India to Sign MoU on Easing Visa Curbs

India will sign a Memorandum of Understanding (MoU) on “revised travel arrangements” with Bangladesh to ease visa restrictions for citizens from the neighboring country.

Background

• In 2014, India had decided to relax visa restrictions for Bangladeshis above the age of 65 and below the age of 13. They were allowed five-year multiple entry visas.
• Last year India announced a five-year multiple entry visa to the 1971 war veterans from Bangladesh.
• However, Bangladesh has demanded that travel restrictions for senior citizens be eased and further concessions are given to Muktijoddhas — those who participated in the 1971 Liberation War.
• Citizens from 161 countries can travel to India on e-tourist visas procured online. However, this facility is not extended to Bangladesh.
• India has on several occasions raised the issue of the influx of illegal migrants from Bangladesh.

E-Tourist Visa

• The E-Tourist Visa enables the prospective visitor to apply for an Indian Visa from his/her home country online without visiting the Indian Mission and also pay the visa fee online. The categories include E-Tourist,  E-Business, and E-Medical.
• The E-visa facility is now available for nationals of 161 countries for entry through 24 airports as well as 3 seaports (Cochin, Goa and Mangalore).
• The new visa regime is meant to make India a more favorable tourism destination.
• It will facilitate the Make in India programme that requires multiple business visits by foreign investors.
• The scheme is also in sync with the vision of Digital India.

Trade Policy Review at WTO

At the recent trade policy review at the WTO, India has cautioned China that its $63 billion trade deficit with the country was unsustainable and promises had to be converted into actions.

Key Highlights

• China needed to make serious efforts to lower trade barriers for rice, meat, pharmaceuticals and IT products from India to make a difference to the trade imbalance.
• Farm exports, including bovine meat, continued to face hindrances in the form of stringent and opaque Chinese regulatory requirements.
• Despite of several protocols being signed between India and China, the hindrances remain on import of farm products, especially bovine meat.
• Due to complex and onerous regulatory requirements, Indian generic medicine producers were unable to access the Chinese market.
• In the service sector, the challenges for Indian companies include complex requirements for participating in contracts of State Owned Enterprise (SOEs) and also include issues related to qualification requirements, licensing and taxation etc.

US-China Trade War: A Silver lining for India?

• Given its trade tensions between the US, China plans to import more from India, along with other countries, to counterbalance the imports of high tariff products from USA.
• This is evident from the fact that China has imposed a 25% duty on US soybean. However, China has removed all tariffs on soybean imported from five APTA (Asia-Pacific Trade Agreement) countries: India, Bangladesh, Sri Lanka, South Korea and Laos. All of them, barring India, are insignificant suppliers.
• In addition, India dominates the world’s generic drugs market, exporting $17.3 billion of drugs in, including to the U.S. and the EU. But only 1% of that went to China. With the protracted trade-war China is preparing to give swift regulatory approvals to India-manufactured drugs.
• This would allow Indian companies to boost revenue at a time when pricing scrutiny and regulatory troubles have hurt U.S. sales.
• Also Indian firms are looking to fill gaps in Chinese demand for software, sugar and some varieties of rice.
• US exports to China currently under threat makeup for nearly a fifth of total US exports. With that huge a market at risk, US sellers will now offer attractive selling prices to Indian businesses.
• However, the lack of manufacturing capability in technology items could deprive India from taking advantage of the trade war.  

Trade Policy Review Mechanism

• The Trade Policy Review Mechanism (TPRM) was an early result of the Uruguay Round.
• The reviews take place in the Trade Policy Review Body which is actually the WTO General Council — comprising the WTO’s full membership — operating under special rules and procedures.
• The trade policy review allows members to put the overall trade and economic policies of a country under the scanner. The trade policies of developing countries are taken up for review every four years while developed ones face similar scrutiny every two years.
• The mandate of the TPRM was broadened to cover services trade and intellectual property.
• The objectives of the TPRM include facilitating the smooth functioning of the multilateral trading system by enhancing the transparency of Members’ trade policies.
• All WTO Members are subject to review under the TPRM.

Sub-Group of Chief Ministers on Coordination Between MGNREGA and Agriculture

The First Meeting of Sub-Group of Chief Ministers on coordination between MGNREGA and Agriculture was recently held at NITI Aayog.

• The regional meetings will be finalized by NITI Aayog, in consultation with Ministry of Rural Development and Ministry of Agriculture and State Governments.
  Ensuring the rights of the labourers and maintaining the “asset creation’’ spirit of MGNREGA was also stressed upon at in the meeting.  
• Use of MGNREGA funds in supplementing labour costs in agriculture and fencing of farm land to protect it from wild animals was suggested at the meeting.
• 5 regional meetings/workshops would be organized one each at Patna, Bhopal, Hyderabad, Guwahati and New Delhi to discuss these issues with experts, farmers and farmer’s representatives and other stakeholders along with State Governments.

