IAS UPSC Prelims and Mains Exam – 04th February 2019

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(PRELIMS + MAINS FOCUS)

Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) Scheme

Part of: GS Prelims and Mains II – Social/Welfare issue; Government schemes and policies

In news:

• PM-KISAN Scheme aims to extend direct income support at the rate of Rs. 6,000 per year to farmer families, having cultivable land upto 2 hectares.
• This income support will be transferred directly into the bank accounts of beneficiary farmers, in three equal instalments of Rs. 2,000 each.
• Around 12 Crore small and marginal farmer families are expected to benefit.
• This programme will be funded by Government of India.
• This programme will entail an annual expenditure of Rs.75,000 crore.
• PM-KISAN would pave the way for the farmers to earn and live a respectable living.

Endosulfan agitation ends

Part of: GS Prelims and Mains II – Social/Welfare issue; Health issue

In news:

• Victims of endosulfan poisoning in Kerala ended their five-day long indefinite hunger strike.
• They have been fighting a long and frustrating battle demanding financial aid, adequate rehabilitation packages and healthcare facilities.
• Environmental activists call it the biggest pesticide tragedy in India.

Why the agitation?

• People living in more than 20 gram panchayats in Kasargod district were exposed to the insecticide endosulfan – a highly potent neurotoxin – between 1975 and 2000, when the public sector Plantation Corporation of Kerala sprayed the chemical aerially on its 12,000-acre cashew estates.
• Its residues spread far and wide via wind and rain, leaving a trail of destruction in the district and neighbouring regions of Karnataka, killing more than 1,000 people. It poisoned more than 6,000 people.
• Thousands of children were born with congenital disabilities, hydrocephalus, diseases of the nervous system, epilepsy, cerebral palsy, and severe physical and mental disabilities.
• The Plantation Corporation of Kerala stopped spraying endosulfan in 2001, but its impact is still being felt in Kasargod – babies continue to be born with genetic disorders and physical deformities.
• Victims have been fighting a long and frustrating battle demanding financial aid, adequate rehabilitation packages and healthcare facilities.

Do you know?

• Endosulfan is an off-patent organochlorine insecticide and acaricide that is being phased out globally.
• Endosulfan became a highly controversial agrichemical due to its acute toxicity, potential for bioaccumulation, and role as an endocrine disruptor.
• Because of its threats to human health and the environment, a global ban on the manufacture and use of endosulfan was negotiated under the Stockholm Convention in April 2011.

Endosulfan pesticide was used widely on crops like cashew, cotton, tea, paddy, fruits and others until 2011, when the Supreme Court banned its production and distribution.

The health effects of the chemical include neurotoxicity, late sexual maturity, physical deformities, poisoning, among others. People, especially newborns, have suffered deformaties, health complications and loss of family members due to exposure to the agrochemical.

Millet Village Scheme

Part of: GS Prelims and Mains II and III – Government schemes and programmes; Agriculture

In news:

• The Project “Millet Village” was started in year 2017-18 in Attapady, Kerala.
• The project is intended for rejuvenating the traditional tribal agriculture.
• The project aims at protecting seeds of traditional varieties of millets and ensures food security and livelihood for tribals.
• Apart from production of Millets, Pulses, Oilseeds, Vegetables and Apiculture, it is proposed to start Procurement, Processing, Packing, Labelling and Marketing of value added finished products of millets. Similar projects will be implemented throughout the State in suitable locations.

Do you know?

• Kerala Agriculture Department has sought Central support under the national-level mission for promoting millets.
• Millets are considered as ‘superfood’ and ‘eat smart’ strategies.
• Under the Millet Village scheme, the department had harvested ragi (finger millet), thina (foxtail millet), cholam (sorghum) and kuthiravaali (barnyard millet) in 1,200 acres.
• Additionally, a pilot scheme for cultivating Chia, a Central American plant, which is gaining popularity in India as yet another superfood, was progressing at Attappady.
• High protein content, short growing season, climate change resilience and low water requirement make millets an ideal crop for the State.
• Millets can grow in poor soil conditions with less water, fertiliser and pesticides. They can withstand higher temperatures, making them the perfect choice as ‘climate-smart’ cereals.

Miscellaneous:

Centre’s crackdown hits Greenpeace

In news:

• Greenpeace has been forced to close two of its regional offices and “considerably” reduce its staff in India because of a government crackdown on allegedly unlawful foreign funding of NGOs.
• The organisation has been campaigning on environmental issues in India for nearly two decades.

Do you know?

• Greenpeace India had its foreign funding blocked in 2015 as part of a nationwide crackdown on charities.

(MAINS FOCUS)

POLITY/NATIONAL

TOPIC: General studies 2

• Indian Constitution- historical underpinnings, evolution, features, amendments, significant provisions and basic structure.
• Separation of powers between various organs.
  

