Current Affairs - 11 December 2016

General Affairs 

Jammau and Kashmir: BJP justifies its opposition to police service restructuring reforms in cabinet

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  Jammu and Kashmir Deputy Chief Minister Nirmal Singh on Saturday justified BJP’s opposition to police service restructuring which had prompted Chief Minister Mehbooba Mufti to leave a Cabinet meeting midway. “This agenda came up at the end of the meeting. We sought for a deferral so that it can be studied as the matter pertains to police,” Singh told reporters in Jammu.

  Mehbooba, on Friday, had left the Cabinet meeting midway after a rift with a BJP minister over her proposal to restructure Kashmir Police Service (KPS) officers’ cadre.

  BJP ministers said the posts of IGs and DIGs should be created after promotion to and inductions into IPS. “It was a minor issue. They wanted to do it. Our take was simple that it is a DoPT issue, posts cannot be given without induction into IPS,” Singh said.

  BJP is not opposed to financial and monetary benefits and grades to KPS officers, but objects to giving ranks, he said. “We only said that it should be discussed. Please give us time to study it,” he said.

  Taking a dig at the authorities for failure ensure induction of KPS officers into IPS for the last five years, he said, “There is vacancy of 50 IPS officers for past five years. Their induction have been caught into litigation. We did not take any initiative in this regard. If it is resolved, over 50 officers would be inducted into IPS.”

  Jammu and Kashmir is the only state in the country which has 50 per cent quota while rest states have only 30 per cent quota for induction into IPS and IAS.

Drought-hit Odisha farmers to get full insurance money soon

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  Odisha government has directed all the district collectors to credit the entire argi-insurance amount to the bank account of the farmers, officials said on Saturday. The collectors were directed to ensure 100 per cent disbursement within 15 days by Chief Secretary A P Padhi through a video conferencing pn Friday.

  Development Commissioner R Balakrishnan has also suggested the banks to open parallel savings accounts of the loanee farmers within two to three days and credit the insurance money to their savings account.

  Cooperation secretary Manoj Ahuja said the insurance claim of farmers was now being given against kharif crop loss of 2015 drought and 11.61 lakh farmers would be benefited. About Rs 1,776 crore would be disbursed through their bank accounts and, as of Saturday, around Rs 880 crore has been credited to the accounts of the farmers, Ahuja said.

  Padhi directed the collectors to keep close watch over the situation and ensure 100 per cent disbursement of the compensation money to account of the farmers. He also asked the collectors to review the situation on daily basis with commercial and cooperative banks and send the updated report to Principal Secretary Cooperation.

  
  

  “As the agricultural loan term is up to the month of March, no bank should adjust the insurance money against the loan of current year,” Padhi said.

Swachh Bharat draws flak from noted architect, says Indian cities don’t need absolute solutions

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  Noted conservation architect, urbanist Rahul Mehrotra who is also an alumnus of Ahmedabad- based CEPT University on Saturday suggested that India urbanists and planners ‘imagine transitions’ rather than making ‘absolute solutions’ for Indian cities. As an example of this, he mentioned the Swachh Bharat campaign and the Gujarat International Finance Tec-City (GIFT) located near Ahmedabad which drew flak from the architect who said that GIFT city had become a great ‘symbol of absolutes’. Mehrotra who was speaking at the 1st Shrenik Kasturbhai Memorial Lecture on “Ephemeral Urbanism- Learning from the Kumbh Mela” at LD Institute of Indology said that Indian cities were more ‘kinetic’ in nature as opposed to them being widely perceived as ‘static’.
  
  Showing a slide of PM Modi flagging off the cleanliness drive, followed by figures of open defecation occurring in countries globally, Mehrotra said, “This is one of the most noble kind of gestures our PM has made, construct a household toilet by 2019 – we are not going to solve the problem this is going to be an absolute disaster, a complete disaster because it can’t happen…We have here a mapping of open defecation around the world, India is way ahead of even Africa. We are the worst in terms of numbers of open defecation, so it is a very good aim but its an absolute way of looking at it because what this results in is we are not going to get a toilet for everyone in that time 3 years because we are not even going to get those slums reorganized in 3 years so how can you get a toilet there? So what has happened is that we are prefabricating millions of toilets very week and a truck goes around and drops it in front of everyone’s houses in the village. It then gets used for storage of grains and different things – as it’s a room. Therefore the transitions becomes important, community toilets in those areas become a way of transitioning.”

