In the recent meeting of the Monetary Policy Committee (MPC), several measures were taken up in a move to fight the economic impact of the countrywide lockdown to check the spread of novel coronavirus.
Key takeaways:
It allowed the equated monthly instalments (EMIs) to be deferred by three months.
Since non-payment will not lead to non-performing asset classification by banks, there will be no impact on credit score of the borrowers.
The repo rate was reduced to by 75 bps to 4.4% while the reverse repo rate was cut by 90 bps point to 4%.
Reduced reverse repo rate will help banks to lend more rather than keeping their excess liquidity with the RBI.
RBI has also reduced the cash reserve ratio of banks, thus increasing liquidity.
Important value additions:
Monetary Policy Committee
It is responsible for fixing the benchmark interest rate in India.
The meetings are held at least 4 times a year.
The committee comprises six members – three officials of the Reserve Bank of India and three external members nominated by the Government of India.
Repo Rate
It is the rate at which the Reserve Bank of India lends money to commercial banks in the event of any shortfall of funds.
It is used by monetary authorities to control inflation.
Reverse Repo Rate
It is the rate at which the Reserve Bank of India borrows money from commercial banks of the country.
It can be used to control the money supply in the country.
Cash Reserve Ratio
It is the share of a bank’s total deposit that is mandated by the Reserve Bank of India (RBI) to be maintained with the latter in the form of liquid cash.
Kavutheendal ceremony
Part of: GS Prelims and GS-I – Art and Culture
In News:
Kavutheendal ceremony, a part of the Meena Bharani festival, was recently performed at Sri Kurumba Bhagavathy Temple in Kerala.
Key takeaways:
The ceremony usually sees huge number of devotees.
Amidst the coronavirus lockdown, the ceremony was performed by a representative of the Velan community, without the presence of any devotee.
Important value additions:
Kavutheendal ritual
It is considered as the largest congregation of oracles in the world.
This ritual is based on the notions of purity/impurity inherent in Brahminical Hinduism.
Velan community
The community belongs to scheduled caste that lives mainly in Kerala.
Sri Kurumba Bhagavathy Temple
It is a Hindu temple at Kodungallur of Kerala state in India.
It is dedicated to the goddess Bhadrakali, a form of Maha Kali worshipped in Kerala.
Various tribal communities of Arunachal Pradesh performed rituals to observe lockdown in the wake of coronavirus pandemic.
Key takeaways:
Arr-Rinam was performed by the Galos community.
The Adi community performed Motor ritual.
The Nyishi community observed Arrue involving self-quarantine.
Important value additions:
Galos community
They belong to the Tani group inhabiting Assam and Arunachal Pradesh, besides Tibet.
Only the Galos maintain genealogy through given names.
The Galos perform Popir dance.
They have been recognized as a Scheduled Tribe under the constitution.
Adi community
They are one of the most populous groups of indigenous peoples in the Indian state of Arunachal Pradesh.
Their prime festivals are Aran, Donggin , Solung, and Etor.
The majority of Adi traditionally follow Donyi-Polo religion.
Nyishi community
It is the largest ethnic group in Arunachal Pradesh.
The Nyishi language belongs to the Sino-Tibetan family.
Polygyny is prevalent among the Nyishi.
Homam ceremony performed
Part of: GS Prelims and GS-I – Art and Culture
In News:
Homam ceremony was recently performed at Srikalahastheeswara Devasthanam.
Key takeaways:
The Homam is generally performed to ensure prosperity and well-being at the global level and health and longevity at the individual level.
This time it was particularly performed to undo the negative effects of coronavirus.
Important value additions:
Srikalahastheeswara Devasthanam
The temple is famous across the world for performing ‘Rahu Ketu Puja’ every day to fight the ‘toxic’ effect of Rahu and Ketu, the ‘rogue serpents’ among the pantheon of Hindu gods.
This is the only Saivite shrine in the country to remain open during the solar and lunar eclipse.
Recently, the details of air travellers were leaked online raising privacy concerns.
Key takeaways:
A forward of a list containing details of the passengers was received on number of social media platforms, which were forwarded further.
The list included names, passport numbers, flight details, mobile phone numbers and addresses of all travellers.
Apart from the threat of violence, each person on the list may be vulnerable to a number of crimes, like online fraud, electronic impersonation or identity theft.
Beta app Corona Kavach has raised some red flags due to this leak.
Important value additions:
Corona Kavach
It is a beta-version app by the Ministry of Electronic and Information Technology.
It is an app designed to track the location of COVID-19 infected people and alert subscribers when they come near their locations.
It has already been downloaded by more than 100,000 people.
It is mandatory for all COVID-19 patients to download the app to track their whereabouts.
(MAINS FOCUS)
ECONOMY
Topic: General Studies 3:
Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
COVID-19: RBI announces measures
After Finance Ministry announced the 1.7 Lakh Crore relief package, the RBI also has come up a slew of measure to help the economy tide over distress caused by COVID-19 pandemic.
Do You Know?
