Current Affairs - 1 January 2016

General Affairs 

Border Dispute To Be Discussed During Ajit Doval's China Visit Next Week

• BEIJING:  National Security Advisor Ajit Doval will visit China next week to hold informal talks with his Chinese counterpart to discuss the vexed border dispute and other strategic issues, it was announced today.
  
  Mr Doval, who is also the Special Representative for Sino-India boundary talks, will hold informal dialogue with his Chinese counterpart and state councillor Yang Jiechi on January 5 during which both officials would review the progress made on the border issue, said Chinese officials.
  
  

  During his visit here, Mr Doval would also call on Chinese Premier Li Keqiang on January 6. India and China have so far held 18 rounds of talks to resolve the dispute along the 3488 km-long border.
  
  Besides the annual dialogue on the border, the Special Representatives also meet informally to review the progress and discuss a host of strategic issues concerning bilateral relations including issues related to the neighbourhood.
  
  The developments come as China seeks to deepen its engagement with countries in South Asia, which in turn has raised concerns in India.
  
  For its part, China says the border dispute is concerned only to the Eastern sector specially Arunachal Pradesh which it claims as part of southern Tibet, while India asserts that the dispute includes the Western sector, especially the area occupied by China in the 1962 war.

President Pranab Mukherjee Returns From 14-Day Stay In Southern India

• HYDERABAD:  President Pranab Mukherjee today returned to New Delhi after his 14-day sojourn in southern India.
  
  Telangana and Andhra Pradesh Governor ESL Narasimhan and Telangana Chief Minister K Chandrasekhar Rao, along with his cabinet colleagues and top officials, saw the President off at Hakimpet airport in Hyderabad.
  
  President Mukherjee, who had arrived in Hyderabad on December 18, stayed at Rashtrapati Nilayam, the official retreat of the President in Secunderabad.
  
  The President on Wednesday hosted reception for the governor, the chief minister, top officials and other dignitaries.
  
  

  Narasimhan hosted a dinner in honour of the President on December 29.
  
  President Mukherjee visited Karnataka on December 22 and 23 to attend various programmes. He visited Andhra Pradesh on December 25 to inaugurate the Tirumala Tirupati Devasthanam's Vedic school and also offered prayers at Tirumala temple.
  
  During his stay in Hyderabad, he attended the convocation of Military College of Electronics and Mechanical Engineering-Secunderabad and inaugurated the Indian Economic Association's annual conference.
  
  President Mukherjee could not attend the Ayutha Chandi Maha Yagam organised by the Telangana chief minister at his farm-house near Hyderabad on December 27 due to a fire accident.

Nepal PM Apprises PM Modi Of Political Developments

• NEW DELHI:  Nepalese Prime Minister KP Sharma Oli today telephoned Prime Minister Narendra Modi and apprised him of the political developments in the Himalayan nation.
  
  "Prime Minister (Modi) emphasised the importance of finding a durable solution to the political problems facing Nepal based on consensus or 'sahmati'," an external affairs ministry statement said.
  
  "Modi extended his good wishes to the friendly people of Nepal for the New Year 2016," it added.
  
  Over 50 people have lost their lives in four months of violent protests after the adoption of a new constitution by the Himalayan republic with agitating Madhesi political parties and ethnic groups of the Nepal Terai demanding amendments in the statute that they deem discriminatory and ignoring their rights.
  
  

  A new bill introduced in the Nepalese parliament on December 15, that aims to amend the constitution, ensures constitutional guarantee of inclusive proportional representation of various ethnic minorities in various state entities apart from the Nepal Army and redrawing the electoral constituencies based on population.
  
  The southern plains comprise of over 50 per cent of the population of Nepal and if this bill is passed, the plains will have majority representation in parliament after the next general elections.
  
  Due to the ongoing agitation, thousands of Nepal-bound cargo vehicles have not been able to enter the country from India since the last four months.
  
  As a result, Nepal is facing serious shortage of essential supplies like food, medicines, fuel and other items.