  
  

  Making a strong case for ‘ephemeral urbanism in planning Indian cities through an academic study of the organisation of the Kumbh Mela in Allahabad that he was part of- Mehrotra said, “The Kumbh demystifies and presents a kind of distilled narrative surrounding the deployment of the city – issues that are negotiated in this form of urbanism are as diverse as memory, geography, infrastructure, sanitation, public health, governance, and ecology…Ephemeral Urbanism as an idea for us planners acknowledges the need for re-examining permanent solutions as the only mode for the formulation of urban imaginaries and instead imagining how new protocols that are constantly reformulated, readapted and re-projected reacts to permanent state of crisis that I believe our cities are in. These cases (of Kumbh) help us recognise the potential of such discussions in constructing new imaginaries of urban environments in the future and specially in India.”

People tired of PM Modi’s monologues: Rahul Gandhi

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  Congress vice-president Rahul Gandhi on Saturday dared Prime Minister Narendra Modi to face Parliament and answer the questions raised by MPs, saying people are tired of his “monologues”. Gandhi’s attack came soon after Modi slammed the opposition for not allowing him to speak in the Lok Sabha forcing him to speak out in ‘jan sabha’ (public rallies).

  “Modiji, people are tired of monologues. I urge you to honestly face the Parliament and answer our questions,” Gandhi tweeted. Modi, while speaking at a public rally in Deesa in Gujarat, targeted the opposition for disrupting Parliament over demonetisation, noting that even the President was unhappy with their conduct.

  “Opposition is not allowing me to speak in Lok Sabha, so, I have decided to speak in ‘jan sabha’. But, whenever I would get a chance, I will try to represent the voice of 125 crore people in Lok Sabha,” Modi said at a rally, in a retort to the opposition leaders accusing him of running away from speaking on demonetisation in Parliament.

  
  

  The PM said those criticising him and highlighting people’s problems should also inform masses that they do not need to stand in queue and can use mobile banking. “You must be aware that the Opposition is not allowing the Parliament to function. I am surprised that despite government’s assurance that the PM is ready to speak on the issue (of demonetisation), the situation has not improved. Even the President is unhappy about it (disruptions in Parliament),” he said. Modi also said that the government is ready for a debate on the issue if the Opposition is willing.

Over 3.5 lakh train passengers opt for railways’ travel insurance cover

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  The railways’ travel insurance scheme has got a good response with more than 3.5 lakh passengers availing the facility on Saturday after the government waived the insurance premium. Passengers will no longer have to pay 92 paise for availing the insurance cover as the government has made it free to encourage online booking of tickets, said a senior Railway Ministry official. The facility, which was announced in the Railway Budget 2016-17, allows a travelling passenger to get an insurance cover of up to Rs 10 lakh on booking a train ticket on the IRCTC’s portal.

  The total insured passengers on December 10 is 3,57,348, according to railways. “We are expecting the number will touch 10 lakh per day shortly,” the official said. As per the decision, travel insurance premium was reduced to zero from 92 paisa for opting travel insurance on booking date. Noting that an option to choose travel insurance appears on the ticket booking website, he said, “It will be changed shortly after modification of the software.” However, wait-listed passengers are not covered in the scheme which is being implemented by IRCTC in partnership with ICICI Lombard, Royal Sundaram and Shriram General.

  
  

  It offers travellers or their families compensation of up to Rs 10 lakh in the event of death or permanent total disability, Rs 7.5 lakh for permanent partial disability, up to Rs 2 lakh for hospitalisation expenses and Rs 10,000 for transportation of mortal remains in the event of death or injury from a train accident or other untoward incident, including terrorist attacks, dacoity, rioting, shoot-out or arson, as well as for short termination, diverted route and Vikalp trains. In case of passenger opting for insurance, the claim and liability is between passenger and the insurance company. In the event of a death due to accident, 100 per cent of the sum insured will be paid by the company.