Five Critical Areas

Five critical areas in which MGNREGA could positively help include those related to-

• reducing the cost of cultivation
• enhancing the production through efficient use of water or other inputs
• providing remunerative price to farmers by incentivising aggregation and market infrastructure
• rehabilitation of agricultural land and assets after natural hazards or re-plantation using MGNREGA fund
• bringing diversification in agriculture to help occupational diversification and maximizing profit.

MGNREGA and the Low Wage Issue

• The Ministry of Finance has refused to bring the central MGNREGA wages on par with the minimum agricultural wages paid by states. As a result, the MGNREGA wages of as many as 28 of the 36 states and Union Territories fell below minimum wages.
• Moreover, the annual wage increase in 2018 was a low 2.9% owing to the Ministry of Finance’s rejection of the Ministry of Rural Development (MoRD) recommendation to index the annual MGNREGA wage revision to Consumer Price Index (Rural) instead of CPI (Agricultural Labourers).
• The CPI (Rural) reflects the current consumption pattern of rural households, whereas the CPI for Agricultural Labourers (CPI-AL), is based on a 35-year-old consumption basket.
• The MoRD raised the issue of wage indexation in the recent meeting.

Concerns

• The possibility of using MGNREGA to employ agricultural labour on private farms has been another area of concern. It has the possibility to benefit employers more than workers.
• The proposal of using MGNREGA fund to solve the agrarian crisis might amount to a cash transfer to farmers, which can distort the purpose of the labour-oriented scheme.
• Several farmers’ groups have expressed that the proposal may be difficult to implement. It would be difficult to measure or monitor the work done and could also reintroduce feudalism in rural areas.

Background    

• The Sub-Group has been constituted by the PM for suggesting ways and means about use of employment under MGNREGS for improving agriculture and reducing cost.
• The Sub Group consists of Chief Ministers of 7 States viz.  Madhya Pradesh, Andhra Pradesh, Bihar, Uttar Pradesh, Gujarat, West Bengal, and Sikkim and Member, NITI Aayog with the Chief Minister of Madhya Pradesh as the convener of the Sub-Group.

Mahatma Gandhi National Rural Employment Guarantee Act, 2005

• The Act aims at enhancing the livelihood security of people in rural areas by guaranteeing hundred days of wage employment in a financial year to a rural household whose adult members (at least 18 years of age) volunteer to do unskilled work.
• The central government bears the full cost of unskilled labour, and 75% of the cost of material (the rest is borne by the states).
• It is a demand-driven, social security and labour law that aims to enforce the ‘right to work’.
• Ministry of Rural Development (MRD), Government of India in association with state governments, monitors the implementation of the scheme.
• Agriculture and allied activities constitute more than 65% of the works taken up under the programme.

RBI Flags States’ Fiscal Stress

RBI, in its annual report titled “State Finances: A Study of Budgets of 2017-18 and 2018-19”, warned that many States may face fiscal risks due to farm-loan waivers, Pay Commission awards and elections.

Highlights of the Report

• States’ consolidated gross fiscal deficit (GFD) overshot the budget estimates in 2017-18 due to shortfalls in own tax revenues and higher revenue expenditure and therefore states revised their gross fiscal deficit (GFD) to gross domestic product (GDP).
  • The GFD-GDP ratio crossed the revised Fiscal Responsibility and Budget Management (FRBM) target for the state-level debt to GDP threshold for third consecutive year. There is a risk that private investment gets crowded out of the finite pool of financial resources.
  • Capital expenditure may have to bear the brunt of the fiscal correction like the past two years.

Fiscal Responsibility and Budget Management (FRBM) Act, 2003

• The FRBM Act was enacted by the Parliament in 2003 to institutionalize fiscal discipline, reduce fiscal deficit, and improve macroeconomic management.
• The government was supposed to wipe out revenue deficit and cut fiscal deficit to 3% of GDP by 2008-09, thus bringing much needed fiscal discipline.
• Fiscal deficit is the total expenditure excluding revenue receipts, loan recoveries and receipts from disinvestment etc. It is a measure of the government borrowing in a year.
• The Act applies only to the central government and the States have to enact suitable legislations to adopt the rules under the FRBM Act.
• The implementation of the Act was put on hold in 2007-08 due to global financial crisis and the need for fiscal stimulus.
• In 2012, the FRBM Act was amended and it was decided that the FRBM Act would target effective revenue deficit in place of revenue deficit.
• Effective revenue deficit excludes capital expenditure from revenue deficit and thus provides space to the government to spend on formation of capital assets.
• In 2017, The FRBM Review Committee headed by former Revenue Secretary, NK Singh submitted its report to the Central Government. Few important recommendations being- A debt to GDP ratio of 60% should be targeted with a 40% limit for the centre and 20% limit for the states; creation of an autonomous Fiscal Council; an “escape clause”, i.e. the government can deviate from the targets in case of a national calamity, national security.