Iran Denies It Fired Rockets Near US Warships In Gulf

• DUBAI:  Iran denied today that its Revolutionary Guards launched rockets near the US aircraft-carrier Harry S Truman and other warships as they were entering the Gulf on Saturday.
  
  "The naval forces of the Guards have not had any exercises in the Strait of Hormuz during the past week and the period claimed by the Americans for them to have launched missiles and rockets," the Revolutionary Guards website quoted Ramezan Sharif, the Guard's spokesman, as saying.
  
  "The publication of such false news under the present circumstances is akin to psychological warfare," Sharif said.
  
  

  NBC News, citing unnamed US military officials, said the Guards were conducting a live-fire exercise and the Truman came within about 1,500 yards (metres) of a rocket.
  
  In Washington, Navy Commander Kyle Raines, spokesman for the US Central Command, said on Tuesday several Revolutionary Guard vessels fired the rockets "in close proximity" of the warships and nearby merchant traffic "after providing only 23 minutes of advance notification".
  
  "These actions were highly provocative, unsafe and unprofessional and call into question Iran's commitment to the security of a waterway vital to international commerce," Raines said.
  
  Sharif said: "Preserving the security and peace of the strategic Persian Gulf region is among the serious strategies of Iran, and the Guards carry out their military exercises ... based on a set schedule."
  
  The Truman, accompanied by two warships from the US-led coalition supporting air strikes against ISIS militants in Iraq and Syria, was entering the Gulf through the Strait of Hormuz on a routine transit when the incident occurred, he said.
  
  NBC News said the US destroyer Buckley and a French frigate were in the area where the rockets were fired.
  
  Iranian and US forces have clashed in the Gulf in the past, especially during the Iran-Iraq war in the 1980s after the 1979 Islamic revolution.
  
  Tehran and six world powers including the United States clinched an agreement in July that would curb Iran's nuclear program in return for lifting economic sanctions.

The Importance Of China Announcing It's Building Second Aircraft Carrier

• BEIJING:  China is building its second aircraft carrier, this time entirely with domestic technology, its Defense Ministry said today, in a leap in its naval development that is increasingly tipping the regional balance of power.
  
  The 50,000-ton vessel is being built in the northern port of Dalian and will be conventionally, rather than nuclear, powered, ministry spokesman Colonel Yang Yujun told reporters at a news conference.
  
  The yet-to-be-named vessel will carry J-15 fighter-bombers and other aircraft and use a ski jump mode for launching fixed-wing aircraft, Yang said. The J-15 is a copy of Russia's Sukhoi Su-33.
  
  
  "After an overall consideration of various factors, the relevant authorities started the research and development of China's second aircraft carrier which is currently under independent design and construction," Yang said.
  
  China currently operates one aircraft carrier that was purchased as an incomplete hull from Ukraine more than a decade ago and then armed and equipped in China before being commissioned in 2013. That carrier, christened the Liaoning after the port in which it was refitted, has yet to take on its full aviation complement and is currently undergoing testing and training.
  
  Yang said the second carrier is being built entirely with domestic technology but has drawn on China's experience refitting its first carrier "with new improvements in various aspects."
  
  Plans for a second aircraft carrier had long been rumored, with many designating Shanghai's Jiangnan Shipyard as the most likely build site. Thursday's announcement was the first official confirmation.
  
  China is also steadily adding cutting-edge frigates, destroyers and nuclear submarines to its fleet and by some estimates has been launching more vessels than any other nation. Its rapid naval modernization is seen as aimed at asserting its maritime claims and extending its power far from its shores. Those ambitions have raised tensions with Japan, the U.S. and Southeast Asian nations with rival territorial claims.
  
  China claims sovereignty over almost all of the South China Sea, which is home to key shipping lanes, rich fishing grounds and a potential wealth of mineral resources. Five other governments claim the maritime space either in part or in whole, and the Philippines and Vietnam in particular have sought assistance from the US and others in beefing up their ability to resist what they view as Chinese aggression, including its construction of seven new islands by piling sand atop coral reefs.
  
