Professional Documents
Culture Documents
eli
msSpeci
al
CURRENT
AFFAIRS
(
Sep
16-Feb
17)
Modul
e-4
ECONOMY
Index
Sr. no. Topic Page no.
7. Blockchain technology 10
10. CBDT to use data from Project Insight to widen tax base 12
16. Demonetization 14
28. E-laabh 19
29. e-NAM 20
31. E-Nivaran 21
112. Penny stocks may come under long-term capital gains tax 63
net
113. NK Singh panel submits its report 63
100% FDI in White Label ATM NITI Aayog launches the first ever
operations agricultural marketing & farm friendly
reforms Index.
Government has allowed Foreign
Investment upto 100% in White Label ATM About the Index-
(WLA) operations, subject to the following The index ranks states based on
conditions:- the initiatives taken by them in
Any non-bank entity intending to implementing farm sector reforms.
set up WLA should have minimum To address the issue of low levels of
net worth of Rs. 100 crore as per productivity, growth and incomes
latest financial years audited ailing the farm sector, NITI Aayog
balance sheet, which is to be has identified three key areas for
maintained at all times. reform:
In case the entity is also engaged in o Agricultural market reforms
any other 18 Non-Banking Finance o Land lease reforms
Company (NBFC) activities, then the o Reforms related to forestry on
foreign investment in the company private land felling and transit
setting up WLA, shall also comply of trees.
Agricultural marketing reforms share this cost with the government
include implementation of seven under the amended PLA.
provisions proposed under model A 2009 Report of a Committee on
APMC Act, joining eNAM initiative, the Cost Competitiveness of India
special treatment to fruits and Tea Industry had pointed out that
vegetables for marketing and level of the PLA had added to production
taxes in mandis. costs and lowered competitiveness.
The second area of reforms
included in the index is relaxation in
restrictions related to lease in and Asia-Pacific Trade and Investment
lease out agricultural land and
change in law to recognise tenant
Report
and safeguard land owners
liberalisation. The United Nations Economic and Social
Commission for Asia and the Pacific
The third area included in the
(ESCAP) recently released Asia-Pacific
index represent freedom given to
Trade and Investment Report 2016 (APTIR).
farmers for felling and transit of
trees grown on private land.
Additional information-
The state of Maharashtra achieved
The Asia-Pacific Trade and
first rank followed by
Investment Report (APTIR) is an
Gujarat.Puducherry was ranked
annual publication prepared by
last.
the Trade, Investment and
Innovation Division of the United
Nations Economic and Social
Amendments to Plantation Labour Act Commission for Asia and the
Pacific.
The Centre is planning to amend the It provides information on and
Plantation Labour Act (PLA), 1951 in a independent analyses of trends and
major way to exclude in kind components developments in: (a) intra- and
being regarded as wages. inter-regional trade in goods and
services; (b) foreign direct
Additional information- investment; (c) trade facilitation
Under the PLA 1951, plantation measures; (d) trade policy measures;
workers get various benefits either and (e) preferential trade policies
subsidised or free. These include and agreements.
rations, housing, education, The report said that Asia-Pacific
firewood and medical facilities. trade flows were wavering amid
A large section of the mainstream sluggish global economic and trade
tea industry bears the cost of growth, downward movement of
providing these services. The world commodity prices and an
industry does not pay statutory uncertain policy environment.
minimum wages, saying that the It added that international and
monetized value of the facilities intra-regional trade costs of India
provided compensates for this. remained higher compared with the
The proposed amendment is now trade costs of best-performing
seeking to exclude from the economies in Asia and the Pacific.
definition of wage the in-kind
benefits that were being hitherto About ESCAP-
included. United Nations Economic and Social
The Central and State governments Commission for Asia and the Pacific
rolled out a clutch of social sector is one of the five regional
schemes which can be implemented commissions of the United Nations
in the tea estates. The Centre now Economic and Social Council.
wants the plantation industry to
It was established in 1947to It also recommended abolition of
encourage economic cooperation merchant discount rate (MDR) to
among its member states. make digital payments cheaper than
ESCAP's regional focus is managing cash.
globalization through programs in The committee also asked the
environmentally sustainable Centre to promote Aadhaar Enabled
development, trade, and human Payment System (AEPS) by
rights. incentivising and not charging MDR.