Business Affairs 

Deploy majority of new Rs 500 notes in ATMs: RBI to banks

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  In a move to ensure equitable and wider distribution of new Rs 500 notes and to also solve the problem of change for Rs 2,000 notes, the Reserve Bank of India has directed banks to deploy a large majority of the new Rs 500 notes in their automated teller machines (ATMs) and use only a small portion of that currency to service customers through their branches.

  Senior officials with three banks told The Indian Express that while giving the new Rs 500 notes to banks, the regional chests of the Reserve Bank gave specific instruction that majority of the notes have to be deployed into the ATMs.

  A senior official a leading bank told that the Reserve Bank wants that customers of all banks are serviced and which is why it wants that a large portion of the new notes of Rs 500 are deployed into the ATM machines.

  “When the money is distributed through branches, the bank branch mostly services its own customers, however through ATM customers of all banks can withdraw and therefore be serviced. This is why the the Reserve Bank wants that majority of new Rs 500 notes are deployed into the ATMs and even the Indian Banks’ Association is supporting the move,” said the source. An official with another bank told that ATMs have lower withdrawal limit and so it is a better way of distributing it to a larger number of people. “Since there is a withdrawal limit of Rs 2,500 per card per day from ATMs, the idea is to have a wider distribution of Rs 500 notes across the country through the network of ATMs,” said a bank official.

  As against the ATM withdrawal limit of Rs 2,500 per day per card, withdrawal limit from branches through the use of cheque books is Rs 24,000 in a day from an account (subject to a weekly withdrawal limit of Rs 24,000). Another source said that larger banks are getting more cash than the relatively smaller banks and so if the large banks run their ATMs and keep deploying cash in them, then even customers of smaller banks will get serviced.

  While a large majority of the replacement of old notes of Rs 500 and Rs 1,000 till now has been in the form of Rs 2,000 notes, individuals across the country have been facing the problem of change as the value of Rs 100 notes in circulation was limited. According to the RBI data, as of March 31, the value of Rs 100 notes in circulation was Rs 157,783 crore.

Sensex racks up best weekly gain in four months, up 517 pts

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  The benchmark Sensex scored its best weekly number in four months by gaining 517 points to finish at 26,747 — a new 1-month high — while the broader Nifty finished above the key 8,200-level. For both benchmarks, the weekly number is the highest since September 2 and it is the best Sensex closing since November 11 when the figure stood at 26,818.82.

  The key indices regained their footing for the week despite RBI’s surprise move to hold interest rates. The market was comforted after the European Central Bank extended its massive stimulus beyond March though it scaled down the size of the purchase. Return of foreign investors also buoyed mood.

  Trading started in anticipation of rate cut from RBI in its two-day policy review, with rate-sensitive stocks gaining an upperhand on short-covering amid firmness in US markets in spite of the Italian political turmoil.

  In his second monetary policy, Reserve Bank Governor Urjit Patel left the repo rate — at which RBI lends to banks for short term — intact at 6.25 per cent and the cash reserve ratio — the share of deposits lenders park with the central bank — at 4 per cent.

  The decision to abolish the temporary 100 per cent CRR came as relief to banking stocks. Investor optimism in the wake of the global rally after ECB’s stimulus action led to the market bounceback.

  During the week, the Sensex gained 516.52 points, or 1.97 per cent, to settle at 26,747.18. It hovered in the range of 26,803.76 and 26,125.35 during the week.

  The Nifty 50 index during the week climbed 174.95 points, or 2.16 per cent, to close at 8,261.75 after shuttling between 8,274.95 and 8,056.85.

  The buying was led by metal, auto, realty, oil and gas, PSUs and banks, except healthcare stocks.

  The second-line shares of mid-cap and small-cap companies witnessed good buying activity.

