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Syllabus

• Prelims – Governance

Context: Krishi Udan Scheme 2.0 was announced in October 2021 enhancing the existing provisions, mainly focusing on transporting perishable food products from the hilly areas, North-Eastern States and tribal areas.

About Krishi Udan Scheme:

• Krishi UDAN Scheme was launched in August 2020, on international and national routes to assist farmers in transporting agricultural products so that it improves their value realisation.
• The scheme aims to ensure seamless, cost-effective, time-bound air transportation and associated logistics for all Agri-produce originating especially from Northeast, hilly and tribal regions of the country.
• Krishi Udan Scheme is a convergence scheme where eight Ministries/Departments namely Ministry of Civil Aviation, Department of Agriculture & Farmers’ Welfare, Department of Animal Husbandry and Dairying, Department of Fisheries, Ministry of Food Processing Industries, Department of Commerce, Ministry of Tribal Affairs, Ministry of Development of North-Eastern Region would leverage their existing schemes to strengthen the logistics for transportation of Agri-produce.
• There is no specific budget allocation under Krishi Udan Scheme.

Implementing Agency:

• The enhanced version of the Krishi UDAN scheme was formulated with support from AAI Cargo Logistics and Allied Services Company Limited (AAICLAS) – a 100% subsidiary of the Airports Authority of India and Invest India, India’s national Investment Promotion & Facilitation Agency, under the Ministry of Commerce and Industry.

About Krishi Udan 2.0:

• After the Krishi UDAN success, Krishi Udan 2.0 was launched in 2021 to further boost the vision of the program.
• Under Krishi UDAN 2.0, perishable food items from tribal communities, Northeastern states, and hilly regions would be transported.

Main objectives of Krishi Udan 2.0:

• Facilitating and incentivizing movement of Agri-produce by air transportation: Full waiver of Landing, Parking, TNLC and RNFC charges for Indian freighters and P2C at selected Airports of Airport Authority of India. Primarily, focusing on NER, Hilly and tribal regions.
• Strengthening cargo related infrastructure at airports and off airports: Facilitating the development of a hub and spoke model and a freight grid. Airside transit and transhipment infrastructure will be created at Bagdogra and Guwahati airports, and at Leh, Srinagar, Nagpur, Nashik, Ranchi, and Raipur airports as a part of focus on NER, Tribal and Hilly Districts.
• Concessions sought from other bodies: Seek support and encourage States to reduce Sales Tax to 1% on ATF for freighters / P2C aircraft as extended in UDAN flights.
• Resources-Pooling through establishing Convergence mechanism: Collaboration with other government departments and regulatory bodies to provide freight forwarder, airlines and other stakeholders with Incentives and concessions to enhance air transportation of Agri-produce.
• Technological convergence: Development of E-KUSHAL (Krishi UDAN for Sustainable Holistic Agri-Logistics). Platform to be developed facilitate in information dissemination to all the stakeholders. Furthermore, integration of E-KUSHAL with National Agriculture Market (e-NAM) is proposed.
• Total 53 airports are select for the first phase of Krishi UDAN 2.0. – the majority of them are operated by AAI.
  • The strategic selection of the airports is primarily focused on northeast region. Additionally covers North, entire western coast and southern India (including two islands).
• Airports for implementation of Krishi Udan 2.0 are selected with the aim of providing benefit to the entire country Opted airports not only provide access to regional domestic market but also connects them to international gateways of the country.
• Development of E-KUSHAL (Krishi Udaan for Sustainable Holistic Agri-Logistics). Proposed to develop a platform which will facilitate in information dissemination to all the stakeholders.
  • This will be a single platform which will provide relevant information at the same time will also assist in coordination, monitoring and evaluation of the scheme.
  • Proposed convergence of E-Kushal with National Agriculture Market (e-NAM).
• Facilitating the development of a hub and spoke model and a freight grid (identified locations for cargo terminals)

Source: PIB

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Syllabus

• Prelims – Science and Technology

Context: Recently, The Indian Space Research Organisation (ISRO) signed an MoU with Social Alpha to launch SpaceTech Innovation Network (SpIN).

