Daily Current Affairs : 9/2/2019

Daily Current Affairs for UPSC CSE

Topics Covered

1. National Security Act
2. Divisional Status
3. Prompt Corrective Action
4. Sixth Schedule Areas
5. Generalized System of Preference
6. Ease of Doing Business’ (EDB), ‘Human Development’ (HDI) and ‘Environmental Performance’ (EPI).
7. Policy Stance of RBI
8. Medecins Sans Frontiers / Doctor without Borders

1 . National Security Act

Context : The authorities in Agar Malwa district of Madhya Pradesh on Friday booked two men under the draconian National Security Act (NSA) for allegedly transporting cattle illegally and disrupting public peace, a police officer said.

About National Security Act

• The National Security Act was promulgated on September 23, 1980, during the Indira Gandhi government and its purpose is “to provide for preventive detention in certain cases and for matters connected therewith”. It applies to the entirety of India, except Jammu and Kashmir. As per the National Security Act, the grounds for preventive detention of a person include:

1. acting in any manner prejudicial to the defence of India, the relations of India with foreign powers, or the security of India.
2. regulating the continued presence of any foreigner in India or with a view to making arrangements for his expulsion from India.
3. .preventing them from acting in any manner prejudicial to the security of the State or from acting in any manner prejudicial to the maintenance of public order or from acting in any manner prejudicial to the maintenance of supplies and services essential to the community it is necessary so to do.

• Under the National Security Act, an individual can be detained without a charge for up to 12 months; the state government needs to be intimated that a person has been detained under the NSA.
• A person detained under the National Security Act can be held for 10 days without being told the charges against them. The detained person can appeal before a high court advisory board but they are not allowed a lawyer during the trial.

2 . Divisional Status

Context : Jammu and Kashmir Governor Satya Pal Malik on Friday granted Ladakh a divisional status, thus creating three administrative units of Jammu, Kashmir and Ladakh in the State.

About Divisional Status

• The J&K government has approved the creation of a separate administrative and revenue division for Ladakh. It will comprise Leh and Kargil districts
• Earlier, Ladakh was a part of the Kashmir division
• Ladakh will now get its own Divisional Commissioner and Inspector General of Police

Why a new division is created

• During the winter months, the entire Ladakh region remains cut-off from the rest of the country for almost six months. The remoteness and inaccessibility of the area makes it eligible for establishing a separate division,” said the government order

3 . Prompt Corrective Action

Context : After Reserve Bank of India (RBI) lifted restrictions under prompt corrective action (PCA) on three public sector banks last week, Finance Minister Piyush Goyal said the government will try to help lift the restrictions on other public sector banks too.

What is Prompt Corrective Action

• To ensure that banks don’t go bust, RBI has put in place some trigger points to assess, monitor, control and take corrective actions on banks which are weak and troubled. The process or mechanism under which such actions are taken is known as Prompt Corrective Action, or PCA.

What does the RBI stipulate

• RBI has set trigger points on the basis of CRAR (a metric to measure balance sheet strength), NPA and ROA. Based on each trigger point, the banks have to follow a mandatory action plan. Apart from this, the RBI has discretionary action plans too.
• The rationale for classifying the rule-based action points into “mandatory“ and “discretionary“ is that some of the actions are essential to restore the financial health of banks while other actions will be taken at the discretion of RBI depending upon the profile of each bank. 
• Breaching net NPA ratio of 6% is one of the conditions that trigger restrictions.
  

.What will a bank do if PCA is triggered

• Banks are not allowed to re new or access costly deposits or take steps to increase their fee-based income.
• Banks will also have to launch a special drive to reduce the stock of NPAs and contain generation of fresh NPAs.
• They will also not be allowed to enter into new lines of business. RBI will also impose restrictions on the bank on borrowings from interbank market. 

4 . Sixth Schedule Areas

Context : The government quietly introduced a Constitution Amendment Bill in Rajya Sabha on Wednesday to increase the financial and executive powers of the 10 Autonomous Councils in the Sixth Schedule areas of the northeastern region. 

• Covered under 24/1/2019 – Daily Current Affairs

5 . Generalized System of Preference

Context : India could lose a vital U.S. trade concession, under which it enjoys zero tariffs on $5.6 billion of exports to the United States, amid a widening dispute over its trade and investment policies

What is Generalized System of Preferences

• Generalized System of Preferences (GSP) is a preferential tariff system extended by developed countries (also known as preference giving countries or donor countries) to developing countries (also known as preference receiving countries or beneficiary countries).
• It involves reduced MFN Tariffs or duty-free entry of eligible products exported by beneficiary countries to the markets of donor countries

GSP of USA

• The Generalized System of Preferences (GSP) is a U.S. trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories. GSP was instituted on January 1, 1976, by the Trade Act of 1974.
• The GSP program has effective dates which are specified in relevant legislation, thereby requiring periodical reauthorization in order to remain in effect. 

