Daily Current Affairs: 26th November 2021

Daily Current Affairs for UPSC CSE

Topics covered

1. EWS Quota
2. GST rate structure
3. Urban cooperative banks
4. Facts for Prelims
5. Places in News

1. EWS Quota

Context: The Union Government on Thursday informed the Supreme Court that it had taken a “considered decision” to revisit the “criteria” for determining Economically Weaker Sections (EWS) to provide them reservation.

About the issue

• The court was hearing a case filed by NEET aspirants challenging a July 29 notification announcing 27% quota to OBCs and 10% reservation to the EWS in the All India Quota (AIQ) category.
• The Union Government on Thursday informed the Supreme Court that it had taken a “considered decision” to revisit the “criteria” for determining Economically Weaker Sections (EWS) to provide them reservation.
• The Government, represented by Solicitor-General Tushar Mehta, said it would take four weeks for the exercise.
• The submission follows rounds of grilling from the court during past hearings to reveal the logic and study before zeroing in on the “exact figure” of ₹8 lakh as the annual income limit to identify the EWS.

About EWS Quota

• Reservation for Economically Weaker Sections (EWS) is being implemented in respect of recruitment for Civil posts and services in government and admission in educational institutions.
• The 10% EWS quota was introduced under the 103^rd Constitution (Amendment) Act, 2019 by amending Articles 15 and 16. It inserted Article 15 (6) and Article 16 (6).
• It enables both Centre and the states to provide reservation to the EWS of society.
• The EWS quota breaches the limit of 50% put up by the nine judge constitutional bench in Indira Sawhney case 1992, without even putting this issue into consideration.

Quantum of reservation

• The persons belonging to EWSs who, are not covered under the scheme of reservation for SCs, STs and OBCs shall get 10% reservation in direct recruitment in civil posts and services in the Government and admission in educational institutions.

Exemption from reservation

“Scientific and Technical” posts which satisfy all the following conditions can be exempted from the purview of the reservation orders by the Ministries/ Departments:

• The posts should be in grades above the lowest grade in Group A of the service concerned.
• They should be classified as “scientific or technical” in terms of Cabinet Secretariat [OM No. 85/11/CF-61(1) dated 28.12.1961], according to which scientific and technical posts for which qualifications in the natural sciences or exact sciences or applied sciences or in technology are prescribed and, the incumbents of which have to use that knowledge in the discharge of their duties.
• The posts should be ‘for conducting research’ or ‘for organizing, guiding and directing research’.

Eligibility

• Persons who are not covered under the scheme of reservation for SCs, STs and OBCs and whose family has gross annual income below Rs 8 (Rupees eight lakh only) are to be identified as EWSs for benefit of reservation. ( Currently disputed in Supreme Court)
• Income shall also include income from all sources i.e. salary, agriculture, business, profession, etc. for the financial year prior to the year of application.
• Also persons whose family owns or possesses any of the following assets shall be excluded from being identified as EWS, irrespective of the family income:
  • 5 acres of agricultural land and above;
  • Residential area of 1000 sq ft. and above;
  • Residential plot of 100 sq. yards and above in notified municipalities;
  • Residential, plot of 200 sq. yards and above in areas other than the notified municipalities.
• The property held by a “Family” in different locations or different places/cities would be clubbed while applying the land. or property holding test to determine EWS status.
• The term “Family” for this purpose will include the person who seeks benefit of reservation, his/her parents and siblings below the age of 18 years as also his/her spouse and children below the age of 18 years.

2. GST Rate Structure

Context: The Government can rationalise the GST rate structure without losing revenues by rejigging the four major rates of 5%, 12%, 18% and 28% with a three-rate framework of 8%, 15% and 30%, as per a National Institute of Public Finance and Policy (NIPFP) study.

About NIPFP?

• The National Institute of Public Finance and Policy (NIPFP) is a centre for research in public economics and policies.
• Founded in 1976, the institute undertakes research, policy advocacy and capacity building in areas related to public economics.
• One of the major mandates of the institute is to assist the Central, State and Local governments in formulating and reforming public policies by providing an analytical base.
• The institute was set up as an autonomous society, at the joint initiative of the Ministry of Finance, Planning Commission, several State governments and distinguished academicians. It is registered under the Societies Registration Act, 1860.
• It has maintained close functional links with the Central and State governments all along, and has built up linkages with other teaching and research institutions both in India and abroad.
• Although the institute receives an annual grant from the Ministry of Finance, Government of India, and various State governments, it maintains an independent non-government character in its pursuit of research and policy.