About SpaceTech Innovation Network (SpIN):

• Space entrepreneurship: SpIN is India’s first dedicated platform for innovation, curation, and venture development for the burgeoning space entrepreneurial ecosystem.
• Public-private collaboration: The space agency said that the tie-up is a one-of-a-kind public-private collaboration for start-ups and SMEs in the space industry.
• SpIN will primarily focus on facilitating space tech entrepreneurs in three distinct innovation categories:
  • Geospatial Technologies and Downstream Applications;
  • Enabling Technologies for Space & Mobility; and
  • Aerospace Materials, Sensors, and Avionics.

Significance of SpIN:

• Shaping policies: This novel partnership is a significant step forward in providing further stimulus to India’s recent space reform policies.
• Creating market potential & ecosystem: It will work towards identifying and unleashing the market potential of the most promising space tech innovators and entrepreneurs in India.
  • The SPIN platform is also expected to create a level playing field for various stakeholders to collaborate and contribute to the space ecosystem in the country.

Areas of innovation:

• Early-stage start-ups for developing solutions in areas of maritime and land transportation, urbanisation, mapping, and surveying, disaster management, food security, sustainable agriculture, environmental monitoring, and natural resources management, among others are encouraged to apply.

Significance of the innovation challenge:

• The selected start-ups and innovators will be able to access both Social Alpha’s and ISRO’s infrastructure and resources as per the prevailing guidelines.
• They will be provided active hand-holding in critical areas, including access to product design, testing and validation infrastructure, intellectual property management, go-to-market strategy, and access to long-term patient capital, among other technical and business inputs.

About Social Alpha: Social Alpha is a multistage innovation curation and venture development platform for science and technology start-ups.

MUST READ:  Space Industry in India

Source:  The Hindu

Previous Year Questions

Q.1) Which one of the following statements best reflects the idea behind the “Fractional Orbital Bombardment System” often talked about in media?  (2022)

1. A hypersonic missile is launched into space to counter the asteroid approaching the Earth and explode it in space.
2. A spacecraft lands on another planet after making several orbital motions.
3. A missile is put into a stable orbit around the Earth and deorbits over a target on the Earth.
4. A spacecraft moves along a comet with the same speed and places a probe on its surface.

Q.2) The experiment will employ a trio of spacecraft flying in formation in the shape of an equilateral triangle that has sides one million kilometres long, with lasers shining between the craft.” The experiment in question refers to     (2021)

1. Voyager-2
2. New Horizons
3. LISA Pathfinder
4. Evolved LISA

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Syllabus

• Prelims – Science and Technology

Context: Recently  consultative committee of Ministry of Civil Aviation meets in New Delhi to discuss GAGAN (GPS Aided Geo Augmented Navigation).

About GAGAN:

• GAGAN is an acronym for GPS Aided GEO Augmented Navigation.
• It is a Space Based Augmentation System (SBAS) jointly developed by ISRO and AAI to provide the best possible navigational services over Indian FIR (Flight Information Region) with the capability of expanding to neighbouring FIRs.
• GAGAN is a system of satellites and ground stations that provide GPS signal corrections, giving you better position accuracy.
• GPS alone does not meet the ICAOs navigational requirements for accuracy, integrity and availability.
• GAGAN corrects for GPS signal errors caused by Ionospheric disturbances, timing and satellite orbit errors and also it provides vital information regarding the health of each satellite.

Services Offered under GAGAN:

• Aviation, Forest management, Railways signalling, Scientific Research for Atmospheric Studies, Natural Resource and Land Management, Location based services, Mobile, Tourism.

How it works?

• GAGAN consists of set of ground reference stations positioned across various locations in India called Indian Reference Station (INRES), which gathers GPS satellite data.
• A master station, Indian Master Control Centre (INMCC) collects data from reference stations and create GPS correction messages.
• The corrected differential messages are uplinkeded via Indian Uplink Station (INLUS) and then broadcasted on a signal from three geostationary satellites (GSAT-8, GSAT-10 and GSAT-15).
• The information on this signal is compatible with basic GPS signal structure, which means any SBAS enabled GPS receiver can read this signal.