Benefits

• Indian exporters benefit indirectly – through the benefit that accrues to the importer by way of reduced tariff or duty free entry of eligible Indian products
• Reduction or removal of import duty on an Indian product makes it more competitive to the importer – other things (e.g. quality) being equal.
• This tariff preference helps new exporters to penetrate a market and established exporters to increase their market share and to improve upon the profit margins, in the donor country

Reasons for withdrawal of GSP

• The trigger for the latest downturn in trade ties was India’s new rules on e-commerce that restrict the way Amazon.com Inc. and Walmart-backed Flipkart do business in a rapidly growing online market set to touch $200 billion by 2027.
• Forcing global card payments companies such as Mastercard and Visa to move their data to India
• Imposition of higher tariffs on electronic products and smartphones

6 . Ease of Doing Business’ (EDB), ‘Human Development’ (HDI) and ‘Environmental Performance’ (EPI)

Ease of Doing Business (EDB)

• The EDB, an indicator put out by the World Bank, is meant mainly as an index of the effect of government regulations on running a business. It is also meant to reflect the extent of property rights in a society
• A country’s ranking is based on the extent to which government regulations facilitate the following: starting a business, obtaining construction permits, getting an electricity connection, registering property, accessing credit, protection of investors, paying taxes, trading across borders, enforcement of contracts and resolving insolvency.
• From a rank of 134 in 2014, India’s rank improved to 77 in 2018. As 190 countries were ranked in 2018, India was in the top 50%
• Criticism : It measures the effect of government regulations alone. While it is important to take this aspect into account, in any situation the ease of doing business is dependent upon other factors too. One of these is the availability of ‘producer services’, with electricity, water supply and waste management coming to mind

Human Development (HDI)

• It is the result of a rare India-Pakistan collaboration in the global discourse on public policy, having been devised by Amartya Sen and Mahbub ul Haq for the United Nations Development Programme.
• The HDI is a combination of indicators of income, health and education in a country.
• India’s ranking has not altered since 2014. India was ranked 130 in 2014, and has remained in the same place out of 185 countries in 2018
• India’s HDI ranking has not improved despite it being the world’s fastest growing major economy in recent years, as the government often points out in its assessments. This despite income being a component of the index. What this reveals is that an economy can grow fast without much progress in human development
• Criticism : First, it has been pointed out that the index combines incommensurate categories, as income, health and education are not substitutes. Second, while it does go beyond purely economic measures of progress, in that it looks at the health and education achievements in a population, it can say little about the ‘quality’ of development. 

Environmental Performance (EPI)

• EPI is produced jointly by Yale and Columbia Universities in collaboration with the World Economic Forum.
• The index ranks countries on 24 performance indicators across several ‘issue categories’, each of which fit under one of two overarching objectives, namely, environmental health and eco-system vitality.
• The issue categories are air quality, water and sanitation, water resources, agriculture, forests, fisheries, biodiversity and habitat, and climate and energy.
• These metrics are meant to serve as a gauge at a national level of how close countries are to accepted environmental policy goals.
• In 2018 India ranked 177 out of 180 countries, having slipped from an already very low rank of 155 in 2014. The country is today among the worst performing on the environmental front and its ranking has worsened over the past five years

7 . Policy Stance of RBI

Context : RBI has decided to cut the repo rates as well as Changed the policy stance to ‘neutral’ from what was called ‘calibrated tightening so far .

Accommodative Stance

• Accommodative stance means the central bank is telling the market to expect a rate cut anytime
• Usually, this policy is adopted when there is slowdown in the economy.

Neutral stance

• Neutral stance doesn’t have any particular meaning. This means anything can happen anytime means the RBI would have the flexibility to either increase or decrease the policy rates

Tight and Calibrated Tightening stance

• Tight – It indicates an impending rate hike
• Calibrated Tightening – RBI would either keep the rates constant or increase the rates.

8 . Medicins Sans Frontiers / Doctors without Borders

Context : Two tuberculosis survivors from India and South Africa have challenged a patent held by pharmaceutical giant Johnson & Johnson (J&J), to prevent the firm from extending its monopoly on bedaquiline, one of the two latest drugs, to combat the disease. The patent challenge has been filed with support from Médecins Sans Frontières (MSF).

About Medecins Sans Frontiers / Doctors without Borders

• Médecins Sans Frontières (MSF) also known as Doctors without Borders provide medical assistance to people affected by conflict, epidemics, disasters, or exclusion from healthcare.
• They are made up of tens of thousands of health professionals, logistic and administrative staff – bound together by the charter. 
• Actions are guided by medical ethics and the principles of impartiality, independence and neutrality.
• In more than 70 countries, Médecins Sans Frontières provides medical humanitarian assistance to save lives and ease the suffering of people in crisis situations.
• It is a non-profit, self-governed, member-based organisation.
• MSF was founded in 1971 in Paris by a group of journalists and doctors