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Today’s important articles/news in various newspapers (24th April)

Dear aspirants, following are the links of various articles taken from various newspapers. Click the link to read further. To get notification, follow the blog. Thank you

1. Intra-State e-way bills: phase 3 to start Apr. 25

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The E-way bill, short form for electronic way bill, is a document to be generated online under the GST system, when goods of the value of more than 50,000 are shipped inter-State or intra-State. The E-way bill must be raised before the goods are shipped and should include details of the goods, their consignor, recipient and transporter.

Though check-posts have been abolished under GST, a consignment can be intercepted at any point for the verification of its E-way bill, for all inter-State and intra-State movement of goods. If a consignment is found without an E-way bill, a penalty of 10,000 or tax sought to be evaded, whichever is greater, can be levied.

Data from the Ministry of Road Transport and Highways, tells us that a typical truck in India spends 20 per cent of its time in inter-state check points. This varies from 20-30 minutes in some States such as Rajasthan and Maharashtra, but goes upto to two hours in Bihar or Jharkhand.

Both the GST levy and the E-way bill were expected to root out such transit delays, while at the same time plugging tax evasion.

Also, a single electronic way bill for the movement of goods throughout the country was expected to save tons of paperwork and sidestep various inter-state clearances for buyers, sellers and transporters. In the previous tax regime, each State framed its own rules for the movement of goods from and to it.

2. India highest recipient of remittances

The top recipient of remittances

  1. According to the world bank, India has retained the top position as a recipient of remittances with its diaspora sending about $69 billion back home last year
  2. Remittances to India picked up sharply by 9.9%, reversing the previous year’s dip, but were still short of $70.4 billion received in 2014
  3. India continued to top in terms of receiving remittance, and was followed by China ($64 billion), the Philippines ($33 billion), Mexico ($31 billion), Nigeria ($22 billion) and Egypt ($20 billion)
  4. Tha data is provided by the world bank in its latest Migration and Development Brief

th23-biz-worldbg7h3rv3mp1jpgjpg

Global trends

  1. The World Bank estimated that officially recorded remittances to low-and middle-income countries reached $466 billion in 2017. This was an increase of 8.5% over $429 billion in 2016
  2. Global remittances(which include flows to high-income countries) grew 7 per cent to USD 613 billion last year, from USD 573 billion in 2016
  3. The upsurge is likely to continue into 2018 on the back of stronger economic conditions in advanced economies (particularly the U.S.)
  4. and an increase in oil prices that should have a positive impact on the GCC countries
    The possible reason behind this growth
  5. The stronger-than-expected recovery in remittances was driven by growth in Europe, Russia and the U.S
  6. The rebound in remittances, when valued in U.S. dollars, was helped by higher oil prices and a strengthening of the Euro and the Ruble

Position of India’s neighbors 

  1. Flows to Pakistan and Bangladesh were both largely flat in 2017, while Sri Lanka saw a small decline (-0.9%)
  2. In 2018, remittances to the region(South Asian) will likely grow modestly by 2.5%to $120 billion

foreign-remittances-and-their-impact-on-the-economy-of-pakistan-2-638

3. An alternative to privatization of public sector banks

The risk-adjusted return from the lending activity of the bank erodes all the value created by the deposit-taking.

People have confidence in India’s Public Sector Banking Services

  1.  The total current account and savings account (CASA) base of PSBs in India was Rs30.2 trillion (including State Bank of India, or SBI) and Rs 18.9 trillion (excluding SBI) in 2017
  2. Given the low deposit rates offered by banks in India relative to the risk-free rate, these deposits represent tremendous value in terms of a profitability cushion
  3. By and large, this reflects the confidence of customers in the implicit government support to these entities
  4. The core strength of PSBs is the deposit franchise
  5. Their branch network in far-flung areas means that they are the preferred choice of the mass-market customer, rural customers, and, often, retired individuals

What is the main issue?

