Daily Current Affairs : 19th August

Daily Current Affairs for UPSC CSE

Topics Covered

1. India-Bhutan Relations
2. Two new species of freshwater fish
3. Pradhan Mantri Laghu Vyapari Maan-Dhan scheme 
4. Repo rate linked Home Loans
5. Legislative Councils
6. Facts for Prelims : Juno, bunker museum

1 . India-Bhutan Relations

Context : Prime Minister Narendra Modi and his Bhutanese counterpart Lotay Tshering held wide ranging talks on Saturday and discussed steps to further expand the bilateral partnership across several sectors.

Details of the Visit

• The two countries signed 10 MoUs in the fields of space research, aviation, IT, power and education.
• Launched the RuPay Card in Bhutan by making a purchase at Simtokha Dzong, built in 1629 by Shabdrung Namgyal, which functions as a monastic and administrative centre and is one of the oldest dzongs in Bhutan.
•  He said an additional $100 million will be available to Bhutan under a standby swap arrangement to meet the foreign exchange requirement.
• Unveiled an e-plaque on the interconnection between India’s National Knowledge Network and Bhutan’s Druk Research and Education Network.

Significance of Bhutan for India

• Bhutan’s significance to India stems from its geographic location. Nestled in the Himalayas, it is sandwiched between India and China. Thus, it serves as a buffer between the two Asian giants.
• Bhutan’s value as a buffer soared after China annexed Tibet in 1951. As the 2017 crisis in the Doklam region revealed, India will strongly oppose, even militarily, any Chinese attempt to assert control over Doklam. Securing Bhutan’s present borders especially its western border is clearly important for India.
• Doklam in the hands of a hostile power would heighten the vulnerability of India’s Siliguri Corridor, a narrow strip of land that links India to its Northeastern states.

Background

• Diplomatic relations between India and Bhutan were established in 1968 with the
  establishment of a special office of India in Thimphu. Before this our relations with
  Bhutan were looked after by our Political Officer in Sikkim.
• The basic framework of India- Bhutan bilateral relations was the Treaty of Friendship and Cooperation signed in 1949 between the two countries, which was revised in February 2007.
• The Golden Jubilee of the establishment of formal diplomatic relations between India and Bhutan is being celebrated in the year 2018.

Treaty of Friendship

• On August 8, 1949 Bhutan and India signed the Treaty of Friendship, calling for peace between the two nations and non-interference in each other’s internal affairs.
• However, Bhutan agreed to let India “guide” its foreign policy and both nations would consult each other closely on foreign and defence affairs. The treaty also established free trade and extradition protocols.
• Scholars regard the effect of the treaty is to make Bhutan into a protected state, but not a protectorate, because Bhutan continues to have the power to conduct its own foreign policy

The New Treaty of Friendship 2007

• India re-negotiated the 1949 treaty with Bhutan and signed a new treaty of friendship in 2007. The new treaty replaced the provision requiring Bhutan to take India’s guidance on foreign policy with broader sovereignty and not require Bhutan to obtain India’s permission over arms imports.
• India allows 16 entry and exit points for Bhutanese trade with other countries (the only exception being the People’s Republic of China) and has agreed to develop and import a minimum of 10,000 megawatts of electricity from Bhutan by 2021.

Bilateral Cooperation

• There are a number of institutional mechanisms between India and Bhutan in areas such as security, border management, trade, transit, economic, hydro-power, development cooperation, water resources.
• There have been regular exchanges at the Ministerial and officials’ level, exchanges of parliamentarian delegations to strengthen partnership in diverse areas of cooperation.

Hydropower

• Hydropower Cooperation Hydropower projects in Bhutan are an example of win-win cooperation, providing a reliable source of inexpensive and clean electricity to India, generating export revenue for Bhutan and cementing our economic integration.
• Government of India has constructed three Hydroelectric Projects (HEPs) in Bhutan totaling 1416 MW, which are operational and exporting surplus power to India
• About three-fourth of the power generated is exported and rest is used for domestic consumption.

