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GS 1 Indian society

The boycott ban: (The Hindu, Editorial) Maharashtra’s law makes a bench mark Context:

  • Maharashtra’s new law prohibiting the social boycott of individuals, families or any community by informal village councils is a step in the right direction.
  • The Maharashtra Protection of People from Social Boycott (Prevention, Prohibition and Redressal) Act, 2016


  • The state’s legislation targets the pernicious practice of informal caste panchayats or dominant sections using ostracism as a means of enforcing social conformity.
  • The practices the law prohibits range from preventing the performance of a social or religious custom, denial of the right to perform funerals or marriages, cutting off someone’s social or commercial ties to preventing access to educational or medical institutions or community halls and public facilities, or any form of social ostracism on any ground.
  • The law recognises the human rights dimension to issues of social boycott, as well as the varied forms in which it occurs in a caste-based society.
  • Its progressive sweep takes into account discrimination on the basis of morality, social acceptance, political inclination, sexuality, which it prohibits.
  • It even makes it an offence to create cultural obstacles by forcing people to wear a particular type of clothing or use a particular language.

The need for the law:

  • Prior to the new law, Bombay enacted a law against excommunication in 1949, but it was struck down by the Supreme Court in 1962. But one hopes the latest Act will not be vulnerable to legal challenge.
  • Members of various castes and communities require protection from informal village councils and gatherings of elders who draw on their own notions of conformity, community discipline, morality and social mores to issue orders to the village or the community to cut off ties with supposedly offending persons and families.


  • The Act serves as a template for similar legislation in other States.

GS 2 India and neighbors

‘India’s approach to U.S. and China differs’: U.S ready to lend India support Context

  • India hardly tries to shape comments from the United States on China during crises according to Dr. Joshua T. White, a former White House and Pentagon official in the Barack Obama administration.

U.S. stand on the issue

  • The U.S. is sympathetic to the challenge that India faces in dealing with a terrestrially assertive China.
  • Given the nature of Sino-Indian disputes, India technically does not ask for our help because it does not need it according to White.
  • This is in complete contrast to the approach taken on issues concerning Pakistan, where New Delhi is quite keen for condemnation of Islamabad’s actions from Washington, he added.

CAG flags delay in work on corvettes: CAG condemns delay in construction of anti-submarine warfare corvettes Context

  • The Comptroller and Auditor-General (CAG) has condemned the Navy and Garden Reach Shipbuilders and Engineers Ltd. for delay in construction of anti-submarine warfare corvettes and hampering their capabilities because of delayed decisions.

The report

  • The report claims that the approved designs got amended 24 times till as late as last year.
  • Against the 18 weapons and sensors to be installed on ASW corvettes, audit observed that the two ASW corvettes delivered were not fitted with ‘X’ weapon and sensor systems.
  • Thus, ASW corvettes will not be able to put to its full potential as envisaged.

Reason behind the delay

  • The report noted that while the Letter of Intent (LoI) was issued in March 2003, only a sketchy specification of the ship was made available to Garden Reach Shipbuilders and Engineers Limited (GRSE).
  • The finalization of system design as well as specification of equipment, weapon and sensor fit were to be undertaken by the Directorate of Naval Design.
  • Due to the major design modifications, the cost went up from the original sanction of Rs.3,051.27 crore to Rs. 7,852.39 crores.
  • The auditor also noted that harbor acceptance trials (HATs) were still pending as of December 2016 in respect of the second ASW Corvette for over a year.

A Litmus Test: (Indian Express, Editorial) (Denial of Right to Privacy) Context Loss of Right to Privacy will take away the minute rights citizens hold today. The right to privacy is not explicitly mentioned in the Constitution. The cons of not having Right to Privacy

  • Citizens will lose guards against surveillance and even reporting by the state, the state could target those who speak against it, even voting preferences may be influenced, telephone tapping could be routinely resorted to and our mails intercepted.
  • If the text of the Constitution alone is going to determine the nature of the right to privacy, then the collegium system, the right against arbitrariness and the freedom of press too could go soon.
  • Intended surrender of personal information to private entities cannot be equated with mandatory data collection by the state.
  • Despite the recognition of privacy as a fundamental right, the government will continue to have powers to impose “reasonable restrictions”.
  • It is nobody’s case that the right to privacy is an absolute right.
  • Denial of privacy neither promotes national security nor curbs terrorism, it merely takes away citizen’s freedom to be left alone and curtails his/her choice in personal decisions.