Coverage Area:

• Two GEOs simultaneously transmit the GAGAN signal in space. GAGAN GEO footprint expands from Africa to Australia and GAGAN system has capability to cater 45 reference stations for expansion to neighbouring countries.
• GAGAN provides a civil aeronautical navigation signal consistent with International Civil Aviation Organization (ICAO) Standards and Recommended Practices (SARPs) as established by the Global Navigation Satellite System (GNSS) Panel.
• The GAGAN system provides Non-precision approach (NPA) service accurate to within the radius of 1/10th of a nautical mile (Required Navigation Performance or RNP-0.1) over the Indian FIR as well as precision approach service of APV-1.0 (Approach with Vertical guidance) over the Indian landmass on nominal days.
• The system is interoperable with other international SBAS systems such as the S. Wide Area Augmentation System (WAAS), the European Geostationary Navigation Overlay Service (EGNOS), and the Japanese MTSAT Satellite Augmentation System (MSAS), and provides seamless air navigation across regional boundaries.

Source:  PIB

Previous Year Question

Q.1) With reference to the Indian Regional Navigation Satellite System (IRNSS), consider the following statements:

1. IRNSS has three satellites in geostationary and four satellites in geosynchronous orbits.
2. IRNSS covers entire India and about 5500 sq. km beyond its borders.
3. India will have its own satellite navigation system with full global coverage by the middle of 2019.

Which of the statements given above is/are correct? (2018)

1. 1 only
2. 1 and 2 only
3. 2 and 3 only
4. None

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Syllabus

• Prelims – Art and Culture

Context: Ministry of Culture operates two schemes namely Museum Grant Scheme (MGS) and Scheme for Promotion of Culture of Science (SPoCS), one of the components of which is development/modification of existing museums and modernization/upgradation of existing Science Cities/Science Centres/Innovation Hubs respectively.

About Museums Grant Scheme:

• The scheme was launched in 2013.
• The aim of the scheme is to provide financial assistance for:
  • Setting up of new Museums
  • Strengthening and modernization of the existing museums
  • Digitization of art objects in the museums across the country
  • Capacity Building of Museum professionals
• The Scheme will have 3 components as given below:
  • Development and Establishment of Museums at the regional, state and District level
  • Digitization of Museum Collections
  • Capacity building and training of Museum Professionals

About Scheme for Promotion of Culture of Science (SPoCS):

• It is a scheme that provides for setting up of Science Cities and Science Centres in all the States of the country and provides adequate funds.
• National Council of Science Museums (NCSM), an autonomous organization under the Ministry of Culture, is entrusted with the implementation of the Scheme for Promotion of Culture of Science.

The scheme for Promotion of Culture of Science has three major components–

• Science City: Science city provides an experiment-based immersive learning ambiance to inculcate a spirit of inquiry, foster creative talent and create scientific temper in the community as a whole.
• Science Centres: Science Centre provides the scope of adopting a hands-on approach for which it offers to the visitor a number of experimental options through which they can discover the scientific concept themselves.
• Innovations Hubs: The Innovation hubs would serve as springboards for new ideas and innovation.

About National Council of Science Museums (NCSM):

• It is an autonomous organisation under Indian Ministry of Culture.
• It is the largest chain of science centres or museums under a single administrative umbrella in the world.
• It has been built to co-ordinate all informal science communication activities in the museum space in the country.
• The first science museum, Birla Industrial and Technological Museum (BITM), Kolkata under CSIR43, was opened in 1959.

Source:  PIB

Previous Year Question

Q.1) The Prime Minister recently inaugurated the new Circuit House near Somnath Temple Veraval. Which of the following statements are correct regarding Somnath Temple? (2022)

1. Somnath Temple is one of the Jyotirlinga shrines.
2. A description of Somnath Temple was given by Al-Biruni.
3. Pran Pratishtha of Somnath Temple (installation of the present day temple) was done by President S. Radhakrishnan.

Select the correct answer using the code given below:

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

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Syllabus

• Prelims – Science and Technology

Context: In 1922. On December 8^th, the International Anthrax Commission has passed a resolution requiring the hairs and wools used in brush-making, upholstering and textile industries be disinfected before they are handled industrially.

About Anthrax:

• Anthrax is a zoonotic disease (could be transferred from animals to humans) caused by the spore-producing bacterium Bacillus anthracis.
• Reservoirs are grass-eating animals, and the spores can survive in the environment for decades.
• It is usually a disease of wild and domestic animals, including cattle, sheep, and goats.
• Human infection, while rare, does occur.
• Human infection usually results from contact with infected animals or their products.