Its headquartered in Bangkok (Thailand). The panel also suggested that there
should be no retrospective taxation
on merchants doing digital
transactions.
Banking Cash Transaction Tax
The other recommendations include
tax incentives for micro ATMs,
The committee of chief ministers on digital biometric sensors etc. and tax
payments recommended the on Tuesday refund for consumers using digital
government to levy banking cash payment up to a certain proportion
transaction Tax (BCTT) on transactions of of annual income.
Rs 50,000 and above to curb use of cash
for large transactions.
Blockchain technology
About BCTT-
BCCT was introduced with effect The Reserve Bank of India has
from June 1, 2005, to track successfully tested blockchain
unaccounted money and trace its technology for trade application. The
source and destination. It was evaluation was carried out in partnership
withdrawn with effect from April 1, with MonetaGo, domestic banks and other
2009. financial institutions.
BCCT was a tax of 0.1% on cash
withdrawals of more than Rs. Additional information-
50,000 (for individuals) and Rs. One The RBI's arm, Institute for
lakh for others, in a single day, from Development and Research in
non-savings bank accounts Banking Technology (IDRBT),
maintained with any scheduled conducted the project using the
bank. technology behind Bitcoin in a trade
This tax was applicable only on cash application with banks and the
and not on payment by cheques. National Payments Corporation of
BCCT is different from Banking India (NPCI) participating too.
Transaction Tax (BTT) which was Following the project, IDRBT last
suggested by the Pune based think week released a white paper titled,
tank, to replace all existing taxes. It 'Applications of blockchain
included charging 2-4% of technology to banking and
transaction tax on every form of financial sector in India'.
transaction including electronic and Blockchain is a public ledger that
cheque payments. enables historical recording of all
transactions that has occurred in a
Recommendations of Chief Ministers network in a way that it cannot be
committee on Digital Payments- altered.
The committee recommended giving The system works like a
tax incentives and subsidies to shared Google spreadsheet, but
boost digital transactions, but also much more potent and secure. So,
levy a banking cash transaction tax each transaction gets recorded on
on cash transactions of Rs 50,000 the spreadsheet for all in the system
and above. to see, but one can only make
changes once all parties agree to country, envisaged to boost the
augmenting it. local manufacturing of hi-end
The technology can help banks products at a significantly lower
automate inter-organisation cost, resulting in affordable
processes, significantly improve healthcare delivery.
transparency and reset existing It would contribute to the
operational benchmarks. development of medical devices and
While blockchain eliminates the technology sector and allied
need for a central regulator in disciplines in the countrybesides
case of banking, it also allows smart generating employment.
contracts to be enforced so that
banks can keep track of shipments CBDT signs Advance Pricing
and disburse loans accordingly. Agreements
In India, ICICI bank and Yes Bank
have already executed pilot projects Central Board of Direct Taxes has entered
to validate these propositions. into multiple Advance Pricing
Agreements over the course of the entire
Bit-Coin- month.
Bitcoin is a cryptocurrency and
an electronic payment system. Additional information-
Bitcoin is open-source; its design is The total number of APAs entered
public, nobody owns or controls into by the CBDT has
Bitcoin. reached 140. This includes 10
The system is peer-to-peer, and Bilateral APAs and 130 Unilateral
transactions take place between APAs.
users directly, without an The APAs pertain to various sectors
intermediary. of the economy like Telecom,
These transactions are verified by Pharmaceutical, Banking & Finance,
network nodes and recorded in a Steel, Retail, Information
public distributed ledger called the Technology, etc.
blockchain, which uses bitcoin as A transfer price is the price at which
its unit of account. divisions of a company transact with
Since the system works without a central each other. Transfer prices are used
repository or single administrator, bitcoin is when individual entities of a larger
called the first decentralized digital multi-entity firm are treated and
currency. measured as separately run entities.
Salient features of the Draft policy- Draft National Steel Policy (NSP), 2017
The policy strives for a tenfold
increase in share of the global The Ministry of Steel has prepared the draft
software product market by 2025to policy named The National Steel Policy
estimated $148 billion. (NSP), 2017 to ensure that the steel sector
It aims to create 3.5 million direct follows a sustainable path of development.
and indirect jobs by 2025.