GS 3 Indian Economy. Planning, Growth and Employment

  Payments bank: for the informal sector: India has four Payment Banks now Context: There are two kinds of banking licences that are granted by Reserve Bank of India –Universal bank licence and differentiated bank licence. Payment Banks comes under a differentiated bank lincence since it cannot offer all the services that a commercial bank offers. Difference between payment banks from commercial banks:

  • Payment bank comes under a differentiated bank licence since it cannot offer all the services
  • Payment bank cannot lend.
  • It can take deposit up to Rs 1 lakh per account
  • It can issue debit cards but not credit cards.
  • Commercial banks in India like State Bank of India or ICICI Bank do not have any such restrictions.

About payment Banks:

  • A payment bank can work as a business correspondent (B C) of another bank.
  • Payment banks can also distribute simple financial products like mutual fund units and insurance products.
  • Out of the 11 entities that received in –principle licence for opening payments bank, 7 entities received the fiscal licence.
  • RBI has mandated the minimum paid-up equity capital for payment bank at Rs 100 crore.
  • Four payment banks have started operation –Airtel Payment Bank, India Post Payment Bank , Paytm Payment Bank and Fino Payment Bank
  • Apart from maintaining Cash Reserve Ratio (CRR), these entities have to invest a minimum 75% of demand deposit balance in Statutory Liquidity Ratio(SLR)

Objectives of a payment bank:

  • The main objective is to further financial inclusion by providing small savings account and payments/remittance services to migrant labour workforce, low income households, small businesses and other unorganized sector entities.

Eligibility to set up a payment bank:

  • RBI permits non-bank Prepaid Payment Instrument (PPI) issuers, individuals and professionals, non-banking finance companies (NBFCs), corporate business correspondents (BCs), mobile telephone companies, super market chains, companies, real sector cooperatives that are owned and controlled by residents and public sector entities to apply of a payments bank licence.

About NBFCs:

  • Non-Banking financial companies are financial institutions that provide certain types of banking services, but do not hold a banking license.
  • These institutions are not allowed to take deposit from the public, which keeps them outside the scope of traditional oversight required under banking regulations.
  • NBFCs can offer banking services such as loans and credit facilities, retirement planning, money markets, underwriting and merger activities.
  • Non Banking Financial Company is a company registered under the Companies Act, 1956 of India, engaged in the business of loans and advances, acquisition of shares, stock, bonds hire-purchase, insurance business or chit business but does not include any institution whose principle business includes agriculture, industrial activity or the sale, purchase or construction or immovable property.
  • The working and operations of NBFCs are regulated by the Reserve Bank of India (RBI) within the framework of the Reserve Bank of India Act, 1934 and directions issued by it.

Types of NBFC:

  1. Asset Finance Company (AFC): An AFC is a company which is a financial institution carrying on as its principal business the financing of physical assets supporting productive/ economic, such as automobile, tractors, lathe, machine, generator etc.
  2. Investment Company (IC): IC means any company which is a financial institution carrying on as its principal business the acquisition of securities.
  3. Loan Company (LC): LC means any company which is a financial institution carrying on as its principal business the providing of finance whether by making loans or advance or otherwise for any activity other than its own but does not include an Asset Finance Company.
  4. Infrastructure Finance Company (IFC): IFC is a non-banking company which deploys at least 75 per cent of its total assets in infrastructure loans, has a minimum Net Owned Funds of Rs 300 crores and has a minimum credit rating of ‘A’.
  5. Infrastructure Debt Fund: It is a registered company as NBFCs to facilitate the flow of long term debt into infrastructure projects.

MPC members to get Rs. 1.5 lakh per meet, must disclose assets: (MPC members to get Rs 1.5 lakh per meet) Context: RBI says that govt appointees on the Monetary Policy Committee will be paid Rs 1.5 lakh per meeting along with air travel and other reimbursements. Introduction:

  • The silent period and confidentiality requirements will also apply the three RBI members, including the Governor, on the panel that has been deciding on policy rates since October last year, the central bank has said.
  • The six-member MPC, constituted in September 2016, has three persons appointed by the central government while the rest, including the governor, are from the RBI.
  • Their appointment is for a period of four years or until further orders, whichever is earlier
  • The regulations do not mention whether any separate allowance would be given to the RBI members on the committee.