The findings of the NIPFP

• Multiple rate changes since the introduction of the GST regime in July 2017 have brought the effective GST rate to 11.6% from the original revenue neutral rate of 15.5%
• Merging the 12% and 18% GST rates into any tax rate lower than 18% may result in revenue loss.
• Study proposes that the GST Council may consider a three-rate structure by adopting 8%, 15% and 30% for revenue neutrality.
• The nature of rate changes has also meant that over 40% of taxable turnover value now falls in the 18% tax slab, thus any move to dovetail that slab with a lower rate will trigger losses to the tax kitty that need to be offset by marginal hikes in other remaining major rates — 5% and 28%.

Current GST Rates structure

• The GST Council has assigned GST rates to different goods and services.
• While some products can be purchased without any GST, there are others that come at 5% GST, 12% GST, 18% GST, and 28% GST. 
• GST rates for goods and services have been changed a few time since the new tax regime was implemented in July 2017.

3. Urban cooperative banks

Context: The Kerala High Court on Thursday issued notices to the Centre and the Reserve Bank of India (RBI) on a writ petition challenging the amendments to the Banking Regulation Act which have brought the urban cooperative banks under the direct supervision of the RBI and made applicable to them the governance norms of commercial banks.

Background

• The urban cooperatives and multi-State cooperative banks, which are 1,540 in number and have a depositor base of 8.6 crore, who have saved ₹4.84 lakh crore, a huge amount have been brought under RBI supervision process, which is applicable to scheduled banks.
• The BR Act, 1949, is an Act meant for banking companies.
• The Act was amended in 1965 to bring cooperative banks under RBI regulation by insertion of a special section – Sec 56 (as applicable to cooperative societies). This enabled some select sections to be made applicable as they are to cooperative banks, while some others were made applicable with certain modifications, and a large number of sections were not made applicable at all.
• The control of the RBI was partial and it shared the control with the registrar of cooperative societies of States, giving rise to the much-discussed dual control and the difficulties it posed to the central bank.
• The recent Banking Regulation (Amendment) Act 2020 enables the RBI to get all the powers, including those hitherto exclusively with the registrar of cooperative societies.
• However, powers of registrar continue to be with him but the powers of RBI override those of registrar.

What are UCBs?

• The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary cooperative banks located in urban and semi-urban areas.
• These banks, till 1996, were allowed to lend money only for non-agricultural purposes. This distinction does not hold today.
• These banks were traditionally centred around communities, localities work place groups. They essentially lent to small borrowers and businesses.
• Today, their scope of operations has widened considerably.

The Banking Regulation (Amendment) Bill, 2020

Highlights of the Bill

• The Bill makes two kinds of changes:
  • extending previously omitted provisions of the BR Act to co-operative banks, and
  • amendments to certain provisions of the Act that apply to all banks. 

• Co-operative banks are exempted from several provisions of the Banking Regulation Act, 1949.  The Bill applies some of these provisions to them, making their regulation under the Act similar to that of commercial banks.
• ​Co-operative banks may raise equity or unsecured debt capital from the public subject to prior RBI approval.
• RBI may prescribe conditions on and qualifications for employment of Chairman of co-operative banks.  RBI may remove a Chairman not meeting ‘fit and proper’ criteria and appoint a suitable person.  It may issue directions to reconstitute the Board of Directors in order to ensure sufficient number of qualified members.
• RBI may supersede the Board of Directors of a co-operative bank after consultation with the state government.
• The Bill allows RBI to undertake reconstruction or amalgamation of a bank without imposing a moratorium.