Types of Anthrax:

• cutaneous (through the skin),
• gastrointestinal, and
• There have been no confirmed cases of person-to-person transmission of cutaneous, gastrointestinal, or inhalational anthrax.
• Anthrax is most common in developing countries.
• The largest reported agricultural outbreak occurred in Zimbabwe, with more than 10,000 cases reported between 1979 and 1985.

Treatment:

• Antibiotics, such as penicillin, are used to treat all forms of anthrax.
• An antibiotic known as ciprofloxacin (Cipro) was approved in August 2000 by the U.S. Food and Drug Administration for treating people who have been exposed to inhalational anthrax.

Source: The Hindu

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Syllabus

• Prelims – Environment and Ecology

Context: An 18-member herd of all female elephants from the forests of Gudiyattam and Pernambattu of Tamil Nadu are currently on the prowl in the Koundinya wildlife sanctuary zone in Chittoor district, apparently “in search of mates”.

About Koundinya Wildlife Sanctuary:

• • Kaundinya Wildlife Sanctuary is a wildlife sanctuary and an elephant reserve situated in Andhra Pradesh.
• It is the only sanctuary in Andhra Pradesh with a population of Asian elephants.
• The sanctuary has dry deciduous forests with thorny scrubs interspersed with trees.
• These forests have the Kaindinya and Kaigal tributaries of Palar River.
• Kalyana Revu Waterfalls (also called Kalyan Drive Falls) and Kaigal Waterfalls are located in the Koudinya Wildlife Sanctuary.
• The sanctuary is primarily an elephant reserve and is home to about 78 Indian elephants.
• The vulnerable yellow-throated bulbul is present in the sanctuary.

Source:  The Hindu

Previous Year Question

Q.1) Which of the following Protected Areas are located in Cauvery basin? (2020)

1. Nagarhole National Park
2. Papikonda National Park
3. Sathyamangalam Tiger Reserve
4. Wayanad Wildlife Sanctuary

Select the correct answer using the code given below:

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

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Syllabus

• Prelims – Governance

Context: Recently, Rajya Sabha welcomed its new Chairman, Shri Jagdeep Dhankhar.

About Chairman of Rajya Sabha:

• Vice-President of India is ex-officio Chairman of the Council of States i.e., Rajya Sabha.
• Powers and Functions:
  • As Presiding Officer of the House
  • Powers and Duties of the Chairman, as laid down by the Constitution of India
  • As the Principal Spokesman of the House
  • Powers Conferred on the Chairman under the Rules of Procedure of the Rajya Sabha
  • Right of the Chairman to interpret the Constitution and Rules
  • Role in the Deliberations of the House
  • Casting of Vote by the Chairman
• Salaries and allowances:
  • Fixed by the Parliament by law.
  • Specified in the Second Schedule.

About Rajya Sabha:

• Rajya Sabha is a permanent House and is not subject to dissolution.
• To ensure continuity, one-third of its members retire after every second year.
• The House also elects a Deputy Chairman from among its members.
• Besides, there is also a panel of “Vice Chairmen” in the Rajya Sabha.
• The Fourth Schedule to the Constitution provides for allocation of Rajya Sabha seats to the states and Union Territories, on the basis of the population of each state.
• Of 245 members, 12 are nominated by the President and 233 are representatives of the States and Union territories of Delhi and Puducherry.

Source: Indian Express

Previous Year Questions

Q.1) Rajya Sabha has equal powers with Lok Sabha in  (2020)

1. the matter of creating new All India Services
2. amending the Constitution
3. the removal of the government
4. making cut motions

Q.2) The Parliament of India acquires the power to legislate on any item in the State List in the national interest if a resolution to that effect is passes by the  (2016)

1. Lok Sabha by a simple majority of its total membership
2. Lok Sabha by a majority of not less than two-thirds of its total membership
3. Rajya Sabha by a simple majority of its total membership
4. Rajya Sabha by a majority of not less than two-thirds of its members present and voting

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Syllabus

• Mains – GS 2 (Governance)

Context: Recently the Central Government introduced the Multi-State Cooperative Societies (Amendment) Bill, 2022 in Lok Sabha. The Bill proposes to amend the Multi-State Co-operative Societies Act, 2002 in light of the 97th Constitutional Amendment Act of 2011 which inserted Part IXB in the Constitution.