  Meanwhile, foreign portfolio investors (FPIs) and foreign institutional investors (FIIs) bought shares worth Rs 1,225.74 crore during the week, as per Sebi’s record including the provisional figure of December 9.

  In the broader market, the BSE Mid-Cap index rose 336.04 points, or 2.75 per cent to settle at 12,535.22. It outperformed the Sensex. The BSE Small-Cap index advanced 236.88 points, or 1.96 per cent to close at 12,320.08, matching the Sensex’s gains in percentage terms.

  Among sectoral and industry indices, metal rose by 5.16 per cent, followed by auto 4.17 per cent, realty 3.89 per cent, oil&gas 3.45 per cent, bankex 2.57 per cent, FMCG 2.00 per cent, consumer durables 1.86 per cent, power 1.80 per cent, tech 1.17 per cent, IT 1.14 per cent and capital goods 0.68 per cent, while healthcare fell by 0.51 per cent.

  Among the 30-share Sensex pack, 25 stocks rose and remaining 5 stocks declined during the week.

  Adani Ports & Special Economic Zone was the biggest gainer in the Sensex pack which rose by 7.26 per cent.

  Tata Motors surged 7.16 per cent. The company said that Jaguar Land Rover (JLR), the UK’s leading manufacturer of premium luxury vehicles, reported its best ever November retail sales. JLR reported 2 per cent rise in total sales to 47,588 vehicles in November 2016 over November 2015.

  Tata Steel jumped 5.88 per cent. Tata Steel UK on Wednesday, reached an agreement with trade unions on a number of proposals that would structurally reduce risks and help secure a more sustainable future for its UK business.

  It was followed by ONGC 5.37 per cent, SBI 4.56 per cent, Asian Paints 4.07 per cent, M&M 3.96 per cent, ICICI Bank 3.35 per cent, Maruti 3.30 per cent, ITC 3.24 per cent, Bharti Airtel 3.22 per cent, Reliance 3.12 per cent and Hero Motoco 3.06 per cent.

  However, the BSE Healthcare index declined 0.51 per cent. Sun Pharmaceutical Industries was the biggest Sensex loser, down by 6.46 per cent followed by TCS 1.37 per cent, Axis Bank 0.76 per cent, Dr Reddy’s 0.68 per cent and Wipro 0.30 per cent.

  
  

  The total turnover during the week on BSE and NSE fell to Rs 11,740.51 crore and Rs 76,902.18 crore, respectively, as against last weekend’s level of Rs 13,981.54 crore and Rs 1,02,280.80 crore.

Digi-banking: Despite incentives, regulatory gaps may hold up digital payments

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  The government’s decisive push in favour of incentivising digital payments underscores the need to plug a number of regulatory gaps governing products such as credit and debit cards, internet banking and mobile wallets. Two of the elements that could come under scrutiny are the arbitrariness in levying merchant charges, which add to the cost of every digital transaction, and the need to enforce the interoperability of digital tools such as wallets.

  One of the underlying charges in the digital transactions space, the merchant discount rate (MDR) — that is charged to a merchant accepting card payments and sometimes passed on to the consumers — is decided by the banks themselves. While there is a cap prescribed by the Reserve Bank of India on the MDR applicable on debit cards, there is no limit on that for credit cards. Government officials indicated that there could be a move towards removing the arbitrariness of the merchant rates and aligning their estimation on the “work done” principle, the principle followed for determining the interconnection charges in the telecom sector.

  “The transaction involving the digital transfer of money occurs essentially entails the creation of a ledger entry by the entities such as banks, and for that charges should be close to zero. This charge should be only based on the work done. Once you do that, these transactions will become almost free,” a senior government official said. The RBI in 2012 had rationalised the MDR for debit cards, capping it at 0.75 per cent for transaction values up to Rs 2,000 and at 1 per cent for transaction values above Rs 2,000. This was done in order to encourage all categories of merchants to deploy card acceptance infrastructure and also to facilitate acceptance of small value transactions through card payments.