Military Ties

• India has strong military and economic ties with Bhutan. The Indian military “is virtually responsible for protecting Bhutan from external and internal threats” and to this end, the Eastern Command of the Indian Army and Air Force have integrated Bhutan’s defence into their role and responsibilities.
• Indian Military Training Team (IMTRAT) trains Bhutanese security personnel as well.

2 . Two new species of freshwater fish

Context : Scientists of the Zoological Survey of India have discovered two new species of freshwater fish from the north-eastern and northern parts of the country.

About the News

• Glyptothorax gopii, a new species of catfish was found in Mizoram’s Kaladan river, Garra simbalbaraensis was found in Himachal Pradesh’s Simbalbara river.
• Both fish, measuring less than seven centimetres, are hill stream fauna and are equipped with special morphological features to suit rapid water flow.
• Glyptothorax gopii (measuring 63 mm standard length without caudal fin) is dark brown on its dorsal surface, and its ventral surface is of a yellowish-light brown. Garra simbalbaraensis (measuring 69 mm standard length without caudal fin) has a yellowish-grey colour fading ventrally. Both these species were discovered from remote areas
• Experts suggest that the origin or evolution of the fishes in the Himalayas and north-eastern parts of India must have been the consequence or after-effects of orogenic events (geological movement) at various stages in the Himalayas’ uplift.

3 . Pradhan Mantri Laghu Vyapari Maan-Dhan scheme 

About the Scheme

• Traders aged between 18 and 40 who have an annual turnover of less than ₹1.5 crore are eligible.
• The subscribers will have to contribute a monthly amount, which will vary depending on the age at which they enter the scheme, that will be matched by the government. Upon turning 60, the subscribers will get ₹3,000 as monthly pension.
• Trader is not eligible if he is covered under National Pension Scheme contributed by the Central Government or Employees’ State Insurance Corporation Scheme under the Employees’ State Insurance Act, 1948 (34 of 1948) or Employees’ Provident Fund Scheme under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (19 of 1952) or he is an income-tax assessee.
• Benefits on disablement.– If an eligible subscriber has given regular contributions and become permanently disabled due to any cause before attaining his age of sixty years, and is unable to continue to contribute under this Scheme, his spouse shall be entitled to continue with the Scheme subsequently by payment of regular contribution as applicable or exit the Scheme by receiving the share of contribution deposited by such subscriber, with interest
• Benefits to the family on death of an eligible subscriber.- During the receipt of pension, if an eligible subscriber dies, his spouse shall be only entitled to receive fifty per cent. of the pension received

4 . Repo rate linked Home Loans

Context : India’s largest lender, the State Bank of India, launched repo-rate linked home loans that came into the market on July 1. his was swiftly followed by several other public sector banks

Background

• The interest rate for normal home loans given by banks are calculated based on the marginal cost of funds-based lending rate (MCLR), which is an internal reference rate set by banks.
• This rate is nominally based on the RBI’s repo rate — which itself is the rate of interest the central bank charges banks — but in practice the calculation of the MCLR by each bank is opaque and complex. The MCLR could be different for different banks, and be influenced by various factors such as the risk assigned to the loan taker and other factors
• “There was a constant complaint from customers that even under the MCLR regime and before that the base rate regime, the benefits of the cuts of the policy rate were not getting transmitted to the end consumer. But, whenever there was an increase in interest rates by the regulator, the banks were very quick to pass that on.”

About Repo rate linked Home Loans

• A repo rate-linked home loan is one way to speed up this process of transmission so that the end user can benefit from the RBI action.
• The interest on the repo rate linked loans is not the repo rate itself, but is simply based on it. For example, the SBI repo-linked lending rate (RLLR) will have a base spread of 2.25 percentage points over the repo rate. The repo rate at the time of launching the product was 5.75%, which meant the effective RLLR would have been 8%.
• On top of this, the bank will add a risk-based spread of 40-55 basis points, depending on the risk assigned to the borrower. Taking this into account, the effective interest rate on the loans would have been 8.4-8.55% at a time when home loans based on the MCLR were anywhere between 8.55% to 9.10%.