The draft policy aims to create About the Draft-
conducive environment for creation The draft has proposed setting up
of 10,000 technology start-ups to greenfield steel plants along Indias
develop software products that are coastline, under the aegis of
globally competitive. Sagarmala project, to tap cheap
The government aims to leverage the imported raw materials such as
start-up India initiative under the coking coal and export the output in
proposed policy to ensure ease of a more cost-effective manner.
business. The policy envisages to more than
According to the draft policy, the double Indias domestic steel
government has promised that it will production capacity to 300 million
create an enabling framework for tonnes by 2030-31.
inclusion of Indian software product It anticipates a requirement of 10
in government procurement. lakh crore of fresh investments to
The concerns of the software meet that goal and expects at least
industry would be addressed 11 lakh new jobs being created in
through an Inter-Ministerial the process.
Coordination Group. It focuses on impediments like high
The draft policy has provision to input costs, availability of raw
create a specialised talent pool of materials, import dependency and
1,000,000 professionals by 2025 financial stress plaguing the sector.
conversant with nuances of software To cut down reliance on expensive
product development that can imports of coking coal, the policy
support the growth of software has mooted gas-based steel plants
product industry. and technologies such as electric
The draft suggests allocating a furnaces to bring down the use of
defined portion of the Rs 100,000 coking coal in blast furnaces.
crore ElectronicDevelopment According to the policy,public sector
Fund, with a support of Rs 100 firms in the steel sector should aim
crore by Ministry of Electronics and for economies of scale and will be
Information Technology (MeitY), encouraged to divest their non-core
under the PPP (public private assets through mergers and
partnership) model, for funding restructuring.
software startups.
Additionally, it intends to set up an
Innovation Fund by the Ministry of
Finance, promoted by Indian
Draft policy to build suburban tracks commercial disputes and paper-less
courts.
For calculating Indias score in Ease
Indian railways have come up with a draft of doing Business rankings on a
policy to build suburban tracks. global level, World Bank considers
only two Indian cities- Mumbai and
About the Draft- Delhi.
The policy aims to ease congestion.
Suburban railway projects are Ease of doing business rankings
proposed to be implemented and
operated through a special purpose India was ranked 130th in Ease of doing
vehicle (SPV) with equal equity business rankings.
participation from the respective
state governments and the Railways. Ease of Doing Business-
SPVs would be empowered to The ease of doing business index is
propose a surcharge on passengers an index created by the World Bank
for recovering operating losses and Group.
capital costs of such projects. Higher rankings (a low numerical
The policy plans to build exclusive value) indicate better, usually
tracks for suburban services. simpler, regulations for businesses
According to the draft guidelines, and stronger protections of property
state governments would set up a rights.
dedicated urban transport fund A nation's ranking on the index is
through levy of dedicated taxes, based on the average of 10
levies, betterment tax, impact fee subindices:
etc. o Starting a business
The state governments will be o Dealing with construction
required to conduct feasibility permits
studies of the project at their own o Getting electricity
cost which will be examined by o Registering property
zonal Railways. o Getting credit
o Protecting investors
Ease of doing business rankings among o Paying taxes
states o Trading across borders
o Enforcing contracts
Andhra Pradesh and Telangana jointly o Resolving insolvency
topped the Ease of Doing Business New Zealand ranked 1st in 2017.
Reforms Ranking 2015-16, followed by
Gujarat. Ease of living index
About IBMS-
IBMS is being developed to create an
Indian Enterprise Development
inventory of all bridges in the Service
country and rate their structural
condition so that timely repair and The Union Cabinet has given its approval
rehabilitation work can be carried for the formation of a new service in the
out based on the criticality of the name of Indian Enterprise Development
structure. Service (IEDS).
During inventory creation each
bridge is assigned a unique Additional information-
identification number or National The cadre would be created in the
Identity Number based on the state, Office of Development Commissioner
RTO zone and whether it is situated (MSME), Ministry of Micro, Small
on an National Highway, State and Medium Enterprises (MSME).
Highway or is a district road. The service has been created by
Then the precise location of the absorbing 11 trades, recruitment to
bridge in terms of latitude-longitude which had been done differently
is collected through GPS and based following different rules.
on this, the bridge is assigned The creation of the new cadre and
a Bridge Location Number. change in structure will not only
Thereafter, engineering strengthen the organization but will
characteristics like the design, also help to achieve the vision of
materials, type of bridge, its age, Startup India, Stand-up India
loading, traffic lane etc are collected and Make in India.
and are used to assign a Bridge The Indian Enterprise Development
Classification Number to the Services, to start with, will have a
structure. cadre strength of 617 officers.