Key Issues and Analysis

• Co-operative banks provide banking facilities to people of small means.  However, absence of regulatory oversight by RBI on par with commercial banks has contributed to the poor performance of co-operative banks.  The Bill seeks to extend RBI regulation of co-operative banks with respect to management, capital, audit and winding up.
• ‘Banking’ is a Union List subject in the Constitution and ‘incorporation, regulation and winding up’ of co-operative societies’ is in the State List.  The question is whether regulation of management, audit, capital and winding up of co-operative banks are essential to regulating the activity of banking, and therefore whether the Bill falls within the legislative competence of Parliament. 
• The Bill enables co-operative banks to issue equity shares to members and to persons residing within the banks’ area of operation.  Since co-operative societies raise capital from members, it is unclear what it means to raise equity capital from the public.  Further, restrictions on redemption of share capital by members may limit their option to exit.

4. Facts for Prelims

INS Vela

• It is the fourth of the six submarines the Indian Navy is to induct under the Kalvari-class submarine Project-75.
• Vela is named after a decommissioned submarine Vela, which served the Navy from 1973 to 2010. The earlier Vela belonged to Foxtrot class submarine of Soviet origin.
• Naval sources said the submarine can take up to eight officers and 35 men.
• The submarine is equipped with C303 anti torpedo countermeasure system, and can carry up to 18 torpedoes or Exocet anti-ship missiles or 30 mines in place of torpedoes.
• Vela will be commissioned into the Indian Navy’s western command, and will be based in Mumbai.
• It can reach a top speed of 20 knots when submerged and a surface top speed of 11 knots.
• The submarine has four MTU 12V 396 SE84 diesel engines and 360 battery cells for power, and has a silent Permanently Magnetised Propulsion Motor. The hull, fin and hydroplanes are designed for minimum underwater resistance and all equipment inside the pressure hull is mounted on shock-absorbing cradles for enhanced stealth.
• Vela is a diesel-electric powered attack submarine, designed to act as “sea denial” as well as “access denial” warfare to the adversary.
• The submarine can engage in offensive operations across the entire spectrum of naval warfare, including anti-surface warfare, anti-submarine warfare, intelligence gathering, mine laying and area surveillance.

Shanghai Cooperation Organisation (SCO)

• The Shanghai Cooperation Organization (SCO) is an intergovernmental organization founded in Shanghai on 15 June 2001.
• The SCO currently comprises eight Member States (China, India, Kazakhstan, Kyrgyzstan, Russia, Pakistan, Tajikistan and Uzbekistan), four Observer States interested in acceding to full membership (Afghanistan, Belarus, Iran, and Mongolia) and six “Dialogue Partners” (Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and Turkey).
• In 2021, the decision was made to start the accession process of Iran to the SCO as a full member, and Egypt, Qatar as well as Saudi Arabia became dialogue partners. 
• Since its inception in 2001, the SCO has mainly focused on regional security issues, its fight against regional terrorism, ethnic separatism and religious extremism.
• To date, the SCO’s priorities also include regional development.
• The SCO has been an observer in the UN General Assembly since 2005.

Delegate for Asia

• The Interpol elected Central Bureau of Investigation (CBI) Special Director Praveen Sinha as a Delegate for Asia in its Executive Committee.
• Mr. Sinha was among the five contestants from five countries for the two posts of Delegates for Asia. The elections were held at the ongoing 89th Interpol General Assembly in Istanbul.
• The Executive Committee has 13 members from different countries comprising the President of the Interpol, two Vice-Presidents and nine Delegates. It supervises the execution of the Interpol General Assembly’s decisions and the administration and work of its General Secretariat. It meets three times a year and sets organisational policy and direction.
• CBI is the nodal agency for Interpol India. 

5. Places in News

Solomon Islands

• Solomon Islands is located in the southwestern Pacific Ocean.
• It consists of a double chain of volcanic islands and coral atolls in Melanesia.
• Once a British protectorate, Solomon Islands achieved independence as a republic in 1978. Honiara, on the north coast of Guadalcanal Island, is Solomon Islands’ capital and largest city.
• The country comprises most of the Solomons chain, with the exception of Buka and Bougainville, two islands at the northwestern end that form an autonomous region of Papua New Guinea.
• Its capital, Honiara, is located on the largest island, Guadalcanal.
• The country takes its name from the Solomon Islands archipelago, which is a collection of Melanesian islands that also includes the North Solomon Islands (a part of Papua New Guinea), but excludes outlying islands, such as the Santa Cruz Islands and Rennell and Bellona.