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Indian Constitution and Polity:

‘Show source of income to contest polls’(The Hindu)

Context:

In a landmark judgement in poll reforms, the SC on Friday has ruled that politicians, their spouses and associates must declare their sources of income, along with their assets, in order to qualify for contesting elections.

Details:

  • The judgment, authored by Justice Chelameswar has observed that manifold and undue accretion of assets by legislators or their associates is a good ground for disqualification
  • The SC has further directed the government to set up a permanent mechanism to monitor the accrual of wealth of sitting MPs and MLAs, their spouses and associates.
  • It observed that assets and sources of income of legislators and their associates should be continuously monitored to maintain the purity of the electoral process and integrity of the democratic structure

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Economy:

How did system allow PNB fraud, asks CVC(The Hindu)

Context:

The Central Vigilance Commission (CVC), India’s apex body for checking corruption in the government, has summoned senior officials from the Reserve Bank of India, the Finance Ministry, along with the Chief Vigilance Officer of Punjab National Bank (PNB), early next week to assess how the 11,500 crore frauds reported recently.

Three-level audit:

  • Banks are audited at three levels : Apart from Internal audit, there is an external auditor and a statutory audit undertaken by the RBI.
  • The CVC is keen to understand how none of these audits picked up a red flag on the letters of undertaking that seem to have been issued bypassing the system.
  • The RBI blamed internal control failures for PNB’s woes, terming the incident as a ‘case of operational risk’ due to ‘delinquent behaviour’ by one or more employees.

What has happened?

  • Recently, PNB found that the SWIFT system had been misused by a junior-level branch officials, who had fraudulently issued letters of undertaking (LoUs) on behalf of some companies for availing buyers credit from overseas branches of Indian banks.
  • Preliminary investigation into the alleged fraudulent transactions worth 11,500 crore has revealed a complete breakdown of supervision and auditing mechanism in Punjab National Bank’s Mumbai branch and overseas branches of the other banks concerned.
  • The transactions remained undetected for almost seven years, despite the fact that the bank conducts internal and external audits on a regular basis.
  • Overseas branches of the other banks, which released payments on the request for settlement of import bills, also did not flag the discrepancies for such a long period.
  • The bank has pinned the whole blame on the then Deputy Manager, Gokulnath Shetty, and a low-rank staffer for the fraudulent issuance of Letters of Undertaking (LoU) on behalf of the three firms associated with diamond merchant Nirav Modi and his family members.
  • It is alleged that bills were also cleared for payments through PNB’s Nostro accounts with other banks that deal in foreign currency
  • As per rules, those availing such a credit facility are required to repay the loan within 90 days of the issuance of an LoU.

SWIFT system

  • In the PNB case, the accused officials misused the Society for Worldwide Inter-bank Financial Telecommunication (SWIFT) system to verify the fraudulently issued LoUs, conforming to the overseas branches of several banks that they could extend foreign exchange credit to the beneficiaries.
  • The SWIFT system is mainly used for clearing international wire transfers.

Accused book under Prevention of Corruption act:

  • The Central Bureau of Investigation has booked one retired and one serving PNB employee so far.
  • The Enforcement Directorate has registered a money laundering case in the matter.
  • It involves Mumbai-based billionaire diamond merchant Nirav Modi.

RBI’s stand:

  • The Reserve Bank of India (RBI) said the failure of internal controls was the main reason for the Rs. 11,500 crore fraud that occurred in Punjab National Bank (PNB).
  • RBI said it was assessing the situation and would take appropriate supervisory action.

‘Operational risk’

  • The banking regulator, in its first reaction since the issue came to light described the fraud as a case of operational risk arising out of delinquent behaviour by the bank’s employees.

Not a prescription for the poor(The Hindu Opinion)

Context:

  • The National Health Protection Scheme (NHPS) is being hailed as the biggest takeaway for the aam aadmi in this year’s Budget.

Problems:

  • The Budget promised to provide insurance coverage to an estimated 50 crore poor beneficiaries through the NHPS. There are two problems with this claim.

Old scheme:

1-   Rashtriya Swasthya Bima Yojana (RSBY) :

  • It was launched in 2008  to target only the Below Poverty Line (BPL) households.
  • However, even after nine years of its implementation, only half the BPL families have been covered, according to government data.
  • There is a huge discrepancy between the coverage figures in government data and estimates from surveys.
  • In the 71st round of the National Sample Survey (NSS), 11.1% of the population was covered by the RSBY and State health insurance schemes in 2014 but according to the Insurance Regulatory and Development Authority, the population coverage of these schemes was 16.4%.

Key reasons for such discrepancy:

  • The creation of bogus beneficiaries by insurance companies to earn premium subsidies from the government.
  • Insurance companies have been given the premium subsidy for covering all eligible households in the respective States, the insurer reached out to only a fraction of the eligible population.
  • For example, in 2016, only 2.45% eligible families were enrolled under Maharashtra’s Mahatma Jyotiba Phule Jan Arogya Yojana (MJPJAY) in 2016.
  • Enrolment was also found to be very low in the Chief Minister’s Comprehensive Health Insurance Scheme, in Tamil Nadu, as shown in the NSS data.

2-      Identification of poor households.