About the Cooperative Societies

• A co-operative society is a voluntary association of individuals having common needs who join hands for the achievement of common economic interest.
• Its aim is to serve the interest of the poorer sections of society through the principle of self-help and mutual help.

97th Constitutional Amendment Act 2011:

• It established the right to form cooperative societies as a fundamental right (Article 19).
• It included a new Directive Principle of State Policy on the Promotion of Cooperative Societies (Article 43-B).
• It added a new Part IX-B to the Constitution titled “The Co-operative Societies” (Articles 243-ZH to 243-ZT).
• It authorizes the Parliament to establish relevant laws in the case of multi-state cooperative societies (MSCS) and state legislatures in the case of other cooperative societies.

Ministry of Cooperation

• The Union Ministry of Cooperation was formed in 2021, its mandate was looked after by the Ministry of Agriculture before.

The objective of the introduction of the Bill:

• The bill is introduced with an objective to enhance transparency and accountability and improve the ease of doing business by reducing the period of registration.

Significance of Cooperative Societies:

• The village cooperative societies provide important inputs for the agricultural sector.
• Consumer societies meet their consumption requirements at concessional rates.
• Marketing societies help the farmer to get remunerative prices.
• The Cooperative processing units help in value additions to the raw products.
• They also help in building up storage, warehouse, cold storage, rural roads and in providing facilities like irrigation, electricity, transport, education and health.
• They play the role of a balancing factor between the public and private sectors and also supplement the work of the government and its agencies.
• Many Cooperative societies have Successfully promoted rural development
  • National Cooperative Development Corporation (NCDC)
  • National Agricultural Cooperative Marketing Federation of India (NAFED)
  • AMUL and Co-operative Rural Development Trust (CORDET)
• They play an important role in poverty reduction, promoting women’s empowerment, and improving literacy rate and skill development.

Key highlights of the bill:

• Cooperative election authority: The Bill also seeks to establish a “cooperative election authority” to bring “electoral reforms” in the cooperative sector.
  • As per the proposed amendment, the authority will consist of a chairperson, a vice-chairperson and a maximum of three members to be appointed by the Centre.
• Establishment of a Fund & concurrent audit: The Bill seeks to insert a new Section related to the “establishment of the Cooperative Rehabilitation, Reconstruction and Development Fund” for revival of “sick multi-state cooperative societies”.
  • It also proposes to insert Section relating to “concurrent audit” for such multi-state societies with an annual turnover or deposit of more than the amount as determined by the Centre.
• Complaints redress: The government has proposed to insert a Chapter relating to “complaints redress”.
  • This proposes to appoint one or more “cooperative ombudsman” with a territorial jurisdiction to inquire into members’ complaints.
• Role of the ombudsman: The ombudsman will complete the process of inquiry and adjudicate within a period of three months from the date of receiving the complaint and may issue necessary directions to the society during the course of inquiry.
• Monetary penalties and imprisonment: The government has also proposed to amend the existing Act to increase monetary penalties on multi-state co-op societies for violating provisions of the law to a maximum Rs 1 lakh.
  • The imprisonment term has also been proposed from a maximum six months at present to up to one year in the proposed amendments.
• Cooperative information officer: The Centre has also proposed to make provisions for the “appointment of cooperative information officer” to provide information on affairs and management of the multi-state co-op society concerned to members of such society.

Contentious clause of the Bill:

• Merger of cooperative society: The Bill proposes merger of “any cooperative society” into an existing multi-state cooperative society.
• Original statute: As per the present law, enacted 20 years ago, only multi-state cooperative societies can amalgamate themselves and form a new multi-state cooperative society.
• Amendment: Any cooperative society may, by a resolution passed by majority of not less than two-thirds of the members present and voting at a general meeting of such society, decide to merge into an existing multi-state co-operative society provided that such resolution shall be subject to provisions of the respective State Cooperative Societies Act for the time being in force, under which such cooperative society is registered.