These are then used to do a These officers will man 72 field
structural rating of the structure on offices of the Development
a scale of 0 to 9, and each bridge is Commissioner and the headquarters
assigned a Structural Rating in Delhi.
Number.
In addition to the structural rating,
the bridges are also being
assigned Socio-Economic Bridge Intellectual Property Rights (IPRs)
Rating Number which will decide the
importance of the structure in About IPRs-
relation to its contribution to daily Intellectual property rights are the
socio-economic activity of the area rights given to persons over the
in its vicinity. creations of their minds. They
Based on this inventory IBMS will usually give the creator an exclusive
analyse data and identify bridges right over the use of his/her
that need attention. Further creation for a certain period of time.
inspection will be carried out Intellectual property is divided into
wherever required to improve the two categories:
operational availability of the
o Industrial Property includes regulation by national
patents for inventions, governments of many forms of
trademarks, industrial designs intellectual property (IP) as
and geographical indications. applied to nationals of other WTO
o Copyright covers literary works member nations.
(such as novels, poems and o The three main features of the
plays), films, music, artistic Agreement are: Standards,
works (e.g., drawings, paintings, Enforcement and Dispute
photographs and sculptures) Settlement.
and architectural design. Rights o The obligations under the
related to copyright include Agreement will apply equally to
those of performing artists in all Member countries, but
their performances, producers of developing countries will have a
phonograms in their recordings, longer period to phase them in.
and broadcasters in their radio o The TRIPS Agreement is a
and television programs. minimum standards agreement,
A patent is an exclusive right which allows Members to provide
granted for an invention a product more extensive protection of
or process that provides a new way intellectual property if they so
of doing something, or that offers a wish.
new technical solution to a problem. o Every member has to enact laws
A patent provides patent owners to enforce the provisions of
with protection for their inventions. Agreement.
Protection is granted for a limited
period, generally 20 years. The Patents Act, 1970-
A trademark is a distinctive sign o It is the legislation that governs
that identifies certain goods or patents in India. The Patents Act
services produced or provided by an has been repeatedly amended:
individual or a company. 1999, 2002, 2005 and 2006 to
An industrial design right is an make it TRIPS-compliant.
intellectual property right that o Section 3 of the Patents Act lists
protects the visual design of objects inventions that are not
that are not purely utilitarian. An patentable.
industrial design consists of the o Section 3(d) of the Indian Patent
creation of a shape, configuration or Act restricts grant of patent for
composition of pattern or color, or "incremental innovations" in
combination of pattern and color in many drugs unless it provides
three-dimensional form containing significant therapeutic
aesthetic value. advantages to existing molecules.
A geographical indication is a sign Evergreening
used on goods that have a specific o Evergreening is a term commonly
geographical origin and possess used in pharma patent parlance.
qualities or a reputation due to that It essentially means filing patents
place of origin. using a strategy, which can
increase the patent protection
Prelims related facts- (exclusivity) beyond the normal
TRIPS- term (20 years).
o The Agreement on Trade-Related o This is commonly done by aslight
Aspects of Intellectual Property modification of the former
Rights (TRIPS) is an international patents description.
legal agreement between all the Compulsory Licensing-
member nations of the World o Compulsory licensing is when a
Trade Organization (WTO). It sets government allows someone else
down minimum standards for the to produce the patented product
or process without the consent of
the patent owner. It is one of the and capacities for teaching,
flexibilities on patent protection training, research and skill
included in the WTOs agreement building in IPRs.
on intellectual property the
TRIPS (Trade-Related Aspects of
Intellectual Property Rights) Jharkhand becomes the first state to
Agreement.
o In essence, under a compulsory implement DBT for kerosene
license, an individual or company
seeking to use another's
intellectual property can do so Jharkhand became the first state to
without seeking the rights implement DBT for kerosene. The project
holder's consent, and pays the was initiated in four selected districts of the
rights holder a set fee for the state.
license.
o The TRIPS Agreement does list a Additional information-
number of conditions for issuing Where the scheme for direct transfer
compulsory licences, in Article of subsidy is introduced, the
31. consumer will pay the non-
subsidized price of kerosene at the
National IPR Policy 2016- time of purchase. Subsequently, the
o The National IPR Policy is a vision amount of subsidy will be directly
document that aims to create and transferred to the bank account of
exploit synergies between all the beneficiary.