  • According to the NSS data for 2014, among the poorest quintile, 12.7% of households received RSBY coverage, which accounted for 25.9% of all the RSBY enrolled households.
  • About 36.52% of households enrolled in the RSBY were actually drawn from the richest 40% of the sample households.
  • Almost half the households enrolled in the RSBY actually belonged to the non-poor category.
  • The targeting process in RSBY has been fraught with exclusion errors.

Access issues

  • According to the programme data, the hospitalisation rate was found to be as low as 1% among RSBY-insured individuals, compared to a national average of 2.6% for the general population as of 2014.
  • The utilisation rate of other insurance schemes is also very low.
  • For example, the MJPJAY recorded a utilisation rate (calculated as the proportion of eligible persons with at least one in-patient claim during the year) of just 0.12% in 2013-14 and 0.18% in 2014-15.
  • Two very recent impact evaluation studies have reported that the RSBY has hardly had any impact on financial protection.

There are two reasons:

  • International experience in publicly funded health insurance in unregulated private health-care markets. This mean a larger transfer of public money into private hands.
  • In absence of strong and effective government regulations for insurers and providers, well-recognised market failures such as supplier-induced demand will ensure that eligible families exhaust full coverage with little improvement in their well-being.

Case histories((The Hindu Opinion)

Context:

  • The government’s intention to launch the world’s largest health insurance programme, the National Health Protection Scheme, raises an important issue.

Issues:

1-   Should the focus be on the demand side of health-care finance when the supply side, the public health infrastructure, is in a shambles?

  • Experience with insurance schemes, such as the Centre’s Rashtriya Swasthya Bima Yojana and Andhra Pradesh’s Rajiv Aarogyasri, show how demand side interventions can miss the mark.
  • The RSBY and Aarogyasri failed to reach the most vulnerable sections. At times they led to unnecessary medical procedures and increased out-of-pocket expenditure for poor people, both of which are undesirable outcomes.
  • These showed that unless the public health system can compete with the private in utilising funds from such insurance schemes, medical care will remain elusive for those who need it most.
  •  Both RSBY and Aarogyasri are cashless hospitalisation schemes.
  •  Both benefited people living below the poverty line, over-reliance on private hospitals and poor monitoring watered down their impact.
  • Scheduled Tribe and rural households typically missed out, while richer quintiles of the population benefited.

Environment:

Brewing higher profits and saving birds on the farm(The Hindu)

Context:

According to a recently published research in the journal Scientific Reports, Arabica coffee helps both farmers and wild birds in the Ghats.

Issues with Robusta Plantations around the World:

  • Native trees are cut down to grow Robusta, in order to give it more sunlight. Thus it is considered unsuitable for wildlife
  • For example, in Vietnam full-sun coffee growth occurred at the expense of native trees.

Robusta and Arabica Plantations in India

Between 1950 and 2015, planted area under Robusta grew by 840% while Arabica grew by 327%.

About the Study:

Scientists from the Wildlife Conservation Society (WCS-India) and USA’s Princeton University compared bird diversity in 61 Arabica and Robusta estates across Chikkamagaluru, Hassan and Kodagu districts in Karnataka.

Findings of the Study:

  • The plantations supported 79 species of forest-dependent birds in all
  • Arabica estates hosted twice the number of endemic birds than Robusta. They also supported more birds that depend on forests, and eat fruits, insects and other food.
  • Interviews with 344 coffee-growers showed that Arabica was more profitable, with returns of around Rs. 1 lakh per hectare.
  • Robusta plantations also hosted high bird diversity. Robusta farmers in the Western Ghats retain native trees and thus they have been able to preserve the complex canopy structure, setting them apart from others worldwide

Solar alliance biggest win since Paris accord, says PM(The Hindu)

Context:

Recently at the inaugural session of the World Sustainable Development Summit, PM Modi has said that the biggest development on tackling climate change since the Paris Accord of 2015 has been the International Solar Alliance.

About International Solar Alliance (ISA)

  • The ISA was launched on November 30, 2015 in Paris, on the sidelines of COP-21, the UN climate conference
  • The ISA aims to mobilise more than $1,000 billion in investments by 2030 for “massive deployment” of solar energy.
  • It further aims to pave the way for future technologies adapted to the needs of moving to a fossil-free future and keep global temperatures from rising above 2°C by the end of the century.
  • It is the first treaty-based international intergovernmental organisation to be based out of India.
  • It has 121 member countries

India’s Target:

  • India has committed itself to having 175,000 MW of renewed energy in the grid by 2022.
  • As part of the agreement, India will contribute $27 million to the ISA for creating corpus, building infrastructure and recurring expenditure over five years from 2016-17 to 2020-21.

Science and Technology:

Chandrayaan-II to be launched in April(The Hindu)

Context:

  • India’s second moon mission, Chandrayaan-II, which would land a rover on the lunar surface is expected to be launched in April this year.
  • Chandrayaan-I discovered water on the moon and this will mission will be  an extension of that.

About Chandrayaan II:

  • Chandrayaan-II would cost about Rs. 800 crore.
  • It  has three components: an orbiter, a lander and a moon rover.
  • The orbiter had a life of one year while the lander and the rover were designed to last a lunar day, which was 14 days, as they worked on solar power.
  • A location had been identified at the Moon’s South Pole to drop the lander and rover.
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