Criticisms against the bill:

• No provision in the Constitution: According to the critics, the Constitution distinguishes between Cooperative Societies of State and Multi-State Cooperative Societies which are governed by the Union of India.
  • No provision of the Constitution makes way for merging a cooperative society which is incorporated under State law with a Multi-State Cooperative Society.
• Centre’s encroachment: Through the introduction of the Clause concerning the merger through the Bill, the Centre is indirectly encroaching on the rights of State Co-operative Societies according to critics.
  • It is being argued that such actions “impinges” on the rights of the States and is against India’s federal structure.
• Beyond legislative competence: It is also being claimed that this is beyond the legislative competence of the Union as State cooperative societies are within the exclusive jurisdiction of States.

Way Forward:

India has more than 1500 multi-State co-operative societies serving as an important tool to promote economic and social betterment of their members. In order to make the governance of these multi-State Cooperative societies more democratic, transparent and accountable, provisions for setting up of the Cooperative Election Authority, Cooperative Information Officer and  Cooperative Ombudsman have been proposed in the amendment.

Developments over the years also necessitated changes in the existing Act so as to strengthen the cooperative movement in multi-state cooperative societies. Therefore, the government proposed to amend the Act.”

Source:  The Hindu

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Syllabus

• Mains – GS 2 (Governance) and GS 3 (Economy)

Context: In recent times, Microfinance institutions have been increasingly adopting technology to enhance operational efficiency, improve underwriting models and reduce expenses.

About Microfinance:

• Microfinance is a banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services.
• Microfinance allows people to take on reasonable small business loans safely, and in a manner that is consistent with ethical lending practices.
• The term “microfinancing” was first used in the 1970s during the development of Grameen Bank of Bangladesh, which was founded by Muhammad Yunus.
• Today, microfinance is available in nearly 85 per cent districts of India with more than two lakh frontline employees distributing credit and associated services.

Need for Microfinance:

• To safeguard the interest of people outside the formal financial system.
• Failure of formal banking institutions in lending to the rural poor in the absence of proof of recognised employment or collateral that can be offered by them while applying for loans leaves the poor with no alternative but to borrow money from local moneylenders at high-interest rates.
• In order to provide credit facilities to such individuals, MFIs are useful.

Benefits of Microfinance:

• Financial Inclusion: Microfinance has emerged as one of most important tools to foster financial inclusion.
  • It enables the poor and low-income households to come out of poverty, helps women to become owners of assets, has an increased say in decision making and leads dignified lives embodying the concept of a collective good.
• Inclusive Growth: Microfinance plays a critical role in promoting inclusive growth by making credit available at the last mile and therefore, acts as a safety net for those at the bottom of the pyramid.
  • Microfinance loans provide financial access to the poorest that allows many of them to start new businesses, grow existing businesses, insure against shocks due to bad weather and illness, and smooth consumption.
• Adopting Tech: MFIs (microfinance institutions) have been increasingly adopting technology to enhance operational efficiency, improve underwriting models and reduce expenses while continuing the focus on customer-centricity.
  • Audio-visual content in vernacular languages is widely utilised to continuously impart financial literacy.
• Improve Underwriting Models: A separate credit bureau for microfinance was established about a decade back.
  • Intense efforts by MFIs and credit bureaus have led to the development of robust databases and a credit bureau report is an essential part of underwriting now.
• Expanding Reach of Microfinance: In terms of reach, microfinance operations cover 28 states and 9 union territories (UTs).
  • In terms of regional distribution, eastern & north-eastern regions of the country have the largest share at 37 per cent followed by south at 27 percent and west at 15 per cent.
  • Thus, in impacting the lives and livelihoods, the role of microfinance continues to be important. While microfinance is present in almost all nooks and corners of the country, in terms of geographical distribution, 82 per cent of the loan portfolio is concentrated in ten states.
• Strong Customer Protection: The RBI regulations for microfinance provide an effective framework for customer protection.
  • This framework is supported by the RBI recognised self-regulatory organisation (SRO).
  • The SRO supports the MFIs in the implementation of the regulations, takes initiatives for capacity building, improves governance through regular guidance and surveillance and provides a platform for resolving sector level challenges.
• Digitalisation initiatives: Digitalisation initiatives have been aligned with the rapid diffusion of smartphones and growing comfort of borrowers with digital modes of transactions.

Today, nearly 100 per cent of loans are digitally disbursed directly into the bank account of the borrowers and an increasing number of repayments are also being done digitally.