  However, in its Concept Paper on Card Acceptance Infrastructure issued in March 2016, the RBI noted that the MDR continues to act as a clear disincentive. “Though the regulatory policy on MDR (issued in September 2012) had indicated a cap on MDR, it is generally treated as floor, with the benefit of lower MDR not really accruing to smaller merchants. In certain segments like mutual funds, insurance, etc. a flat fee structure of charges has also been established by the industry,” the RBI noted in March. Hence, cash continues to be the predominant mode of payment as it appears to be “costless” in comparison to the visible costs associated with card and electronic payments.

  An industry representative said that the MDR for debit cards, despite being regulated, is fixed by banks and the payment network companies. The government official cited above said that: “These charges are being paid by a customer or a merchant to the system. It’s the banking system gain, and it is in their interest to charge the merchant or the customer. This is not financial inclusion. The Reserve Bank of India must issue a fiat to banks to end these charges. Digital transactions should be made cheap and convenient, and physical transactions should have a levy.”

  The RBI has reportedly presented a number of options to regulate the merchant rates, including an option of levying uniform ad-valorem MDR across all merchant categories and locations and setting MDR for debit cards as a fixed or flat fee for transactions beyond a certain value. Another sector that has seen surge in its volumes post the Centre’s November 8 announcement is of the prepaid payment instruments, or mobile wallets. Even as the companies pay a 1-2 per cent fee to the banks when their users load money into the wallets, the bigger ones with a wider merchant network earn from the funds that stay in their own system. The National Payments Corporation of India had proposed to the RBI that interoperability between these wallets would be an added service from which customers would benefit and give boost to cashless transactions.

  A government official also said that the integration must not happen only within various wallets but also with the unified payments interface (UPI). “The wallets have to be interoperable. They must get integrated with UPI. Otherwise they are just islands. Interoperability is such an essential stuff. Either you integrate them with UPI, or create their own switch, and let that switch talk to UPI. There is a need to completely integrate every payment method and architecture,” the official said. He said that interoperability between wallets must be made compulsory failing which the bigger wallets, which can sustain themselves on their own, would not opt for money transfer to and from their wallets to those run by other companies.

  
  

  “If you don’t mandate payment wallets to be interoperable, the bigger ones won’t come on board. They’ll say they are big enough to sustain their network on their own. The tendency of the bigger wallets will be to not become interoperable. Similarly, the bigger banks will have a tendency to not come on board UPI. The problem is that when transactions become commoditised, big players don’t like it because they get subsumed, and they wouldn’t want to participate in the network,” the official said.

Arun Jaitley holds pre-budget consultation meeting with IT companies

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  Finance Minister Arun Jaitley held a pre-budget consultation meeting with representative of IT (software/hardware) companies, for boosting the sector. Noting that the electronic market in India is one of the largest in the world and is expected to reach US $400 billion in 2020, Jaitley said that the software industry had emerged as one of the most dynamic and vibrant sectors in India, according to the press statement issued by the Press Information Bureau.
  The meeting was focused on how the government support was required for the IT sector in view of increasing trends of protectionism and anti-globalisation abroad.  The members also discussed the rapid changing nature of technology in IT field and hence collectively called for an imperative to focus on ‘Research and Development’ in IT sector, said the press release.

  Other issues that were the discussed in the meeting involved speed and penetration of broadband in India, increasing the number of Wifi-hotspots in the country and bringing down the prices of smart phone to make broadband more accessible to masses. The use of fiber cable network instead of over-ground towers was suggested in the meeting, said the press release.

  “To further boost electronic manufacturing in country, suggestions were made to extend the duty differential scheme to all ITA goods, specifically for personal computers (Desktop, Laptop),” the press note said.

  In a push for ‘Make in India’ initiative, a proposal for a comprehensive list of CPE goods for Duty Differential Scheme to was also discussed during the meeting. “To create an ecosystem for electronics and IT hardware manufacturing, proposal for a ‘Component Trading Hub’ was discussed,”  in the meeting said the press release.

  
  

  To answer concerns regarding the increased digital divide in the country, a plan to make internet more open, transparent and easily accessible to all was also discussed in the meeting.