  Yang said the date of the second carrier's launching would "depend on progress made at the current stage." As to how many flat-tops China aimed to build in total, he said, "Relevant authorities will take into consideration various factors."
  
  The second carrier will be roughly the same size as the Liaoning but only about half the size of the US Nimitz class nuclear powered super-carriers, of which 10 are currently in operation.

Business Affairs 

Petronet to buy LNG from Qatar at almost half original cost

• India's biggest gas importer Petronet LNG will buy liquefied natural gas (LNG) from Qatar's Rasgas at virtually half the original cost, the government said in a statement on Thursday.

  The price cut will help Petronet save Rs 40 billion ($604.69 million) a year, Oil Minister Dharmendra Pradhan said, adding that the Qatari supplier has also waived off the penalty fee for lower offtake.

  Reuters reported last month that the two companies were renegotiating the terms of the deal to lower the cost of gas shipments and avoid a $1.5 billion penalty fee for lifting less gas than agreed.

  New Delhi said Rasgas will supply LNG to Petronet at $6-7 per million British thermal units (mmBtu), sharply lower than $12-13 per mmbtu agreed earlier.

Oil ends 2015 in downbeat mood, hangover to be long and painful

• Oil prices opened the final trading session of 2015 in a downbeat mood after record US crude inventories reinforced concerns over a global supply glut that has pulled down prices by a third over the past year.

  Crude inventories in the United States, the world's largest petroleum producer, rose 2.6 million barrels last week, the US Energy Information Administration said. Analysts polled by Reuters had expected a draw of 2.5 million barrels.

  Crude prices held losses after falling 3 percent in the previous session, with US West Texas Intermediate (WTI) crude futures CLc1 trading around $36.70 per barrel in early Asian hours on Thursday and Brent opening around $36.60 per barrel.

  The immediate outlook for oil prices remains bleak, with some analysts like Goldman Sachs saying prices as low as $20 per barrel might be necessary to push enough production out of business and allow a rebalancing of the market.

  U.S. bank Morgan Stanley said in its outlook for next year that "headwinds (are) growing for 2016 oil" citing ongoing increases in available global supplies despite some cuts particularly by US shale drillers as well as a slowdown in demand as the main reasons.

  "The imbalance in the global oil market has been diminishing in 2H15, but the hope for a rebalancing in 2016 continues to suffer serious setbacks," the bank said, reflecting a market consensus that meaningfully higher prices are not expected before late 2016.

  Traders expect some US oil to be taken out of America and supplied into global markets, following the surprise lifting of a decades-old US crude export ban in December, which ended a years-old discount in US crude prices to international Brent.

  "At a time when US shale is facing headwinds due to the collapse in crude oil prices... US crude oil exports are likely to help reduce congestion concerns in the US," ING bank said.
  
  INDUSTRY PAIN

  Oil prices began falling in mid-2014 as ballooning output from the Organization of the Petroleum Exporting Countries (OPEC), Russia and also US shale drillers started to outpace demand. The downturn gained pace at the end of 2014 after a Saudi-led OPEC decided to keep production high to defend global market share rather than cut output to prop up prices.

  A year on, and the oil downturn has turned into a rout with Brent prices briefly falling below $36 per barrel and to levels last seen in over a decade, effectively wiping out the gains from a decade-long commodity super-cycle sparked by China's unprecedented energy demand boom.

  The downturn has caused pain across the energy supply chain, including shippers, private oil drillers and oil-dependent countries from Venezuela and Russia to the Middle East.

  Analysts estimate global crude production exceeds demand by anywhere between half a million and 2 million barrels every day. This means that even the most aggressive estimates of expected US production cuts of 500,000 bpd for 2016 would be unlikely to fully rebalance the market.

  Russia and OPEC are so far showing few signs of reining in production, leading traders to establish record high active short positions in the market 1067651MSHT that would profit from further crude price falls.