Monetary Policy Committee (MPC):

  • Each member of the MPC has one vote and in case the numbers are equal, the governor has the casting vote.
  • The MPC, which has the responsibility of achieving a set of inflation target, should submit a report to the government in case of failure to achieve the required target..
  • The panel is required to meet at least four times in a year and the RBI has been convening a bi-monthly meeting of this committee.
  • Apart from RBI Governor Urjit Patel, Deputy Governor Viral V Acharya and Executive Director M.D. Patra are also part of the committee.
  • The regulatons do not mention whether any separate allowance would be given to the RBI members on the committee.
  • Each member of the MPC has one vote and in case the numbers are equal, the governor has the casting vote.
  • At least 15 days of notice is required for convening a meeting ordinarily, but an emergency meeting can be called with 24 hours for each member and technology enabled arrangement need to be made for even shorter notice period meetings.

Annual disclosure:

  • All members need to disclose their assets and liabilities and update this information once every year.
  • Members cannot reveal outside the committees any confidential information.
  • After conclusion of meeting, a resolution needs to be made public including on the policy repo rate and other monetary policy measures at the discretion of the chairperson.

Forum concerned at ‘secret’ RCEP talks: (RCEP mega FTA talk to be held in India) Context: Talks to forge a mega free trade agreement (FTA) encompassing Asia and Oceania will take place in India this week with countries striving for an early settlement of the accord, the government said on Sunday. Introduction:

  • Civil society organizations and trade experts on Sunday raised concern over the secrecy surrounding the negotiations regarding a proposed mega-regional Free Trade Agreeement (FTA) involving 16 Asia Pacific nations including India and China.
  • Technical level talks of the proposed FTA, officially known as Regional Comprehensive Economic Partnerships (RCEP), are being held from July 18 to 28 at the Hyderabad International Convention Centre.
  • The 19th round of negotiations on the proposed Regional Comprehensive Economic Partnership (RCEP), began in Hyderabad.

Key points:

  • The RCEP, aims to liberalise investment norms as well as boost trade by eliminating/drastically reducing import duties on goods and bringing down ‘barriers’ in the service sector.
  • The 16 nations account for a combined GDP of close to $ 50 tillion( about 40% of the world’s GDP) and are home to around 3.5 billion people
  • The RCEP would have a wide range impact on agriculture, services, access to medicine, investment and e-commerce.

RCEP in India:

  • RCEP involves the Association of Southeast Asian Nations, South Korea, Japan, China, India, Australia and New Zealand, with the emphasis centered on facilitating open trade without tariffs, duties and quotas that can stimulate commerce and benefit all sides.
  • The current round of negotiations is crucial as members are expected to finalise the broad contours of the agreement.
  • It will include members making their second round of offers on tariff reduction on goods, nations deciding on investment rules, as well as India going against ASEAN and China on market access for the services trade.

NITI Aayog: An institution to fix implementation issues: (Live Mint, Editorial) (The Role of NITI Aayog in the changing economic realities) Context: NITI Aayog is responsible of monitoring and evaluating government schemes but its performance is below par Introduction: In his last month’s radio address, Prime Minister Narendra Modi appreciated the importance of constructive criticism in strengthening democracy and the government’s performance. Background:

  • Governments in the past have devised different mechanisms to facilitate monitoring and evaluation.
  • An independent evaluation office was set up under the earlier regime but wound up after this government assumed office.

Role of NITI Aayog:

  • NITI Aayog is engaged in outcome-based monitoring with states in sectors such as healthcare, education, and water supply.
  • It is now mooting the idea of ranking each state based on health, education, and water index, and identifying “champion states”.
  • It has developed a composite water management index, comprising several key performance indicators, with different weights assigned to indicators.
  • This is expected to incentivize states to collect data and analyse it to make better policies.
  • The approach of measuring and monitoring progress through ranking and encouraging competition among states is akin to the approach adopted in promoting ease of doing business reforms.


  • Reforms remain mostly on paper with key concerns remaining unaddressed.
  • Such approach might result in a race to the bottom, as legitimate beneficiaries get excluded by lowering targets.
  • The vision at the top level of polity and bureaucracy is unable to percolate to the middle and entry levels, resulting in limited change on the ground.
  • Impediments to implementation include capacity constraints, inadequate resources, lack of incentives to perform, no disincentives for non-performance, absence of policy and regulatory clarity among others.


