Factly :-News Articles For UPSC Prelims | Mar 19, 2021

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What are “DFIs or Development Finance Institutions”?

What is the News?

The Union Cabinet has approved a bill to set up a DFI (Development Finance Institution). It will be called National Bank for Financing Infrastructure and Development (NaBFID).

Click Here to Read about NaBFID

About DFIs:

  • The development finance institutions(DFI) are usually owned by the government or public institutions. DFIs provide funds for infrastructure and large-scale projects. Large Scale banks are often not interested in lending for such projects due to viability issues.
  • The prime objective of DFI is the economic development of the country via financing infrastructure activities.
  • Their cost of borrowings also reduces because of the attached government guarantees.
  • Setting up of DFI is important due to rising NPAs in commercial banks. At present, they are unable to finance the infrastructure projects in India.

Key Features of DFIs:

  • Funding: DFIs do not accept deposits from people. Thus, they raise funds by borrowing from governments, insurance companies, and sovereign funds.
  • Functions: They provide technical assistance like Project Report, Viability study, and consultancy services.
  • DFIs provide credit enhancement for infrastructure and housing projects. It also helps in improving debt flows towards infrastructure projects.
  • DFIs strike a balance between public good via infrastructure and profit maximization. It often prioritizes the former over the latter.

DFIs in India:

  • The first DFI in India was the Industrial Financial Corporation of India (IFC) that was launched in 1948. IDBI, UTI, NABARD, EXIM Bank, SIDBI, NHB, IIFCL are the other major DFIs.
  • Later several of them were converted into banks like ICICI Bank, IDBI Bank etc.

DFI categories: DFIs in India can be classified in four categories of institutions as per their functions:

  • National Development Banks e.g IDBI, SIDBI, ICICI, IDFC
  • Sector specific financial institutions e.g. EXIM Bank, NABARD, NHB
  • Investment institutions e.g LIC, GIC, UTI
  • State level institutions e.g. state Finance corporations.

Source: The Hindu

“MPLAD Scheme” Funds for 2019-20 cleared by Finance Minister

What is the news?

The Finance Minister has said that the funds under the MPLAD scheme (Members of Parliament Local Area Development) Scheme for 2019-20 are clear.

Note: The government of India has decided to make the MPLADS scheme non-operational for two years(2020-21 and 2021-22). These funds will be used to strengthen the Government’s efforts in managing the impact of COVID-19 in the country.

About MPLADs Scheme:

  • Members of Parliament Local Area Development Scheme(MPLADS) is a Central Sector Scheme. It was launched in 1993.
  • Nodal Ministry: Ministry of Statistics and Programme Implementation.
  • Aim: To provide funds to MPs to execute certain developmental projects in their constituencies.

Note: States have their own version of this scheme with varying amounts per MLA.

Key Features of MPLAD Scheme:

  • Under the scheme, an MP receives Rs. 5 crores per annum to identify and fund developmental projects.
  • The funds released under the scheme are non-lapsable.
    • Non-Lapsable funds should be spent within the current financial year. These funds cannot be carried forward to the next year.
  • The role of the MP is recommendatory in nature. The implementation of the project is done by local authorities.
  • The focus of the scheme is on the creation of durable community assets like roads, school buildings, etc. Recommendations for non-durable assets can be made only under limited circumstances.
  • Elected Members of Rajya Sabha can recommend works in the state from where they have been elected.
  • Nominated Members of both the Rajya Sabha and Lok Sabha can recommend works anywhere in the country.

Source: The Hindu

Voluntary Vehicle-Fleet Modernisation Programme

What is the news?

Union Minister for Road Transport and Highways Minister announces the Voluntary vehicle fleet modernisation programme. The programme is also known as the Vehicle scrapping policy.

Aim of the Policy:

  • The policy is aimed at creating an ecosystem to phase out unfit and polluting vehicles. It will reduce pollution, improve fuel efficiency and increase the government’s revenue collection from the sale of new vehicles.

When will the policy be applied?

  • The policy will kick-in for government vehicles from April 1, 2022.
  • The Mandatory fitness testing for heavy commercial vehicles will start from April 1,2023 and
  • For all other categories of vehicles including personal vehicles will start in phases from June 1,2024.

Key Features of the Policy:

  • A vehicle has to undergo fitness tests after the completion of 20 years in the case of privately owned vehicles and 15 years in the case of commercial vehicles.
  • Any vehicle that fails the fitness test or fails to renew its registration certificate may be declared as an End of Life Vehicle. These vehicle owners will be encouraged to scrap the vehicles.
  • Vehicle re-registration fees will be increased to discourage people from running old vehicles.
  • Automated fitness centres will be established throughout the country to ease vehicle scrapping.
  • All government vehicles and those owned by PSUs will be de-registered after 15 years.
  • Vintage cars will be exempted from this policy and separate guidelines will be formulated to regulate them.