Gold price closes year on a weak note, tumbles Rs 260 on global cues

• Gold plunged by Rs 260 to Rs 25,390 per ten grams in the last trading day of 2015 at the bullion market on Thursday, tracking a weak trend overseas amid muted demand from jewellers.

  The precious metal has lost further sheen for the third year in a row and recorded a steep fall of Rs 1,550 per ten grams largely on weak global cues amid the government seeking to monetise the gold holdings lying idle with households and institutions.

  Silver also remained under selling pressure and traded further down by Rs 250 to close at Rs 33,300 per kg.

  Marketmen said apart from a weakening global trend, fall in demand from jewellers and retailers mainly led to the decline in the precious metals prices.

  Globally, gold fell 0.76 per cent to $1,060.90 an ounce and silver shed 0.47 per cent to $13.88 an ounce in New York in Wednesday's trade.

  In Delhi, gold of 99.9 and 99.5 per cent purity tumbled by Rs 260 each to Rs 25,390 and Rs 25,240 per ten grams, respectively.

  Sovereign, however, remained steady at Rs 22,200 per piece of eight grams in limited deals.

  Tracking gold, silver ready fell by another Rs 250 to Rs 33,300 per kg and weekly-based delivery by Rs 142 to Rs 33,448 per kg.

  Silver coins too plummeted by Rs 2,000 to Rs 46,000 for buying and Rs 47,000 for selling of 100 pieces.

Essential medicines: Cipla, Pfizer, Sun Pharma & other majors hit most by price cut

• The health ministry's recent move to revise the National List of Essential Medicines (NLEM) by adding 106 medicines and deleting 70, thereby taking the total number now to 376 drugs, is expected to hit several pharma companies.

  According to an analysis put out by the pharmaceutical market research entity AIOCD AWACS on Wednesday, the most likely to be impacted would be Cipla, Pfizer and Sun Pharma.

  Giving details of the impact on the companies following the price cuts, it puts the value loss for Cipla at Rs 84 crore, for Pfizer, Rs 56 crore and Rs 42 crore for Sun Pharma.

  This is followed by companies such as Zydus, Lupin, Sanofi and others. 

  

  
  

  
  
  
  
  
  
  
  
  
  
  In terms of therapy areas, the impact, it says, is expected to be mostly felt in anti-infectives, followed by cardiac, neuro /CNS and respiratory segments. It puts the overall patient benefit at Rs 747 crore.

Foreign Policy: India Must Share Its Success with the World

• ABOUT: The cheerleaders of Indian economy love to say that this century belongs to India. What they mean is that India will move from being an emerging economic superpower to a full fledged economic and diplomatic powerhouse before the end of this century. But to be truly influential at the global level, India needs to relook at its current foreign policy. T.C.A Rangachari, former ambassador to France and Germany, and former director of Academy of International Studies, Jamia Millia Islamia University, writes about what India needs to do about the future in foreign policy.

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  What would India's global posture and role be as it approaches its centenary in 2047? To answer that question, we need to consider what India and the world might look like then.

  The shift in the centre of gravity of international affairs from the Atlantic to the Indo-Pacific region that is now hypothesised with increasing credibility might well be a reality. The rise of emerging economies around the world, in particular Asia, will result in the displacement of the established powers.

  

  
  

  Multiple projections, now fast entrenching themselves as conventional wisdom, suggest that India will be the third largest economy in the world by 2050. Some estimate that this could happen by 2030. In that same period, India would have also become the most populous nation with 1.7 billion people. The effect of China's reversal of its 'one child' policy of over three decades' standing requires to be factored in. Economic strength, as has happened throughout history, will facilitate the acquisition of military muscle. India's GDP, according to an optimistic projection will by then reach nearly $30 trillion. Depending on its success in augmenting its political union with a single market, and in sustaining growth rates, that GDP figure would make India richer than several G-7 countries - Germany, Japan and the UK put together. In effect, the clock would have been turned back to the pre-colonial days when India was reputed to be the sone ki chidiya, or the golden bird.
  

