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  • Skilling India – Skill India Mission,PMKVY, NSDC, etc.

    [pib] PMKVY 3.0

    PIBSchemes | Governance | Mains Paper 2: Government Scheme/Policies

    The Ministry of Skill Development and Entrepreneurship (MSDE) has launched Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 3.0.

    Note the differences between all three versions of PMKVY.

    PMKVY 3.0

    • PMKVY 3.0 envisages training of eight lakh candidates over the scheme period of 2020-2021.
    • This phase three will focus on new-age and COVID-related skills.
    • The 729 PM Kaushal Kendras (PMKKs), empanelled non-PMKK training centres and more than 200 industrial training institutes under Skill India will be rolling out under it.
    • On the basis of the learning gained from PMKVY 1.0 and PMKVY 2.0, the MSDE has improved the newer version of the scheme to match the current policy doctrine and energize the skilling ecosystem.

    Implementation

    • PMKVY 3.0 will be implemented in a more decentralized structure with greater responsibilities and support from States/UTs and Districts.
    • District Skill Committees (DSCs), under the guidance of State Skill Development Missions (SSDM), shall play a key role in addressing the skill gap and assessing demand at the district level.
    • The new scheme will be more trainee- and learner-centric addressing the ambitions of aspirational Bharat.
    • PMKVY 2.0 broadened the skill development with the inclusion of Recognition of Prior Learning (RPL) and focus on training.
    • With the advent of PMKVY 3.0, the focus is on bridging the demand-supply gap by promoting skill development in areas of new-age and Industry 4.0 job roles.

    Back2Basics: PMKVY 1.0

    • PMKVY is a skill development initiative scheme of the Government of India for recognition and standardization of skills launched on16 July 2015;.
    • The aim of the scheme is to encourage aptitude towards employable skills and to increase the working efficiency of probable and existing daily wage earners, by giving monetary awards and rewards and by providing quality training to them.
    • For this qualification plans and quality, plans have been developed by various Sector Skill Councils (SSC) created with the participation of Industries.
    • National Skill Development Council (NSDC) has been made coordinating and driving agency for the same.

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  • Banking Sector Reforms

    Recapitalization of state-owned banks: Privatization should do it

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    The article suggest the approach to deal with the problems banking in India faces.

    Banking sector under stress

    • Along with the other sectors, pandemic dealt a severe blow to the banking sector.
    • Stress tests reported in the Financial Stability Report (FSR) indicate that the low ratio of capital to risk-adjusted-assets (CRAR) is likely to decline further.
    • To revive the economy and resume sustained high growth, bold structural reforms will have to be combined with strong fiscal and monetary measures.

    Declining credit growth: monetary challenge

    • India’s credit-to-gross domestic product ratio is around 51%.
    • 51% not too low compared to other countries at comparable levels of per capita income.
    • However, the worry is that credit growth is declining rapidly.
    • It is mainly attributable to rising risk aversion among lenders, reflecting the high and rising level of NPAs.
    • Risk aversion spiked during the economic contraction.

    Rising NPA of Public Sector Banks

    • The FSR stress tests now indicate that the gross NPA ratio is likely to go up to as much as 13.5% by September 2021 in the report’s baseline case and 14.8% in the ‘severe stress’ case.
    • Within the banking sector, conditions are much worse in public sector banks (PSBs) compared to private banks (PBs) or foreign banks (FBs).
    • The gross NPA figure is forecast to rise to 16.2% for PSBs as compared to 7.9% and 5.4% for PBs and FBs in the baseline case.
    • Clearly, high NPAs are primarily a problem for PSBs, which still account for 60% of India’s total bank credit.

    Expanding banking sector: bypass PSBs and give a big push to private banking

    • The recent report on Ownership and Corporate Structure for Indian Private Sector Banks submitted by an RBI internal working group (IWG) espouses this approach.
    • The IWG’s main  recommendation is to enable large corporations and industrial houses to acquire banking licences.
    • The proposal has been strongly opposed by former governors and deputy governors of RBI, several former chief economic advisers, a former finance secretary, and, most significantly, all save one of the many experts the IWG consulted.

    Four issues with the push to private banking

    • 1) With an industry CRAR of only 12%, the proposed raising of the promoter share cap to 26% could potentially leverage the promoter’s investment by 32 times.
    • The very high risk appetite generated by such leveraging would subject depositors to a high level of systemic risk, given the limited deposit insurance provided in India.
    • 2) Excessive risk appetite would lead to imprudent lending, especially connected lending to group companies. Conglomerates always find ways around regulatory restrictions against such connected lending.
    • 3) Three, a conglomerate’s bank would have access to insider information on borrower companies that compete with its group companies.
    • 4) Conglomerate banks would lead to massive concentration of economic power and political influence against not just competing companies, but even the regulator.

    Way forward

    • A safer and cleaner option would be to help the country’s banking sector grow through simultaneous privatization and recapitalization of PSBs.
    • However, these options do not change the ownership and governance structure of PSBs, which is what primarily is to blame for their poor performance.
    • A better option is for PSBs to recapitalize themselves by raising fresh equity.
    • It would be more prudent financially and also more acceptable politically to test this approach with one or two small PSBs.

    Conclusion

    Government should try to adopt the approach which reduces the risks associated with giving push to private players in the banking sector while making the PSBs more efficient.

