts attributable to air pollution. Therefore, there is a strong case to be made for tackling HAP on a war footing.
Way ahead: households should predominantly use fuels that burn cleanly.
Ujjwala scheme which provides LPG connections recognises this challenge and represents an important first step to tackle the problem.
However, addressing this challenge requires going beyond Ujjwala. In a country as large and diverse as India, LPG need not be the only solution to address this problem.
Consumers should be given a wider choice of clean-burning options. This requires a coordinated strategy involving multiple government agencies and programmes.
It also requires setting well-defined targets for HAP and its associated health impacts, and having systems to monitor and publish them.

Connecting the dots:

Does there exist a direct relation of smokeless kitchens with economic development. Discuss.
Controlling Household air pollution (HAP) needs to be a key strategic objective for India. Discuss in brief. Also suggest how Household air pollution (HAP) can be controlled by adopting a strategic roadmap.

(TEST YOUR KNOWLEDGE)

Model questions: (You can now post your answers in comment section)

Note:

Featured Comments and comments Up-voted by IASbaba are the “correct answers”.
IASbaba App users – Team IASbaba will provide correct answers in comment section. Kindly refer to it and update your answers.

Q.1) Which of the following countries is not a member of South Asian Association for Regional Cooperation (SAARC)?

Myanmar
Maldives
Afghanistan
Bhutan

Q.2) To check indoor air pollution caused by the use of solid biomass fuels and conventional cook stoves in the rural areas, which institute/organisation has developed a multi-fuel improved cook stove called “NEERDHUR” –