  The world around us would have China, with a GDP of some $50 trillion as the largest economy followed by the US with a GDP of over $40 trillion. In the top 10, Japan, Germany, the UK and France would be the four G-7 members; the emerging market economies are expected to be Indonesia, Brazil and Mexico. The quest for peace and prosperity will surely continue to resonate with the world.

  Conventional dangers arising from inter-state conflicts will not have been eliminated. Territorial challenges may give way to contention over resources, markets and technology. They are unlikely to engulf the world at large but can be a potent source of disruption. More worrisome are the new threats to international security that have emerged, and may well continue to exist, in the form of non-state actors using the instrumentation of terrorism and non-conventional warfare. The danger to peace may rise exponentially when non-state actors in different theatres of the world are backed up by state sponsorship. Even the militarily powerful will find themselves increasingly ineffective in eliminating threats to their own security. To be able to deal effectively with the dangers to international peace and security and other global challenges, it would be essential to base international cooperation on universal adherence to a globally-agreed set of rules. Unilateralism - singly or in association with like-minded states - will have to give way to genuine multilateralism.

  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  As for prosperity, the promise of the peace dividend presaged by the end of the Cold War has not materialised in Europe in the last quarter of a century. Given the current economic and demographic projections, it might still remain elusive a quarter of a century hence. A recent study by the European Commission assessing different scenarios postulated a worst case scenario of global economic decline in which the EU share of the world GDP might fall by almost half by 2050 and a more attractive 'European renaissance' scenario wherein the EU continues to enlarge, becomes stronger, retains its competitiveness, innovation and share of global GDP at 15-16 per cent. Irrespective of which scenario comes to pass, the impetus for global growth is more likely to come from today's developing or emerging market economies. The continents of Asia, Africa and Latin America are better placed to grow and significantly enhance their share of, and contribution to, the global economy. Whether that would translate into their being able to play a more meaningful role in the management of global affairs remains in question. As India grows, it should be more forceful in pursuit of the modification of the post-war international power structure dominated by the victors in that war, particularly since they are unlikely to retain their economic dominance, political clout or demographic depth. India should have no difficulty with the principles underpinning the global order. It supports democracy and fundamental freedoms, market economy and international cooperation for resolving international problems. Nor should it have any difficulty in joining in collective measures for the prevention and removal of threats to peace, including aggression, and for peaceful settlement of international disputes.

  Indeed, with enhanced economic and military capabilities, India would be better placed to help enforce acceptable international conduct and to penalise misbehaviour. In order to be able to do so effectively, India should reinvigorate its pursuit of the democratisation of the international order replacing the post-World War II order with one that represents, more truly, the global realities of the times. This restructuring would have to be based on the fact of new and emerging powers, including India, being legitimate stakeholders in building and sustaining international peace and security, not least by virtue of contributing substantially to global prosperity. India's credentials as an upright international citizen buttress the country's entitlement. As the decades unfold, this process is inevitable. Yet, India's place at the global high table, including international financial institutions, UNSC, and other multilateral organisations, will need to be secured.

  In political terms, India should have the will to be more active and a vocal proponent of a global order inspired by a value system that has its roots in its own civilisational ethos. Mahatma Gandhi always spoke of the universality of human freedom. India's freedom, he said, would not be complete till all subjugated peoples are free. India should not settle for being a helpless bystander when citizens elsewhere are not treated with the dignity they deserve. A politically mature and economically well-off country should be able and prepared to be held, and hold others, accountable to this standard. We must stand true to the belief system that our founding fathers inculcated in this nation.