The Doctrine of Basic Structure of the Indian Constitution: A Critique

Introduction:

• One of the most fundamental and equally ambiguous concepts that underlies Indian Constitutional Law is the ‘basic structure doctrine’.
• It has now been more than 45 years since the Supreme Court ruled in Kesavananda Bharati v. State of Kerala that Parliament’s power to amend the Constitution was not unlimited, that the Constitution’s basic structure was infrangible.

Criticisms:

While there is no denying its significance the doctrine has often been criticized –

• It is ambiguous and allows the judiciary to tread on the toes of other branches of Government.
• The phrase “basic structure” finds no mention anywhere in the Constitution. Therefore, some experts even call it undemocratic as unelected judges can strike down a constitutional amendment.
• The doctrine accords the judiciary a power to impose its philosophy over a democratically formed government – “tyranny of the unelected”.

Of recently there has been severe disapproval of the document, because of the Supreme Court’s occasionally confused interpretation of what the Constitution’s basic structure might be.

Positives of the doctrine:

However, rejecting the doctrine altogether is not a good idea, as –

• It possesses substantial moral value important to strengthen democracy as it limits the power of a majoritarian government to undermine the Constitution’s central ideals.
• It implies limitations on the amending powers of the Legislature. Restrains Legislature from stepping into the treacherous realm of arbitrariness by misusing article 368 of the Indian Constitution.
• It is critical to upkeep the spirit of the constitution document.
• It performs an important democratic role in ensuring that majoritarian governments do not destroy the Constitution’s essential character.
• To protect the country’s federal structure, safeguard human rights and established constitutional principles such as the state’s democratic and social order.
• Parliament is a creature of the Constitution. It should not, therefore, make changes that have the effect of overthrowing or obliterating the Constitution itself.
• Basic structure doctrine is a safety valve against majoritarianism and authoritarianism; it safeguards citizens’ liberties and preserves the ideals on which the Constitution is based.

Conclusion:

A Constitution needs to be a living Constitution, to endure the tides of time and adapt to the changing requirements of generations.

A Constitution is like a machine, a lifeless thing. It acquires life because of the men who control it and operate it and India needs today nothing more than a set of honest men who will have the interest of the country before them.

The basic structure doctrine is a mean to give a momentum to the living principles of the ‘Rule of Law’ and connotes that none is above the Constitution and the Constitution is supreme.

Connecting the dots:

• Does in your opinion the basic structure doctrine undermine parliamentary sovereignty? Critically examine.
• Examine the doctrine of basic structure, its evolution and significance.

NATIONAL/ECONOMY

TOPIC: General studies 2 and 3

• Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
• Indian Economy and issues related to it.

NBFCs and its significance

Introduction:

• India has 10,000 active NBFCs that are regulated by the Reserve Bank of India (RBI), of which some 275 are systemically important (SI).
• There are a lot of disruptions taking place in banking sector, but still NBFCs would have an upper hand.
• Many NBFCs have doubled their balance sheet sizes, whereas majority of the banks either did nothing or got entangled in mess.

Unlike banks, NBFCs are insulated from the vagaries of farm loan waivers and priority lending. The NBFC sector in India, which serves a genuine need, has undergone a significant transformation over the past few years.

Basic: What is NBFC?

• Non-Banking Financial Company (NBFC) refers to a financial institution. NBFC is a type of company engaged in the business of receiving loans and advances, acquisition of stocks or shares, leasing, hire-purchase, insurance business, chit business under Companies Act 2013.
• The main business activity of the NBFCs is to raise capital funds from public depositors and investors and then lend to borrowers as per the rules and regulations prescribed by the Reserve Bank of India.
• NBFCs are becoming alternative to the banking and financial sector.
• In NBFC there is a requirement of minimum net owned fund of Rs. 2 Crore.

What is the difference between Banks & NBFCs?

• Banks are the government authorized financial intermediary that aims at providing banking services to the general people. Whereas NBFC provides banking services to people without carrying a bank license.
• NBFC is incorporated under the Companies Act whereas a bank is registered under Banking Regulation Act, 1949.
• NBFCs are not allowed to accept deposits which are repayable on demand whereas banks which accepts demand deposits.
• In NBFC, foreign Investments up to 100% is allowed. Whereas in case of private sector banks they are eligible for foreign investment, but which would be not more than 74%.
• Banks are an integral part of payment and settlement cycle while NBFC is not a part of this system.
• It is mandatory for banks to maintain reserve ratios like CRR or SLR. Whereas in case of NBFC it is not required to maintain reserve ratios.
• Deposit insurance facility is allowed to the depositors by Deposit Insurance and Credit Guarantee Corporation (DICGC). In case of NBFC, this type of facility shall not be available.
• Banks can create credit whereas in case of NBFC they are not involved in the creation of credit.
• Banks can provide transaction services to its customers such as providing overdraft facility, issue of traveler’s cheque, transfer of funds, etc. Whereas these type of services cannot be provided by NBFC.