  1. The real issue happens on the lending side
  2. This occurs due to a few reasons
    (1) mandated lending through various schemes, in addition to priority sector lending targets
    (2) the poor risk management competencies of banks, particularly vis-à-vis managing the concentration risks of specific sectors and business groups
    (3) lack of specialized underwriting skills, given that customers tend to range from large firms and farmers to small businesses and mortgages
  3. The math here is straightforward—the risk-adjusted return from the lending activity of the bank erodes all the value created by the deposit-taking activity

What should be done on the lending side?: The suggested model

  1. On the lending side, rather than PSBs directly originating credits through branches and hoping for the best,
  2. they would assemble a portfolio of credits that are originated by specialist institutions (non-bank finance companies and small finance banks)
  3. Assembling this portfolio of loans can be done through a variety of ways,
    such as direct purchases of their loans, and by investing in securitized assets representing underlying loans originated by these specialist institutions
  4. This also implies a clearer role for these specialist institutions and their contributions to extending credit in an efficient manner
    This is not a new idea
  5. Glimpses of this model can be seen in the priority sector lending certificates market and the micro-loan securitization market where specialists trade assets with non-specialists in a markets framework
    The idea will increase the ratings of the book asset of the PSBs
  6. The implementation of this idea would ensure a more efficient approach to capital, while, importantly, preserving the deposit franchise of PSBs
  7. This is because under this model, the PSB asset book would be highly rated owing to the high levels of diversification and granularity in underlying loans

The right way to implement this model

  1. Portfolio-level guidelines would need to be specified,
  2. The model would be subjected to high-quality risk reporting requirements that would be made possible by the availability of accurate and complete data
    (along business lines, legal entity type, asset type, industry, region and other groupings)
    that permit identifying and reporting risk exposures, concentrations and emerging risks

4. Insolvency and Bankruptcy Code: a legislation mired in controversy

The focus of the Insolvency and Bankruptcy Board of India and the government must shift from tinkering with the law to building proper infrastructure.

what-you-need-to-know-about-project-financing-19-638

5. Farmers, forests and the future

In the battle over jungle and tribal land, deep mistrust divides natural allies.

6. 45 years on, recalling Kesavananda Bharati, the verdict that identified the basic structure of the Constitution

On April 24, 1973, exactly 45 years ago, a 13-judge Constitution Bench of the Supreme Court restrained, by a 7-6 verdict, Parliament from altering the “basic structure” of the Constitution. In Kesavananda Bharati vs State of Kerala, the court ruled that the basic structure of the Constitution is inviolable, and could not be amended by Parliament.

This is the greatest decision in the history of Indian constitution which determined the fabric of Indian constitution and also has till date the higest number of judges on bench . Supreme Court of India outlined the Basic Structure doctrine of the Constitution.

Background

The factual summary of this case is as follows:-

In February 1970 Swami HH Sri Kesavananda Bharati, Senior head of “Edneer Mutt” – a Hindu Mutt situated in Edneer, a village in Kasaragod Districtof Kerala, challenged the Kerala government’s attempts, under two state land reform acts, to impose restrictions on the management of its property.Although the state invoked its authority under Article 21, an Indian jurist,Nanabhoy Palkhivala, convinced the Swami into filing his petition under Article 26, concerning the right to manage religiously owned property without government interference

Issue – All this effort was to answer just one main question: was the power of Parliament to amend the Constitution unlimited? In other words, could Parliament alter, amend, abrogate any part of the Constitution even to the extent of taking away all fundamental rights?

Verdict : The 703-page judgment revealed a sharply divided court and, by a wafer-thin majority of 7:6, it was held that Parliament could amend any part of the Constitution so long as it did not alter or amend “the basic structure or essential features of the Constitution.” This was the inherent and implied limitation on the amending power of Parliament.

What happened after that ?

There are certain Principles within the framework of Indian constitution and are inviolable and cannot be amended even by amended by the parliament. These principles are termed as basic structure. Parliament has wide powers but it did not have the power to destroy or emasculate the basic structure or fundamental features of Indian constitution

42nd Amendment that came in 1976 GAVE preference to ALL the DPSPs over FR 14,19,31 and DPSP will not be termed as unconstitutional

FR<<<<<DPSP

Minnerva Mills case vs Union of India

SC held the changes introduced as unconstitutional and void on the grounds that it disturbed the balance between part 3 and part 4 of Indian constitution and that the balance between them is the basic structure of the Indian constitution

Goals Set out by DPSP HAVE TO be achieved without the abrogation of the means provided by FR

FINALLY :-   FR>DPSP

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