forms of intellectual property (IP), To avoid any inconvenience to the
concerned statutes and agencies. beneficiary during the initial
o It sets in place an institutional purchase through payment of non-
mechanism for implementation, subsidized price, an initial amount
monitoring and review. of subsidy shall be credited to all
o It sets in place an institutional eligible beneficiaries.
mechanism for implementation, As a part of this scheme,
monitoring and review. implementing States will be given
o The Policy lays down the fiscal incentives equivalent to 75 %
following seven objectives: of subsidy saved in the first two
To create public awareness years, 50 % of subsidy saved in
about the economic, social third year and 25 % of subsidy
and cultural benefits of IPRs saved in 4th year.
among all sections of society.
To stimulate the generation of About Direct Benefit Transfer (DBT)-
IPRs. Direct benefit Transfer scheme was
To have strong and effective initiated in 2013.
IPR laws, which balance the The primary aim of this Direct
interests of rights owners with Benefit Transfer program is to bring
larger public interest. transparency and terminate
To modernize and strengthen pilferage from distribution of funds
service-oriented IPR sponsored by Central Government of
administration. India.
Get value for IPRs through This program aims to transfer
commercialization. subsidies directly to the people
To strengthen the through their bank accounts.
enforcement and adjudicatory The beneficiaries would purchase
mechanisms for combating the commodity at the market price
IPR infringements. and the subsidy would be directly
To strengthen and expand transferred to their reported bank
human resources, institutions accounts.
The DBT program has been Long term Irrigation Fund
implemented for many schemes like
scholarships, MGNREGA and LPG. Ministry of Water Resources, River
Development and Ganga Rejuvenation and
NABARD signed an agreement to
Logistics Efficiency Enhancement operationalise the Long Term Irrigation
Program Fund (LTIF).
With Kerala and Tamil Nadu rolling out the The National Highways Authority of India
National Food Security Act (NFSA), now the (NHAI) is preparing to start the process of
Act has been implemented in all the States monetizing toll-based operational road
and Union Territories. assets under the toll, operate and transfer
(TOT) model, aimed to bring new
National Food Security Act (NFSA)- investments to the highways sector.
The National Food Security Act,
2013 is an Act of Parliament which Additional information-
aims to provide subsidized food This will be Indias first exercise in
grains to approximately two thirds auctioning NHAIs operational
of India's population. projects.
Up to 75% of the rural population Under the TOT model, stretches of
and 50% of the urban population national highway already
will be covered under this Act. constructed by the NHAI or a
Under the NFSA, eligible households concessionaire will be bid out to the
come under two well-defined private sector for a fixed time period
categories: priority households, (concession period).
entitled to 5 kg of foodgrains per The NHAI can securitize the toll
person per month at nominal prices, receivables by collecting upfront the
and Antyodaya households (the concession fee.
poorest), entitled to 35 kg per The private party will operate and
household per month. collect toll on the stretch during the
The prices for priority households concession period. It would also be
were: Rice at 3/kg, wheat at 2/kg responsible for maintaining the
and Coarse grains (millet) at 1/kg. roads during this period.
Identification of eligible households The model takes away two key risks
is to be done by States/UTs. in the road sectordelays or cost
Eldest woman of the household of overruns and initial traffic
age 18 years or above to be the head discoveryas the assets that will be
of the household for the purpose of offered under this (model) will be
issuing of ration cards. operational with some tolling
Pregnant women and lactating history.
mothers and children in the age NHAI can lease up to 75 national
group of 6 months to 14 years will highway projects which are fetching
be entitled to meals as per tolls for at least two years to various
prescribed nutritional norms under entities on the TOT model.
Integrated Child Development
Services (ICDS) and Mid-Day Meal
(MDM) schemes. Higher nutritional
Non-Performing Assets (NPA) and Bad
norms have been prescribed for
malnourished children upto 6 years Banks
of age.