Since February 2020, RBI has pumped in ₹2.8-lakh crore in the system through various market interventions (like LTRO, OMO)
US Federal bank has reduced its interest rates to near zero to shore up liquidity in its financial system
Relief measures announced by RBI are:
Repo Rate: cut by 75 basis points to 4.4% – To ease credit lending in the economy
Reverse Repo rate: Reduced by 90 basis points to 4%
Cash Reserve Ratio(CRR): Reduced by 100 basis points to 3% of net demands and time liabilities – will inject ₹1.37-lakh crore into the system
Accommodation under Marginal Standing Facility to be increased from 2% to 3% of SLR. This will release Rs 1.37 lakh crore into the system.
All term Loan repayment: Moratorium i.e. Temporary halt of three months on payment of instalments
Long term repo operations will be carried out by RBI to inject liquidity to the tune of ₹1 lakh crore
The cumulative liquidity boost provided by RBI through above measures amounts to ₹3.74-lakh crore
Impact of RBI’s actions
Compliments the efforts of government to address the economic upheaval caused by COVID-19 pandemic
Reduction of Repo rate lowers the cost of capital
Reduction of Reverse Repo will disincentivise banks from parking their funds with the RBI
Prevent credit market dislocation
Relief to all retail & corporate borrowers who are finding it difficult to service their loans during this crisis period
Protects against defaults & banks’ rising NPAs
Ensures ample liquidity and narrows the credit spreads of corporates
It reflects the RBI’s willingness to listen to problems faced at ground level and its effort to resolve them.
Adaptability: RBI has stated that it will not shy away from using both conventional and unconventional measures in future to adapt to the evolving situation
Helps in reassuring Public trust in the Banking system during this crisis period
Challenges
Monetary Transmission: To ensure quick liquidity transmission to the larger economy and not just to investment grade companies.
Consequences of heightened liquidity like Inflation which needs to tackled in future
Fresh investment will be the last thing on the minds of businessmen who are currently grappling with unsold inventory & disrupted supply chain
Inadequate action by RBI to ease the corporate securities market (suggestion is direct buying of Corporate Bonds like US Fed)
There could be a sharp rise in bad loans a few quarters after the end of the moratorium
RBI has stopped short of providing material relief measures for medium and small enterprises, which are likely to bear the brunt of shutdown
Connecting the dots:
Abenomics that includes Negative Interest rates
How central banks can ensure smoother & quicker monetary transmission?
JUDICIARY
Topic: General Studies 2:
Structure, organization and functioning of the Judiciary
Judicial Administration Reform
Context: Criticism on Supreme Court about delay in hearing of crucial cases due to its inefficient administrative functioning.
Allegations on Supreme Court
Critical cases like those concerning personal liberty, law and order and Democratic functioning, are posted after long intervals
The Government is being granted a luxury of time to respond.
Fait accompli can be created due to lack of judicial action in such cases where immediacy is pre-eminent.
Adds fuel to perception that judicial inaction is due to executive influence
Erodes public trust on apex court
Increases backlogs in Judiciary
What are the possible reasons causing this situation?
CJI has been given the onerous dual charge of heading both the administrative and judicial functions of the court.
Increasing number of cases has made handling both these tasks difficult
Some of the administrative functions carried out by CJI includes:
All service-related matters of the SC’s 2,500 employees
Issue office orders to streamline the registry
Supervise measures for security and infrastructure
Chair committees
Interview candidates for the various courts, etc
Inadequate capabilities & training of Junior officers under CJI who handle these tasks
Possible Solution – CEO
A chief executive officer – an independent professional who is equipped with the day-to-day management of the Court and is not beholden to the judges in any way
CEO will be charged with the entire mission of running the Court, so that the judges can concentrate on adjudication of cases
It will reduce the burden on CJI which will lead to faster resolution of cases.
Challenges ahead
CEO needs to be given adequate operational autonomy to ensure efficiency in management of Court’s administrative functioning
He/she should be answerable to a committee of the Court, comprising judges and bar representatives
Conclusion
Resolution of significant cases in a time-bound manner is crucial for robust functioning of Democracy
Connecting the dots:
Judicial Vacancies in India – Its impact and challenges
Need for digitisation of Judicial process as a part of Judicial reform
(TEST YOUR KNOWLEDGE)
Model questions: (You can now post your answers in comment section)
Note:
Correct answers of today’s questions will be provided in next day’s DNA section. Kindly refer to it and update your answers.
Comments Up-voted by IASbaba are also the “correct answers”.
Q 1.Consider the following statements:
Monetary Policy Committee fixes the benchmark interest rate in India.
The meetings are held at least two times a year.
Which of the above is/are correct?
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Q 2.Consider the following statements:
Kavutheendal ritual is considered as largest congregation of auricles in the world.
The ceremony is performed by the representative of Velan community.
Which of the above is/are correct?
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Q 3. Which is the largest ethnic group in Arunachal Pradesh?
Adi
Nishi
Galos
Ahom
Q 4. Consider the following statements
Srikalahastheeswara Devasthanam is famous for performing ‘Rahu Ketu Puja’.
This is the only Saivite shrine in the country which remains open during the solar and lunar eclipse.
Which of the above is/are correct?
1 only
2 only
Both 1 and 2
Neither 1 nor 2
ANSWERS FOR 27th March 2020 TEST YOUR KNOWLEDGE (TYK)
1
D
2
C
3
B
4
D
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