  India has always advocated that the world cannot have peace if there are islands of affluence in a sea of poverty. India should be willing to be a partner in development of people less fortunate. Thus, we must ensure that prosperity is shared. The beginning made with our immediate and extended neighbours must intensify as India becomes more able. In South Asia, we have shared commonalities over centuries, derived from civilisational linkages and of living together in a multi-ethnic, multi-cultural, multi-lingual, and multi-religious environment. The divisions created by the colonial and imperial onslaught rent asunder complementarities of economies. As India progresses, being the larger nation, it will have to show leadership. It will need to assuage fears of smaller neighbours and treat them as equal. Indeed, within the constraints of respecting sovereignty, India should consider the development priorities of our neighbours as its own. Depending on the willingness of the neighbour, India should be agreeable to participate financially and otherwise as it might do with the states of the Indian Union. It could integrate India's development plans with willing regional partners and ensure everyone gains. A similar logic can be applied to our cooperation with the extended neighbourhood taking into account needs and resources that each side can contribute.

  In the global commons, India should be able to play an increasingly leading role as the success of its developmental effort unfolds. For instance, if India succeeds in fulfilling its target of 100 GW of solar power, it would have significantly reduced its dependence on fossil fuel. That alone would make its contribution to reduction of its own, and global, carbon footprint unique. In addition, it would hold out an entirely different developmental model. It can intensify its role in the elimination of global terrorism by not limiting itself to combating just the threats faced by India but also those forces that are out to destabilise human existence elsewhere. Agriculture, dairy, medicine, IT, and other sectors offer scope for leaving a defining Indian imprint, globally.But, how would India deal with China as it becomes the largest economy? China's willingness to uphold the extant international order is often times in question. Essentially, China is seeking a greater say in global decision making. President Xi Jin Ping has publicly stated that China seeks to "adjust and reform the global governance system and mechanism. Such reform is not about dismantling the existing system and creating a new one. Rather, it aims to improve the global governance system in an innovative way." The RMB has now become a reserve currency to hold Special Drawing Rights (SDRs). In due course, it would become a currency for international trade. Already, many countries have entered into RMB swaps. This increasing economic clout is natural given China's economic status. What makes China difficult to predict is its pursuit of undefined 'core' interests including territorial, as exemplified in our borders, South and East China seas. President Xi Jin Ping said at the CCP politburo session in January 2013 that while China would remain on a path of peaceful development, it would "never give up" legitimate rights or sacrifice 'core interests'. "No country should presume we will engage in trade involving our 'core interests' or that we will swallow the 'bitter fruit' of harming our sovereignty, security or development interests."

  We have agreed to a strategic partnership. Yet, China looks at India and deals with it as a strategic adversary. This is evident from the military stand-offs in the border regions in 2013 and 2014 even as the Chinese Prime Minister and President were on official visits to India. (Remarkably, the incidents have not been repeated in 2015.) It is evident also in China's $46 billion investment initiative to build the China-Pakistan Economic Corridor (CPEC) through PoK. There are other instances where China's pronouncements and actions (recall China's stand on the Indo-US nuclear deal of 2009) are adverse to Indian interests.

  

  India and China, by 2050, are expected to account for some two-fifths of the global economy. That imposes an obligation on both countries to work cooperatively to promote economic stability and security. As Prime Minister Narendra Modi observed in his address at the Tsinghua University in Beijing on May 15, 2015: "The prospects of the 21st century becoming the Asian century will depend in large measure on what India and China achieve individually and what we do together."
  

  India and China will need to work together in the coming decades to accommodate differing, competing, even conflicting interests in a cooperative arrangement. This is to mutual benefit. Both are large and populous, together constituting nearly two-fifths of humanity. Their primary objective is to eliminate poverty and want, and provide prosperity, or at the very least, livelihood security to their peoples. One way of achieving this objective might be to replace the balance of power approach that tends to shape strategic thinking by a civilisation state, humanist approach. This should not be impossible. China has often said that there has only been a brief interlude of hostility in the several millennia of friendly relations between us.