Evaluation

• Some consumers have the misapprehension that a repo rate-linked product will mean that the effective interest rate of the loan would change as constantly as the repo rate itself does, thereby making it more difficult for the loan taker to systematically make the payments. This, however, is a risk most borrowers already take when they opt for floating rate loans rather than fixed rate ones
• Another risk is eventuality of the central bank raising the repo rate. This could not only increase the interest rate of the loan, but could also eventually impact the size of the instalments themselves.
• In the case of the repo rate linked loans, the changes in the interest rate can be more frequent and it could result in changes in the instalment amount itself, which was not the case in the MCLR regime

5 . Legislative Council

Context : The Madhya Pradesh government has indicated that it plans to initiate steps towards creation of a Legislative Council. Not all states have two Houses. Which are the ones that do, and why is a second House needed?

Constitutional Provisions Regarding Legislative Council

• Article 71 of the Constitution provides for the option of a state to have a Legislative Council in addition to its Legislative Assembly. As in Rajya Sabha, members of a Legislative Council are not directly elected by voters.
• Under Article 169, a Legislative Council can be formed “if the Legislative Assembly of the State passes a resolution to that effect by a majority of the total membership of the Assembly and by a majority of not less than two-thirds of the members of the Assembly present and voting”. Parliament can then pass a law to this effect.
• Under Article 171 of the Constitution, the Legislative Council of a state shall not have more than one-third of the number of MLAs of the state, and not less than 40 members. As with Rajya Sabha MPs, the tenure of a Member of the Legislative Council (MLC) is six years, with one-third of members retiring every two years.

Constitution Assembly Debates

• Opinion in the Constituent Assembly was divided on the idea. Among the arguments in its favour, a second House can help check hasty actions by the directly elected House, and also enable non-elected individuals to contribute to the legislative process. The arguments against the idea: a Legislative Council can be used to delay legislation, and to park leaders who have not been able to win an election.

States with LCs

• Andhra, Bihar, Karnataka, Maharashtra, Telangana and Uttar Pradesh
• Currently, six states have Legislative Councils. Jammu and Kashmir too had one, until the state was bifurcated into the Union Territories of J&K and Ladakh.

Elections to LC

• One-third of the MLCs are elected by the state’s MLAs, another one-third by a special electorate comprising sitting members of local governments such as municipalities and district boards
• 1/12th by an electorate of teachers and another 1/12th by registered graduates.
• The remaining members are appointed by the Governor for distinguished services in various fields.

Comparison with Rajya Sabha

• The legislative power of the Councils is limited. Unlike Rajya Sabha which has substantial powers to shape non-financial legislation, Legislative Councils lack a constitutional mandate to do so; Assemblies can override suggestions/amendments made to a legislation by the Council. Again, unlike Rajya Sabha MPs, MLCs cannot vote in elections for the President and Vice President. The Vice President is the Rajya Sabha Chairperson; an MLC is the Council Chairperson.

6 . Facts for Prelims

Juno

• Juno is a NASA space probe orbiting the planet Jupiter. It was built by Lockheed Martin and is operated by NASA’s Jet Propulsion Laboratory. 
• Juno’s mission is to measure Jupiter’s composition, gravity field, magnetic field, and polar magnetosphere.
• It will also search for clues about how the planet formed, including whether it has a rocky core, the amount of water present within the deep atmosphere, mass distribution, and its deep winds
• Juno is the second spacecraft to orbit Jupiter, after the nuclear powered Galileo orbiter, which orbited from 1995 to 2003

Bunker museum

• Pesident Ram Nath Kovind inaugurated the underground Bunker Museum at Raj Bhavan in Mumbai.
• The 15,000 square feet underground bunker museum houses virtual reality booths, which will help visitors time travel to the 19th century, when the underground tunnel was used strategically to fire cannons at approaching enemy ships
• The bunker dates back to the pre-World War I era and is believed to have been an asset of the battery stationed near the coast to defend Bombay Castle from naval attacks