  • The government needs to realize that a business-as-usual approach will work no more, and it needs a comprehensive strategy to transform implementation.
  • Such strategies much comprise working with key stakeholders to identify implementation related challenges and design solutions.
  • A rigorous independent ex-ante and ex-post assessment of solutions is necessary.
  • Experts suggest that significant improvement in the ability to implement policies and projects in the states, cities, and the centre can considerably add to citizens’s well-being and could even add about 2-3% to the country’s gross domestic product (GDP), without any additional resources.
  • NITI Aayog will need to design customized solutions depending on the impediment.
  • A policy or regulatory bottleneck could require regulatory impact assessment to identify superior regulatory alternatives
  • convincing incumbents and political losers for reform could require implementation of transformation change methodology
  • Customized training could be needed to deal with capacity constraints.
  • There could be vertical and horizontal coordination challenges which would require NITI Aayog to act as catalyst to enhance implementation capabilities and improving outcomes, rather than merely measuring them.
  • Agencies grappling with implementation should not be burdened with additional responsibilities of data collection and analysis.
  • Independent agencies could be engaged to collect granular data and design different scenarios.


  • It is high time that NITI Aayog realizes it needs to metamorphose into an organisation which can transform implementation of policy reforms. The development monitoring and evaluation office at NITI Ayog is presently responsible for monitoring and impact evaluation of currently funded programmes. However, there are yet to witness significant improvement in this domain. Independent monitoring and evaluation is important but not sufficient to ensure the success of policy reforms.
  • Identification of constraints like inadequate resources, lack of incentives to performs, no disincentives for non-performance, absence of policy and regulatory clarity etc would require NITI Aayog to have more eyes and ears on the ground. NITI Aayog could leverage available local skills for providing independent inputs and feedback
  • All above strategy can help NITI Aayog to achieve its objective of transforming India.

The RBI’s harsh prescription: (Live Mint, Editorial) (RBI amending its provisions) Context

  • Reserve Bank of India (RBI) cited 12 accounts for reference under Insolvency and Bankruptcy Code and also mentioned that RBI will notify revised provisioning norms for cases accepted under the code.

The RBI directives

  • RBI has mandated banks to set aside at least 50% of the loan amount as probable losses for cases referred under the code.
  • These reports suggest that the RBI has directed a provisioning of 100% of the loan amount for cases that are not resolved in the initial period of 180 days.
  • The RBI directive in its newest form will lead to an undervaluation of assets on bank balance sheets.
  • Banks in India are already challenged in their ability to raise additional equity from private players.
  • The implementation of the RBI directive will further aggravate the situation and render banks reliant upon equity infusion by the government.

What needs to be done?

  • The RBI should consider amending the directives and specify provisioning norms that are aligned with the historical recovery rate.
  • An acceleration of provisioning after six months to a zero book value should be replaced by a provisioning amount that conforms to the National Company Law Tribunal appointed liquidator’s appraisal value.
  • It will prevent fire-sale liquidation and promote bids for assets that preserve “going concern” valuations.

Prelims Related News

Once hero, now ‘white elephant’: (Once a pride, INS Vagli lies unattended) Context:

  • Decommissioned in 2010, the Russia-designed submarine INS Vagli currently lies idle at the Chennai port.
  • She proudly served the Indian Navy and the nation for over 36 years.


  • The maritime heritage museum was expected to be displayed on a 30-acre stretch of land near the Shore Temple of the UNESCO-declared World Heritage group of monuments.
  • But the inability of a contractor to mount the submarine on the intended site at Mamallapuram has forced the vessel to lie idle at the Chennai port.

The planning and failure:

  • In June 2012, The Tamil Nadu government, under Chief Minister Jayalalithaa had decided to set up the maritime museum with the INS Vagli, and senior Navy officials handed over the sumarine to it in April 2013.
  • In April 2015, a petitioner moved the Madras High Court, seeking to find an alternative site for the museum, contending that the submarine being a huge piece of voluminous scrap had the potentiality of inviting lightning.
  • A 2016 report of the Comptroller and Auditor General (CAG) of India observed that an infructuous expenditure of Rs. 4.41 crore was incurred due to a lack of proper planning.
  • In December 2016, the submarine was almost damaged when Cyclone Vardah hit the Chennai coast.

Scientists develop ‘anti-Zika drug’: (Drug for Zika Virus discovered) Context:

  • Researchers from a southeastern Spanish university announced the discovery of a molecule that could be used as a potential drug to fight the effects of a Zika virus infection.

What is it about?

  • It’s a drug that had been withdrawn from the market because it had lost its strength as an antibiotic, but recent discoveries says that it is can be administered to humans.

Russia keen on selling MiG-35 jets to India: (Russian MiG-35 jets on sale for India) Context:

  • Russia is keen on selling its new fighter jet MiG-35 to India Russia is keen on selling its new fighter jet MiG-35 to India.


  • MiG aircraft have been used by India for almost 50 years.
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