Pregnant women and lactating To reduce the quantum of bad loans in
mothers will also be entitled to sectors like steel, power and shipping, the
receive maternity benefit of not less finance ministry has asked successful PSUs
than Rs. 6,000. such as NTPC and Steel Authority of India
There is also a provision for food to examine taking over some stressed
security allowance to entitled projects in their respective sectors, in
beneficiaries in case of non-supply coordination with the lender banks.
of entitled foodgrains or meals. Rising NPAs in recent years have negatively
affected banks' balance sheets, hampering
their ability to lend. There have been o Written off assets are those the
suggestions to deal with this problem by bank or lender doesnt count the
creating Bad Banks. money borrower owes to it.
To solve the problem of bad loans in
Concept of Bad Banks- India, the Reserve Bank of India
A bad bank is a corporate structure (RBI) has introduced multiple
to isolate high risk assets held by schemes over the last few years:
a bank or a financial organisation. Flexible Refinancing of
The proposed bad bank would be a Infrastructure (5/25 scheme), Asset
centralised agency that would take Reconstruction (ARC), Strategic
over the largest and most difficult Debt Restructuring (SDR), Asset
stressed loans from public sector Quality Review (AQR) and
banks in order to help clean their Sustainable Structuring of Stressed
balance sheets. Assets (S4A).
The approach of a Bad Bank allows
good banks to focus on their core Flexible Refinancing of Infrastructure
business of lending while the bad (5:25 scheme)
bank can specialize in maximizing The 5:25 scheme allows banks to
value from the high risk assets. extend long-term loans of 20-
The first bank to use the bad bank 25 years to match the cash flow of
strategy was Mellon Bank, which projects, while refinancing them
created a bad bank entity in 1988. every 5 or 7 years.
Until now, banks were typically not
Prelims related facts- lending beyond 10-12 years. As a
India has been trying to solve its result, cash flows of infrastructure
Twin Balance Sheet (TBS) problem firms were stretched as they tried to
overleveraged companies and meet shorter repayment schedules.
bad-loan-encumbered banks, which Infrastructure projects give positive
is a legacy of the boom years in mid- cash flows after a long duration
2000s. (typically after the start of
Stressed assets = NPAs + Operations). This scheme helps in
Restructured loans +Written Off making long term infrastructure
Assets projects viable by matching cash
o A nonperforming asset (NPA) flows with the repayment schedule.
refers to a classification for loans
on the books of financial Asset Reconstruction Company
institutions that are in default or Asset Reconstruction Company
are in arrears on (Securitization Company /
scheduled payments of principal Reconstruction Company) is a
or interest. In most cases, debt company registered under Section 3
is classified as nonperforming of the Securitisation and
when loan payments have not Reconstruction of Financial Assets
been made for a period of 90 and Enforcement of Security
days. Interest (SRFAESI) Act, 2002. It is
o Restructured asset or loan are regulated by Reserve Bank of India
that assets which got an as anNon Banking Financial
extended repayment period, Company.
reduced interest rate, converting ARC performs the following
a part of the loan into equity, functions:
providing additional financing, o Acquisition of financial assets.
or some combination of these o Change or takeover of
measures. A restructured loan Management or Sale or Lease of
also indicates bad asset quality Business of the Borrower
of banks. o Rescheduling of Debts
o Enforcement of Security Interest Scheme, the total loans by all
o Settlement of dues payable by institutional lenders in the
the borrower account should exceed Rs 500
ARCIL is Indias first Asset crore.
Reconstruction Company o Moratorium cannot be offered by
the banks on the sustainable
Strategic Debt Restructuring (SDR)- part of the debt.
Under SDR, banks who have given o Banks cannot extend the
loans to a corporate borrower gets repayment schedule of the debt
the right to convert the full or part or reduce the interest rate on the
of their loans into equity shares in debt.
the loan taken company. o While converting the debts into
The SDR an initiative can be taken equity or equity related
by the group of banks or Joint instruments, the banks must
Lender Forum (JLF) that have given follow the valuation criteria laid
loans to the particular defaulted down by RBI.
entity. The JLF is a committee
comprised of the entire bankers who
have given loans to a potentially Payment of Wages (Amendment) Bill,
stressed or stressed borrower.The
2016
Scheme will not be applicable to a
single lender.
The Payment of Wages (Amendment) Bill,
The basic purpose of SDR is to
2016 was introduced in Lok Sabha on
ensure more stake of promoters in
December 15, 2016 by the Minister of
reviving stressed accounts and
Labour and Employment.
providing banks with enhanced
capabilities in the management of
About the Bill-
the company.
The Bill amends the Payment of
Wages Act, 1936.