Incentives for Scrapping: In order to lure owners into vehicles scrapping policy their vehicles, the Government has suggested the following ways:

  • A vehicles scrap value of the ex-showroom price of the vehicle ranging from 4-6% will be given to the owner if they choose to vehicle scrap policy
  • A rebate of up to 25% will be given in Road Tax
  • Vehicle manufacturers will be advised to give a 5% discount on new vehicles against a scrapping certificate.
  • So in total benefits of up to 10-15% can be availed on the older vehicles, who have reached the end of their lifecycle.

Source: Indian Express

EU joins “CDRI or Coalition for disaster resilient infrastructure initiative”

What is the news? The 27-member European Union joins the Coalition for Disaster Resilient Infrastructure (CDRI) initiative. About Coalition for Disaster Resilient Infrastructure(CDRI) Initiative:

  • Prime Minister of India launched it in 2019 at the UN Climate Change Summit.
  • What is it? It is a multi-stakeholder global partnership of national governments, UN agencies, multilateral development banks, private sector, academic and knowledge institutions.
  • Purpose: It aims to promote the resilience of new and existing infrastructure systems to climate and disaster risks. It also supports sustainable development.
  • Governing Council: The Governing Council is the highest policy-making body of the CDRI. It is co-chaired by India and a representative of another nation, nominated by rotation every two years.
  • Funding: A large share of the fund over the first five years has been invested by India. There are no obligations on the part of members to make financial contributions to CDRI. However, at any point, members of the CDRI may make voluntary contributions.
  • Secretariat: New Delhi, India.

Source: Livemint  

SC Guidelines for Bail in Sexual Assault Cases to Lower Courts

What is the News?

The Supreme Court has set aside the “rakhi-for-bail” order of the Madhya Pradesh High Court. Further, the SC also issued a set of guidelines to be followed by Courts while dealing with sexual assault cases.

What was the Rakhi for Bail order of the MP High Court?

  • In 2020, the Madhya Pradesh High Court Judge put forward a condition for bail to the accused of having outraged the modesty of a woman. The condition was to present himself before the victim so that she may tie a “rakhi” on his wrist to be eligible for bail.

Guidelines to be followed by Courts while dealing with Sexual Assault Cases: The apex court issued seven directions to the lower courts. These directions need to be followed while dealing with bail petitions under cases of crimes against women. These guidelines are:

  1. Condition for Bail should not require or permit contact between the accused and the victim.
  2. Protection should be provided to the victim in case of any potential threat of harassment.
  3. The complainant should be provided Information of bail to the accused immediately. Copy of the bail order made should be delivered to him/her within two days.
  4. Bail conditions and orders should avoid reflecting stereotypical or patriarchal notions about women and their place in society.
  5. The courts while adjudicating cases involving gender-related crimes, should not suggest or encourage compromises between the victim and the accused to get married or mandate mediation.
  6. Sensitivity should be displayed at all times by judges. They should ensure that there is no traumatization of the victim during the proceedings.
  7. Judges especially should not use any words, spoken or written, that would undermine or shake the confidence of the survivor in the fairness or impartiality of the court.

Note: Besides these directions, the apex court also stated that the lower courts should desist from expressing any stereotype opinion such as women are physically weak, should be submissive and obedient, good women are sexually chaste, among others.

Source: The Hindu

SC agreed to hear the issue of “electoral bonds”

What is the News?

The Supreme Court agrees to hear a plea to stay the fresh sale of Electoral Bonds. The hearing of the case is set before the upcoming state assembly elections. It is important considering the dependency of political parties on Electoral Bonds for funding.

What are Electoral Bonds?

  • Electoral Bonds are interest-free bearer financial instruments for making donations to political parties. They were introduced by the Government of India by the Finance Bill, 2017.
  • The bonds are issued in multiples of Rs. 1,000, Rs. 10,000, Rs. 1 lakh, Rs. 10 lakh and Rs. 1 crore without any maximum limit.

Key Features of Electoral Bonds:

  • Eligibility: Only the registered Political Parties which have secured atleast 1% of the votes polled in the last Lok Sabha elections or the State Legislative Assembly are eligible to receive the Electoral Bonds.
  • Donors:  Electoral bonds may be purchased by a citizen of India or entities incorporated or established in India. A person can buy Electoral Bonds, either singly or jointly with other individuals.
  • Authorised Bank: The State Bank of India (SBI) has been authorised to issue and encash Electoral Bonds.
  • Validity: The Electoral Bonds shall be valid for fifteen calendar days from the date of issue. No payment shall be made to the Political Party if the Electoral Bond is deposited after the expiry of the validity period.
  • Political parties will create a specific account. This account will be verified by the Election Commission. The political parties will encash the electoral bonds only in this verified account.
  • The Electoral Bond deposited by an eligible Political Party in its account shall be credited on the same day.