• Referring to the aftermath of the 2008 global financial crisis, when States borrowed big from markets, mainly due to the additional fiscal space given to them as part of stimulus measures, the RBI said several 10-year vanilla bonds had reached maturity from 2017-18, increasing redemption pressures on the States that issued them.
• This would imply that the borrowings of States are expected to soar.

Vanilla Bonds: They are the most basic or standard version of bonds. It is the opposite of an exotic instrument, which alters the components of a traditional financial instrument, and is more complex.

• The issuance of UDAY (Ujwal Discom Assurance Yojana) bonds in 2015-16 and 2016-17, farm-loan waivers and the implementation of Pay Commission awards which were not fully provisioned for in their respective budgets led to a higher debt-GDP ratio at 24 per cent in 2017-18, which is expected to rise to 24.3 per cent in 2018-19.
• Farm loan waivers create a more long term issue i.e. of impacting credit discipline by disincentivizing borrowers from repaying and giving rise to a problem of moral hazard. The bigger issue is that such a step actually incentives debtors, capable of repaying loans, to also default.
• Debt relief helps in reducing household debt but there are no evidences of increase in investment and productivity of beneficiary households.
• However, RBI has highlighted few positives as well as suggestion for the future:

• In 2018-19, states’ revenue capacity is likely to be augmented with the stabilization of GST and the consequent expansion of tax base and efficacy.
• With the implementation of the E-way bill for inter-state movement of goods from April 2018, states could also strive for generating more revenues by locking inefficiency in tax administration.
• According to the RBI study, there are visible signs of fiscal pressures emerging in several states, particularly due to certain expenditure schemes.
• These schemes could be made more productive by closing ‘efficiency gaps’, better targeting/ reducing leakages and careful planning as well as better forecasting.
• Enhanced efficiency must be coupled with improved public financial management practices may be necessary to rebuild fiscal space.

Industrial Growth Dips & Retail Inflation Rises

India’s industrial growth slowed to a seven-month low in May while consumer inflation breached the central bank’s forecast for the first half of the fiscal year, marking twin setbacks for an economy.

• Both the slowdown in industrial output growth and jump in price pressure add to the worries of policymakers who are already concerned about sticky global oil prices.
• Retail inflation, based on Consumer Price Index (CPI), rose to 5 percent in June, a five-month high, despite easing food prices.

Consumer Price Index (CPI)

• CPI (Rural/Urban/Combined) is compiled by the Central Statistics Office (CSO) in the Ministry of Statistics and Programme Implementation.
• CPI for Industrial Workers (IW) and CPI for Agricultural Labourers (AL) / Rural Labourers (RL) are compiled and released by the Labour Bureau in the Ministry of Labour and Employment.
• It is based on the retail prices of products and measures inflation from the consumer side. RBI uses CPI (combined) to monitor inflation.
• It covers only the consumer goods and consumer services.
• Base Year: 2012
• The Index of Industrial Production (IIP) slipped to 3.2% in May 2018 mainly due to sluggish performance of manufacturing and power sectors coupled with poor off-take of fast moving consumer goods (FMCG).

Index of Industrial Production (IIP)

• IIP is an index which details out the growth of various sectors.
• All India IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period.
• It is compiled and published monthly by the Central Statistical Organization (CSO) six weeks after the reference month ends.
• Base Year: 2011-12

Financial Resolution and Deposit Insurance Bill

The Financial Resolution and Deposit Insurance Bill, 2017 proposes a comprehensive resolution framework for specified financial sector entities and service providers to deal with bankruptcy in banks, insurance companies and financial sector entities

Key Highlights

• The Bill proposes the setting up of a Resolution Corporation (RC) by the Central government.

• The functions of the Resolution Corporation will be protecting the stability and resilience of the financial system, public funds, and consumers of covered obligations up to a “reasonable limit”.
• The Corporation will be empowered to bail-in the company. While a bail-out is the use of public funds to inject capital into an ailing company, a bail-in involves the use of depositors’ funds to achieve those ends.
• This has caused a lot of concern among depositors who are worried they may lose their hard-earned money deposited with banks.
• Even the Deposit Insurance and Credit Guarantee Corporation provide deposit insurance of up to Rs. 1 lakh. The rest is forfeited in the event of a bank failure.

• The recently enacted Insolvency and Bankruptcy Code, 2016 to deal with the insolvency resolution issues of non-financial entities will be complemented by the FRDI.