Sustainable Structuring of Stressed
Under the 1936 Act, all wages must
Assets (S4A)-
be paid either in coin or currency
The S4A Scheme aims at deep
notes, or both. However, the
financial restructuring of big debted
employer may pay his employees
projects.
wages either by cheque or by
Under this scheme, the lenders
crediting it into his bank account,
(Banks) are required to convert the
after obtaining his written
lenders debt into two- sustainable
authorization.
debt and unsustainable debt.
The Bill amends the 1936 Act to
Sustainable debt is that part of the
permit the employer to pay an
debt that can be repaid by the
employees wages: (i) in coin or
borrower using his current cash
currency notes; or (ii) by cheque; or
flows.
(iii) by crediting them into his bank
The banks then convert the account. The Bill removes the
unsustainable debt into equity. requirement of obtaining written
The scheme makes financial authorization for payment of wages
restructuring of large projects at the by cheque or through a bank
same time helping the lender's account.
ability to deal with such stressed However, the relevant central or
assets. state government may specify
However, there are certain certain industrial or other
conditions that need to be satisfied establishments where the employer
for the application of this scheme- should pay his employees only by: (i)
o For an account to be eligible for cheque; or (ii) crediting the wages in
restructuring under the S4A
his bank account. population size have been provided
all-weather road connectivity.
Pradhan Mantri Gram Sadak Yojana However, it must be noted that
(PMGSY) Upgradation is not central to the
Programme and cannot exceed 20%
of the States allocation as long as
eligible Unconnected Habitations in
The governments flagship rural road
the State still exist.
connectivity programme, PradhanMantri
Gram Sadak Yojana (PMGSY), is expected The Sub-Group of Chief Ministers
to achieve its annual target of constructing on Rationalization of Centrally
roads this year. Sponsored Schemes has
recommended in its report that fund
About PMGSY- sharing pattern of PMGSY should be
in the ratio of 60:40 between the
The PradhanMantri Gram Sadak
Centre and States for all States
Yojana (PMGSY) was launched in
except for 8 North Eastern and 3
2000 by Govt. of India to provide
connectivity to unconnected Himalayan States for which it will be
90:10.
Habitations as part of a poverty
reduction strategy.
The PMGSY is under the authority
of the Ministry of Rural Project Saksham
Development.
It is a 100% Centrally Sponsored The Cabinet Committee on Economic
Scheme. 50% of the Cess on High Affairs has approved Project Saksham, a
Speed Diesel (HSD) is earmarked for New Indirect Tax Network (Systems
this Program. Integration) of the Central Board of Excise
The primary objective of the PMGSY and Customs (CBEC).
is to provide Connectivity, by way of
an All-weather Road to the eligible About the project-
unconnected Habitations in the It is an indirect tax network that will
rural areas, in such a way that all help in the implementation of Goods
Unconnected Habitations with a and Services Tax (GST).
population of 1000 persons and It will help in:
above are covered in three years o Implementation of Goods and
(2000-2003) and all Unconnected Services Tax (GST)
Habitations with a population of 500 o Extension of the Indian Customs
persons and above by the end of the Single Window Interface for
Tenth Plan Period (2007). Facilitating Trade (SWIFT)
In respect of the Hill States (North- o Other taxpayer-friendly initiatives
East, Sikkim, Himachal Pradesh, under Digital India and Ease of
Jammu & Kashmir, Uttaranchal) Doing Business of Central Board
and the Desert Areas (as identified of Excise and Customs.
in the Desert Development CBES will upgrade its IT systems
Programme) as well as the Tribal (under the project).
(Schedule V) areas, the objective The IT systems will eventually be
would be to connect Habitations integrated with the Goods &
with a population of 250 persons Services Tax Network (GSTN) for
and above. payment and returns, registrations,
The PMGSY will permit the GSTN Data transfer to CBEC etc.