Arguments against Electoral Bonds:

  • Anonymity: Neither the donor nor the political party is obligated to reveal whom the donation comes from.
  • Black Money: The sale of electoral bonds had become an avenue for shell corporations and entities to park illicit money and even proceeds of bribes with political parties.
  • Tax Exemption: Electoral Bonds donations enjoy 100% tax exemption. Further, they need not be reported to the Income Tax department either.
  • Removal of Cap on Net Profit Donations: The government has removed the eligibility cap for funding political parties. Earlier a company can make a political contribution only if it has 7.5% of the net average profit for three preceding financial years.

Source: The Hindu

Ecuador’s “Sangay Volcano” erupted

What is the news?

Ecuador’s Sangay volcano erupted and blew clouds of ash as high as 8,500 meters (8.5 km) into the sky.

 About Sangay Volcano:

  • Sangay is an active stratovolcano in central Ecuador. It is one of the most active volcanoes in the world.
    • Stratovolcanoes or composite volcanoes are conical volcanoes composed of multiple layers of intermediate to lava, ash, and other volcanic debris.
  • Location: Sangay Volcano is located on the eastern edge of the Andes Mountains.
    • The Andes is the longest mountain range in the world and boasts some of the highest peaks. The range is also known for its volcanoes.
    • The Andes extend from north to south through seven South American countries: Venezuela, Colombia, Ecuador, Peru, Bolivia, Chile, and Argentina.
  • Significance: Sangay Volcano hosts a significant biological community. Therefore, since 1983, its ecological community has been protected as part of the Sangay National Park, a UNESCO World Heritage Site.

About Ecuador:

  • Ecuador is a country in the northwestern part of South America. It is bordered by Colombia on the north, Peru on the east and south, and the Pacific Ocean on the west.
  • Ecuador also includes the Galápagos Islands in the Pacific which is about 1,000 kilometres west of the mainland.
  • Ecuador is a part of the Pacific Rim’s “Ring of Fire” region. It has eight volcanoes in its territory.

Source: Indian Express

What is FDI or Foreign Direct Investment?

What is the News?

Rajya Sabha has passed the Insurance (Amendment) Bill, 2021. The Bill seeks to raise the FDI in the insurance sector to 74% from the current 49%.

Click Here to Read about Insurance in Amendment Bill,2021

About Foreign Direct Investment(FDI):

  • Foreign Direct Investment(FDI) is the medium for acquiring ownership of assets in one country (the home country) by residents of other countries. FDI may result in control of the production, distribution, and other activities in a firm in the host country.
  • FDI is considered a major source of non-debt financial resources for economic development.
  • However, FDI is distinguished from Foreign Portfolio Investors(FPI) in which a Foreign investor merely purchases equities of companies.

Routes through which India gets FDI:

  • Automatic Route: In this, the foreign entity does not require the prior approval of the government or the RBI.
  • Government route: In this, the foreign entity has to take the approval of the government.

Sector Specific Conditions for FDI:

  • Mining and Exploration of metal and non-metal ore – 100% FDI through Automatic Route
  • Coal & Lignite — 100% FDI through Automatic Route
  • Defence Industry — 100%. However, Automatic is only up to 74%. Beyond 74%, it is a Government route wherever it is likely to result in access to modern technology or for other reasons to be recorded.
  • Print Media and Digital Media — 26% through Government Route
  • Intermediaries or Insurance Intermediaries — 100% FDI through Automatic Route
  • E-commerce activities — 100% FDI through Automatic Route
  • Single Brand Product Retail Trading — 100% Automatic
  • Multi Brand Retail Trading — 51% through Government route
  • Railways Infrastructure —100% FDI through Automatic Route in the construction, operation and maintenance of the railway transport sector: Suburban corridor projects through PPP model and High-speed train projects.

Prohibited Sectors: FDI is prohibited in:

  • Lottery Business including Government/private lottery, online lotteries, etc.
  • Gambling and Betting including casinos etc.
  • Chit funds
  • Nidhi company
  • Trading in Transferable Development Rights (TDRs)
  • Manufacturing of cigars, cheroots, cigarettes, tobacco, or of tobacco substitutes
  • Activities/sectors not open to private sector investment e.g.(I) Atomic Energy and (II) Railway operations (other than permitted activities).
  • Real Estate Business or Construction of Farm Houses
    • ‘Real estate business’ shall not include development of townships, construction of residential /commercial premises, roads or bridges and Real Estate Investment Trusts(REITs) registered and regulated under the SEBI(REITs) Regulations 2014.

Source: Indian Express

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