Challenges of micro financial institutions:

• Fragmented Data: While overall loan accounts have been increasing, the actual impact of these loans on the poverty-level of clients is not clear as data on the relative poverty-level improvement of MFI clients is fragmented.
• Impact of Covid-19: It has impacted the MFI sector, with collections having taken an initial hit and disbursals yet to observe any meaningful thrust.
• Social Objective Overlooked: In their quest for growth and profitability, the social objective of MFIs—to bring in improvement in the lives of the marginalized sections of the society—seems to have been gradually eroding.
• Loans for Non-income Generating Purposes: The proportion of loans utilized for non-income generating purposes could be much higher than what is stipulated by the RBI which is 30% of the total loans of the MFI.
  • These loans are short-tenured and given the economic profile of the customers, it is likely that they soon find themselves in the vicious debt trap of having to take another loan to pay off the first.

Regulatory Framework for Microfinance in India:

The Reserve Bank came out with a comprehensive and revised regulatory framework for microfinance loans in March 2022.

Core Principles:

• Intent in framing these guidelines was built around the idea of customer protection. To achieve, the framework has incorporated five core principles, namely –
• Addressing regulatory arbitrage with the introduction of a lender agnostic and activity-based regulation so that all the regulated entities engaged in microfinance pursue the goal of customer protection within a well-calibrated and harmonized set-up.
• Protection of microfinance borrowers from over-indebtedness caused by granting of loans beyond the repayment capacity of the borrowers which, then, can potentially get manifested into coercive recovery practices.
• Enabling the competitive forces to bring down the interest rates by way of enhanced transparency measures.
• Enhancement of customer protection measures by way of strengthening them and extending them to all regulated entities.
• Facilitating flexibility to design products/ services to meet the needs of microfinance borrowers in a comprehensive manner.

Major Provisions:

• The central bank has allowed households earning up to ₹3 lakh annually to be classified as eligible for microloans, expanding the market for microfinance institutions (MFIs)
• It also removed the cap on pricing loans, aiding deeper penetration into existing markets and entry into new ones.
• There shall be no pre-payment penalty on microfinance loans.

Significance

• MFIs believe these measures, along with the rising demand for loans in rural India, should drive growth for NBFC-MFIs.
• These regulations can improve credit culture. Credit assessment of households is very beneficial for long-term sustainability.
• This harmonised regulatory framework for different types of lenders, will encourage healthy competition and enable customers to make an informed choice regarding their credit needs.

Way Forward:

The microfinance program has witnessed phenomenal growth in India in the last decade. However, the focus of most of the microfinance service providers has remained on expanding the outreach of microfinance programs with little attention to the depth, quality and viability of the financial services. The RBI should encourage all institutions to monitor their impact on society by means of a ‘social impact scorecard’.

Source: The Hindu

Previous Year Question

Q.1) With reference to the Indian economy, consider the following statements:

1. A share of the household financial savings goes towards government borrowings.
2. Dated securities issued at market-related rates in auctions form a large component of internal debt.

Which of the above statements is/are correct?

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

Q.1) Consider the following statements regarding Rajya Sabha:

1. Vice-President of India is ex-officio Chairman of the Council of States i.e., Rajya Sabha.
2. The Fourth Schedule to the Constitution provides for allocation of Rajya Sabha seats to the states and Union Territories, on the basis of the population of each state.

Which of the statements given above is/are correct?

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

Q.2) Koundinya Wildlife Sanctuary is often mentioned in news is in

1. Telangana
2. Karnataka
3. Odisha
4. Andhra Pradesh

Q.3) Consider the following statements regarding Krishi Udaan Scheme:

1. The scheme was launched in 2014 to assist farmers in transporting agricultural products so that it improves their value realisation.
2. It is a convergence scheme where three Ministries/Departments namely Ministry of Civil Aviation, Department of Agriculture & Farmers’ Welfare would leverage their existing schemes to strengthen the logistics for transportation of Agri-produce.

2. E-KUSHAL (Krishi UDAN for Sustainable Holistic Agri-Logistics) platform to be developed facilitate in information dissemination to all the stakeholders.

Which of the statements given above is/are correct?

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

Comment the answers to the above questions in the comment section below!!

ANSWERS FOR ’ 9th December 2022 – Daily Practice MCQs’ will be updated along with tomorrow’s Daily Current Affairs.st

Q.1) – a

Q.2) – a

Q.3) – d