Upgradation (to prescribed It will be developed with the help of
standards) of the existing roads in Wipro.
those Districts where all the eligible
Habitations of the designated
Public Sector Asset Rehabilitation Prelims related facts-
Agency (PARA) India has been trying to solve its
Twin Balance Sheet (TBS) problem
overleveraged companies and
Economic Survey 2016-17 has suggested
bad-loan-encumbered banks, which
setting up a centralised Public Sector Asset
is a legacy of the boom years in mid-
Rehabilitation Agency (PARA) that could
2000s.
take charge of the largest, most difficult
cases, and make politically tough decisions Stressed assets = NPAs +
to reduce debt. Restructured loans +Written Off
Assets
Additional information- o A nonperforming asset (NPA)
refers to a classification for loans
The Survey reaches to the
on the books of financial
conclusion that a PARA may be
institutions that are in default or
necessary because:
are in arrears on
o Public discussion of the bad loan
scheduled payments of principal
problem has focused on bank
capital. But far more problematic or interest. In most cases, debt is
classified as nonperforming
is finding a way to resolve the bad
when loan payments have not
debts.
been made for a period of 90
o Some debt repayment problems
days.
have been caused by diversion of
o Restructured asset or loan are
funds. But the vast majority has
that assets which got an
been caused by unexpected
extended repayment period,
changes in the economic
reduced interest rate, converting
environment after the Global
a part of the loan into equity,
Financial Crisis.
providing additional financing, or
o Restoring public sector banks to
financial health will require large some combination of these
measures. A restructured loan
write-downs.
also indicates bad asset quality of
o Among other issues, they face
banks.
severe coordination problems,
o Written off assets are those the
since large debtors have many
bank or lender doesnt count the
creditors, with different interests.
money borrower owes to it.
And they find it hard financially
and politicallyto grant them To solve the problem of bad loans in
sizeable debt reductions, or to India, the Reserve Bank of India
take them over and sell them. (RBI) has introduced multiple
o It increases the costs to the schemes over the last few years:
government since bad debts of Flexible Refinancing of
the state banks keep rising, and Infrastructure (5/25 scheme), Asset
increases the costs to the Reconstruction (ARC), Strategic
economy, by hindering credit, Debt Restructuring (SDR), Asset
investment, and therefore growth. Quality Review (AQR) and
o Since, private run Asset Sustainable Structuring of Stressed
Reconstruction Companies Assets (S4A).
(ARCs) have not been successful
either in resolving bad debts,
though international experience Public Debt Management cell
shows that a professionally run
central agency with the The Finance Ministry has set up a Public
government backing could Debt Management Cell (PDMC) with a view
overcome the coordination and
to streamline government borrowings and
political issues
better cash management with the overall Permanent Residency Status to
objective of deepening bond markets. Foreign Investors
Additional information-
The Union Cabinet has approved the
PDMC will be upgraded to Public
Debt Management Agency in few scheme for grant of Permanent Residency
years. Status (PRS) to foreign investors subject to
This arrangement will allow the relevant conditions as specified in the
separation of debt management FDI Policy.
functions from RBI to PDMA in a
gradual and seamless manner. About the scheme-
PDMC will have only advisory The scheme will be applicable only
functions to avoid any conflict with
to foreign investors fulfilling the
the statutory functions of RBI.
PDMC has been tasked to plan prescribed eligibility conditions,
government borrowings, including his/her spouse and dependents.
market borrowings and other In order to avail this scheme, the
borrowings, like Sovereign Gold foreign investor will have to invest a
Bond issuance. minimum of Rs. 10 crores to be
PDMC has also been asked to brought within 18 months or Rs.25
develop an Integrated Debt
crores to be brought within 36
Database System (IDMS) as a
centralised data base for all months.
liabilities of government, on a near Further, the foreign investment
real time basis. should result in generating
employment to at least 20 resident
Public Debt Management Agency- Indians every financial year.
General Budget 2015-16 proposed
Permanent Residency Status will be
setting up Public Debt Management
Agency (PDMA) as an independent granted for a period of 10 years
agency to bring both Indias external initially with multiple entry facility,
borrowings and domestic debt under which can be renewed for another
one roof. 10 years.
The Public Debt Management PRS will serve as a multiple entry
Agency (PDMA) was proposed to be
visa without any stay stipulation
set up as an autonomous agency
and PRS holders will be exempted
that will act as an investment
banker to the government and will from the registration requirements.
raise capital through bonds for the PRS holders will be allowed to
government. purchase one residential property
At present, RBI through the Internal for dwelling purpose.
Debt Management Department The spouse/ dependents of the PRS
(IDMD) manages the public debt of
holder will be allowed to take up
the central and state governments
whereas the external debt (and long employment in private sector.
term debt management) is managed
by the Union government directly. NPPA caps coronary stent prices