  So, what of the US? There is much talk of the US in decline. However, the technological lead and military power that the US enjoys - and its demonstrated will and ability to maintain it - over India and China is likely to be more telling than the fact of its ranking behind China as an economic power. Neither India (nor China) will be able to reach the per-capita living standards of the US, nor will they have commensurate power projection capability. India and the US, fortunately, have a multifaceted partnership rooted in shared values, among others, of democracy and people-to-people ties. With enhanced economic prowess, this partnership can be more meaningful as India overcomes its insecurities and summons up the wherewithal and the political will to take on new global challenges. This partnership has already articulated tangible principles to guide ongoing efforts to advance mutual prosperity, a clean and healthy environment, greater economic cooperation, regional peace, security and stability for the larger benefit of humankind. Their engagement in the region, along with others, including Japan, Australia and the ASEAN nations, will play a key role in promoting peace, prosperity, stability and security in the Indo-Pacific region. India's biggest strength will be its linkage with its traditional partners such as Russia and Japan, as also the developing world. It has a welcome presence because it is seen as non-threatening. It is attractive because it has pursued the difficult model of combining economic development with political freedoms. The more success it achieves in this unprecedented experiment in growth with equity and freedom, the more this model will be replicated when contrasted with capitalism per se, or authoritarian capitalism as the models. And as the developing world becomes economically stronger, irrespective of the model pursued, India will find willing partners in the joint effort to restructure the world order.

  In sum, India should be well placed to play a leading role in global management. In the immediate aftermath of Independence, it was India which provided moral leadership by forcefully pursuing the agenda of anti-colonialism, anti-apartheid and racism, and of the right to development of the developing world. When the fruits of its labours over the last seven decades propel it to a pivotal position in the next three decades, it should give back to the people of the world, in moral and material terms, a selfless return. 

General Awareness

Deepak Mohanty Committee Report on Medium-term Path on Financial Inclusion

• • 14-member committee headed by RBI Executive DirectorDeepak Mohanty has submitted the report on Medium-term Path on Financial Inclusion, which has been recently released by RBI.

    • The committee was constituted in July 2015 by RBI with the objective of working out a medium-term (5 years) measurable action plan for financial inclusion.

    The Committee has made several key recommendations to improve the governance system, strengthen the credit infrastructure and increase the personal disposable income of the poor which would put the economy on a medium-term sustainable inclusion path.

    Key recommendations of Deepak Mohanty Committee

    Sukanya Shiksha Scheme: Banks have to make special efforts to step up account opening for females, and the Government may consider a deposit scheme for the girl child – Sukanya Shiksha – as a welfare measure.

    Aadhaar linked credit account: It recommended linking credit accounts with Aadhaar number and share information with credit information companies to enhance stability of the credit system and improve access.

    Mobile Technology: Bank’s traditional business model should be changed with greater reliance on mobile technology to improve ‘last mile’ service delivery.

    Digitisation of land records: In order to increase formal credit supply to all agrarian segments backed by an Aadhaar-linked mechanism for Credit Eligibility Certificates.

    Promoting self-help groups: Corporates should be encouraged to nurture SHGs as part of their Corporate Social Responsibility (CSR) initiatives.

    Subsidies: Panel has recommended replacing current agricultural input subsidies on fertilizers, irrigation and power by a direct income transfer scheme as a part of second generation reforms.

    Crop Insurance: A mandatory crop insurance scheme covering all crops should be introduced starting with small and marginal farmers with a monetary ceiling of Rs 2 lakh.

    Agricultural loan interest subvention scheme: The government can phase out the agricultural loan interest subvention scheme and plough back that allocation into the crop insurance subsidy

    Multiple guarantee agencies: Encouraged to provide credit guarantees in niche areas for micro and small enterprises (MSEs).

    Gold KCC (Kisan credit card): Higher flexibility for borrowers with prompt repayment records can be dovetailed with a government-sponsored personal insurance, and digitisation of KCC to track expenditure pattern.

    State Level Bankers Committees (SLBCs): SLBCs are advised to focus more on inter-institutional issues, livelihood models, social cash transfer, gender inclusion, Aadhaar seeding, universal account opening, and less on credit deposit ratio which is a by-product.

    Unique identification of MSME: It should be introduced for all MSME borrowers and information from it should be shared with credit bureaus.