Significance of NBFCs

• Credit access in our country is vastly under-penetrated, and businesses need constant capital to grow.
• NBFCs with use of technology and innovation, wide reach, customised products, smart credit underwriting and strong risk management capabilities have been able to control bad debts.
• With better understanding of clients, they have created clusters and niches which would be impossible for the banks to replicate or cater to.
• Projects like ‘Make in India’ and the boom in startups are offering huge opportunities. In fact, NBFCs remain a good proxy to bet on the new, agile India.
• NBFCs serve customer segments that are un-served or under-served by banks.

Though their cost of funding is higher than that of banks, a decent spread and lower cost of operations can do the job for them.

NBFCs have, so far, achieved a tremendous feat by meeting their massive short-term /commercial paper obligations in this quarter. They have weathered many storms in the past (since the 2008 global financial crisis to demonetisation in late 2016) and seems to have almost overcome the current liquidity crisis as well.

NBFCs have evolved strongly over the recent years. The next decade could well belong to them and their shareholders.

However, NBFCs in India are going through a rough phase following defaults by infrastructure lender, Infrastructure Leasing and Financial Services (IL&FS).

Banks are the major resource avenue for NBFCs. After defaults by IL&FS, both public sector and private sector banks almost stopped lending to NBFCs and housing finance companies (HFCs).

Such defaults might also keep potential investors away from the debt instruments of companies.

Need for an Unified Financial Authority

Indian non-banks are governed by a regulatory hodgepodge of RBI, the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority (IRDA), NHB, the ministry of corporate affairs (for NIDHI companies) and state governments (for chit funds). Cooperation is on an ad hoc basis and often post-event.

The commission chaired by former justice B.N. Srikrishna, also called Financial Sector Legislative Reforms Commission (FSLRC), recommended that SEBI, IRDA, the Pension Fund Regulatory and Development Authority and the Forward Markets Commission (since merged with SEBI) be merged under one regulator to be called the Unified Financial Authority.

The FSLRC recommended for a strong legal framework added to Financial Stability and Development Council (FSDC).

Implementing FSLRC recommendation, with a more focused scope for RBI and creating a unified regulator with teeth for macro-prudential supervision will help NBFCs avoid falling into such crisis.

It is time to focus on systemic risk and the only way to do that is to simplify and give that specific scope to one regulatory agency.

Connecting the dots:

• The idea of forming an umbrella regulator for all the financial institutions and related agencies will go a long way in overhauling the financial ecosystem of India. Do you agree? Discuss.
• Discuss the rationale behind constituting Non-Banking Financial Companies (NBFCs). Are they successful? How are they different from the banks?

(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) Supreme Court banned production and distribution of ‘Endosulfan’. It caused which of the following?

1. Abnormalities related to male reproductive system
2. Physical deformities
3. Neurobehavioral disorders

Select the correct code:

1. 1 and 2
2. 2 and 3
3. 1 and 3
4. All of the above

Q.2) Which of the following statements are correct about endosulfan?

1. Endosulfan is acutely neurotoxic to both insects and mammals.
2. Endosulfan has high potential to bio-accumulate and bio-magnify.
3. Endosulfan is banned across the world under Stockholm convention.
4. Endosulfan is the cause of death of Indian vultures.

Select the code from the following:

1. 1 and 2
2. 1, 2 and 3
3. 2, 3 and 4
4. 1, 2, 3 and 4

Q.3) Consider the following with regard to Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) Scheme:

1. It is a scheme funded by Government of India.
2. It aims to extend direct income support at the rate of Rs. 6,000 per year to farmer families, having cultivable land upto 2 hectares.
3. It is a loan waiver scheme which transfers Rs. 2,000 into the bank accounts of beneficiary farmers in three equal installments.

Which of the statements given above is/are correct?

1. 1 only
2. 1 and 2 only
3. 2 and 3 only
4. 1, 2 and 3

Q.4) Which of the following statements are true w.r.t millets?

1. They are kharif crops.
2. Major millets grown in India are Jowar, bajra and ragi.
3. Bajra is grown in moist areas whereas jowar is grown in dry areas.

Select the correct code

1. 1 and 2
2. 1 and 3
3. 2 and 3
4. 1,2 and 3

Q.5) Consider the following statements:

1. Kerala is the India’s leader in the millet sector
2. Indian Institute of Millets Research (IIMR) operates under the aegis of Indian Council of Agricultural Research (ICAR)

Select the correct statements

1. 1 Only
2. 2 Only
3. Both 1 and 2
4. Neither 1 nor 2

Q.6) Which of the following are ‘Millets’?

1. Sorghum
2. Ragi
3. Bajra

Select the correct code

1. 1 and 2
2. 2 only
3. 2 and 3
4. 1, 2 and 3

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