MoEF to Launch Dust Mitigation Measures

The Ministry of Environment and Forests (MoEF) has lined up a slew of measures to tackle dust pollution in the capital. It will include the launch of three pilot projects:

• Installation of filters on top of buses,
• Use of dust separation chemical sprays and
• Installing equipment that will suck in particulate matter. The National Environmental Engineering Research Institute (NEERI) will install these equipments.

Other measures

• Use of more mechanical sweepers.
• The pillars of the Delhi Metro network to have the hanging garden.
• Use of water sprinklers to settle the dust.
• Finalizing the National Clean Air Programme (NCAP), so that it can be adopted by other states as well.

National Clean Air Programme (NCAP)

• It is a medium-term national-level strategy to tackle the increasing air pollution problem across the country in a comprehensive manner.
• The overall objective is to augment and evolve effective ambient air quality monitoring network across the country besides ensuring a comprehensive management plan for prevention, control, and abatement of air pollution.
• A separate component on ‘Technology Assessment Cell’ has been envisaged under NCAP to evaluate the technologies for prevention, control, and abatement of air pollution.
• However, it does not mention any specific target and time frame.

Model Villages under Border Area Development Programme

Issues related to the implementation of the Border Area Development Programme (BADP) were discussed by the Union Home Minister in his interaction with Field and State Level Officers.

• The border population is the strategic asset to the country and important element to maintain border security.
• Social and economic infrastructure like connectivity, safe drinking water, schools, hospitals and other facilities to ensure sustainable living in these areas must be improved.

Model Villages

• For the comprehensive and all-round development of border villages, the government has decided to develop 61 model villages under the Border Area Development Programme.
• Each model village will provide all basic facilities like primary health center, primary education, community center, connectivity, drainage, drinking water, etc. to enable sustainable living in border areas.
• BADP Online Management System for better planning, monitoring, and implementation of various projects under BADP was launched on the occasion.
• Border States can submit their respective Annual Action Plans online and receive approvals from Ministry of Home Affairs in the electronic mode which will bring in transparency in the sanction process and improve quality of planning and implementation.

Border Area Development Programme

• The BADP was launched in the year 1986-87 for balanced development of border areas of States bordering Pakistan, namely, Jammu & Kashmir, Punjab, Gujarat and Rajasthan and subsequently it was extended to all the land borders.
• It is a centrally sponsored scheme. Funds are provided to the states as a non-lapsable special central assistance for the execution of projects relating to infrastructure, livelihood, education, health, agriculture and allied sector.
• BADP now covers 111 border districts in 17 States (Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland, Tripura, Sikkim, West Bengal, Bihar, Uttar Pradesh, Uttarakhand, Jammu & Kashmir, Himachal Pradesh, Punjab, Rajasthan and Gujarat) to meet special development needs of border population with focus on people living within 50 kilometers of the International Border.
• The main objective of the BADP is to meet the special developmental needs and well being of the people living in remote and inaccessible areas situated near the international border and to saturate the border areas with the entire essential infrastructure through the convergence of Central, State, BADP and local schemes by following a participatory approach.

Important Facts for Prelims (July 13, 2018)

Bengei Nacha

• In the State of Odisha, ‘Bengei Nacha’ or ‘frog dance’ is a traditionally performed ritual to appease the rain gods.
• As per belief, the croaking sounds made by frogs during the ritual would alert rain god ‘Indra Devata’ to the lack of precipitation in a village.
• Amid much fanfare, villagers catch a frog and put it inside a pitcher partly filled with water which is carried by two people at the head of a procession.
• Monsoon rains are vital for Indian agriculture, which is a major source of employment in the country.
• Rituals devoted to rain gods vary from State to State depending upon local customs and traditions.

Scientists Perform First Color X-ray on a Human

• Scientists from New Zealand performed the first ever 3D color X-Ray on a human being using a technique that could improve the field of medical diagnostics.
• The new device, named Medipix, is based on the traditional black-and-white X-Ray but has incorporated a particle-tracking technology developed by CERN for its Large Hadron Collider.
• The color X-ray imaging technique could produce clearer and more accurate pictures and help doctors give their patients more accurate diagnoses.

Buddha of Swat

• The Buddha seated in a meditative posture is an iconic 7th-century sculpture and is considered one of the largest rock sculptures in South Asia.
• The Buddha sits in Jehanabad, the epicenter of Swat's Buddhist heritage, a beautiful valley in the foothills of the Himalayas.
• The holy figure, depicted in a lotus position at the base of a granite cliff in northern Pakistan, was severely damaged by Islamists insurgents.
• Swat was for centuries a pilgrimage site for the Buddhist faithful, especially from the Himalayas.
• The Vajrayana school even consider it a "holy land", from where their faith originated.
• They continued to visit right up until the 20th century when borders hardened with the independence of British India and creation of Pakistan in 1947.