Banks expect huge rush for cash after 3-day break

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  Bank customers continued to line up outside branches and ATMs as banks faced the uphill task of meeting the huge demand for cash ahead of three-day break. Banks will remain closed in many places for three days in a row on account of ‘Id-e-Milad’ on Monday. Bankers are anticipating huge rush for withdrawals when they open for public dealing after the break.

  The situation at bank branches has not improved as ATMs are still not dispensing adequate cash despite being recalibrated for new currency notes. Bankers on the condition of anonymity said that despite assurances by RBI and government, they are not getting adequate cash from currency chests to meet the withdrawal pressure on account of pay day.

  A private sector banker said that although about 95 per cent of over 2 lakh ATMs have been recalibrated, there is cash shortage due to logistics issue. ATMs are fed only once a day and most of them are running out of money shortly due to heavy withdrawals.

  Bankers expect that the situation would continue for another 10-12 days. Faced with acute shortage of cash, banks have imposed their own limits for withdrawal as low as Rs 2,000 in some cases against the limit of Rs 24,000 per week set by RBI.

  Frustrated with standing in long queues people at times venting their anger at bank officials asking them to compensate them for not being able to keep their promise of providing Rs 24,000 per week to a person, similar to what bank charges when a customers fails to maintain minimum balance in the account.

  “Because of the acute short supply of cash, and when branches are unable to meet the requirements of cash withdrawals, irritated customers are naturally becoming angry, and annoyed and their anguish is turned towards the staff, officers and managers,” All India Bank Employees’ Association said in a statement.

  Some banks are disbursing only Rs 2,000 per person while those having better cash availability are offering Rs 10,000-12,000 per withdrawal against specified limit of Rs 24,000, bank officials said.

  
  

  To promote less cash economy, the government yesterday announced slew of measures incentivising payment through digital mode for purchase of petrol, diesel, insurance cover, railway tickets etc. It also waived service tax for payments up to Rs 2,000 made through cards and decided to do away with transaction fee for payment to central government departments and PSUs.

General Awareness

Govt announces several incentives on payments through digital modes

• To promote digital transaction in the country, Union Government announced various incentives on December 8, 2016, in New Delhi which will be effective from January 1, 2017.
  • The incentives which was announced by Union Finance Minister Arun Jaitleywere related mostly with the services provided by the Central public sector undertakings and the Railways.
  • Aim: to lower cash transactions in the economy and promote digital economy.
  Following 11 incentive measures were announced by the Finance Minister
  Consumers who will make digital payment at the petrol pumps would be given a discount of 0.75 % on petrol and diesel by the petroleum companies.
  • A discount of 0.5 percent will be given to them who will buy monthly seasonal tickets in the Suburban railway networks through digital payment mode. This will be effective from January 1, 2016 and will start with the Mumbai suburban railways.
  • Booking Railway Ticket through online mode will enable the passenger to get free accident insurance cover of Rs. 10 lakh.
  • Digital payment for railways catering, accommodation and retiring roomwill also attract 5 percent discount.
  • Online purchase of new insurance policy of PSUs will deliver 10 percentdiscount on General Insurance and 8 percent discount on life Insurance policies.
  • A discount of 10 per cent will be given to users who pay toll at Toll Plazas on National Highways using RFID card and Fast Tags.
  • Government will expand digital payment infrastructure in rural areas through NABARD that will extend financial support to eligible banks to install two Point of Sale (PoS) machine in each of the 1 Lakh villages with population of less than 10,000.
  • The Government through NABARD will also support Rural Regional Banks and Cooperative Banks to issue Rupay Kisan Cards to over 4 crore 32 lakh Kisan Credit Card holders to enable them to make digital transactions at POS machines and ATMs.
  • Public sector banks are advised that merchant should not be required to pay more than 100 rupees per month as monthly rental for PoS terminals, Micro ATMs and mobile POS.
  • Public dealings with (central) government departments and PSUs through digital mode will be free of transaction fees and Merchant Discount Rate (MDR) charges.
  • Credit and Debit card transactions worth up to Rs 2,000 will be exempt from any service tax.