    Back2Basics: CRAR-Capital to risk-adjusted-assets

    •  The CRAR is the capital needed for a bank measured in terms of the assets (mostly loans) disbursed by the banks.
    • Higher the assets, higher should be the capital by the bank.
    • A notable feature of CRAR is that it measures capital adequacy in terms of the riskiness of the assets or loans given.

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  • PPP Investment Models: HAM, Swiss Challenge, Kelkar Committee

    Hybrid Annuity Model(HAM) for the benefit of the road sector

    op-ed snap | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.,Investment Models

    The article explains the working of Hybrid Annuity Model in the road construction and the risks involved in the model.

    Investment in road sector

    • The central government has set a target of increasing the investment in infrastructure to over Rs 111 lakh crore over the period FY20-FY25.
    • Within the transportation segment, projects worth Rs 36.7 lakh crore, constituting 55% of transportation infra, are for the road sector.
    • The large investments planned in the road sector signifies its importance—it has a multiplier effect on the economy and provides large employment opportunities.

    Models for the road sector

    • Out of HAM (Hybrid Annuity Model) and BOT (Build, Operate and Transfer)—toll developers prefer the relatively lower risk HAM model.
    • This is due to its various positives like lower equity requirements, provision for mobilisation advances, better right of way availability, inflation-linked adjustments for bid project cost, termination payments during the construction period and de-linking construction and operations.
    • These HAM features have garnered a favourable response and mix of HAM awards has increased from 10% in FY16 to 48% in H1FY2021.

    How HAM works and risks involved

    • During the operations period for a HAM project, the recovery from authority is in the form of fixed annuity payments along with interest on balance accumulated annuity payments (calculated @300 bps over prevailing bank rate)
    • The only major risk for HAM is the prevailing low bank rates adversely affecting the overall project viability and returns.
    •  Such interest receipts account for around 45% of total inflows.
    • Low bank rate would thus reduce the overall inflows for a HAM project, thereby adversely affecting its debt coverage metrics and returns to the investors.
    • The second problem is related to delayed and inadequate interest rate transmission—there is a transmission lag for the project loan (linked to MCLR of banks).

    Changes in model concession agreement

    • As per revised concession agreement dated November 10, 2020, interest rate on annuities will be equal to the average MCLR of top 5 scheduled commercial banks plus 1.25% instead of bank rate.
    • With the average MCLR replacing the bank rate, there will be a natural hedge between the annuity inflows and interest costs,
    • This will reduce the interest rate risks to a large extent, and that too without any delay.
    • The other major revision is the grant payment from the authority which will now be paid in 10 instalments instead of five.
    • The other major revision is the grant payment from the authority which will now be paid in 10 instalments instead of five.
    • Thus, the spacing between the payment milestones is reduced.
    • This will improve the cash conversion cycle for the contractors executing the HAM projects as their payments are back to back in nature.
    • However, these changes will be applicable for new awards, and the fate of the existing HAM projects is hanging in the balance.

    Conclusion

    With improved attractiveness, HAM is expected to remain the mainstay for public-private partnership projects in the road sector.

    Source:-

    https://www.financialexpress.com/opinion/hamsome-gains/2171329/

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  • Foreign Policy Watch: India – EU

    The ‘Difficult Four’ Countries

    IOCR | International Relations | Mains Paper 2: Effect Of Policies & Politics Of World On India’S Interests

    A UK think-tank ‘Royal Institute of International Affairs’ has listed India in ‘Difficult 4’; clubs India with China, Saudi Arabia, and Turkey.

    This newscard helps analyse the Western esp. that of the EU’s perception of India and its global image under the present regime.

    What is the news?

    • A report called ‘Global Britain, Global Broker’ has warned the UK government to consider India as more of a rival that a cooperative partner.
    • It accepts the fact that India is set to be the largest country in the world by population very soon and will have the third-largest economy and defence budget at some point in this decade.
    • But it cautions that gaining direct national benefit from the relationship, whether economically or diplomatically, will be difficult for the UK government.
    • The report also accepts India’s importance to the UK as being “inescapable”.

    The ‘Difficult Four’

    • Clubbing India with China, Saudi Arabia and Turkey as the “difficult four”, the report says the Johnson government should be more realistic about developing deeper ties with India.
    • They may be important to the UK’s commercial interests, but they will be rivals or, at best, awkward counterparts on many of its global goals, the report warns.
    • India is now classed as a country, destined to count among the UK’s “rivals” or “awkward counterparts” as it pursues its global goals.

    India has had bitter (colonial) past

    • The think-tank strikes a note of caution over the two countries’ shared colonial history proving a stumbling block to the promise of a deeper relationship.
    • India has a long and consistent record of resisting being corralled into a ‘Western’ camp.
    • As a result, India is always on the list of countries with which a new UK government commits to engage.
    • But it should be obvious by now that the idea of a deeper relationship with India always promises more than it can deliver.
    • The legacy of British colonial rule consistently curdles the relationship.

    Indian flaws

    • The report points to India’s “complex, fragmented domestic politics”, which make it one of the countries resistant to open trade and foreign investment.
    • It highlights concerns raised by domestic groups as well as the UN over a “crackdown on human rights activists and civil society groups” not being actively challenged by the judiciary.
    • It raises concern over India’s pursuance of extreme right-winged policies. Indian domestic politics also has entered a more ethnic-nationalist phase, the report argues.
    • Against this backdrop, the report reflects on the prospect of including India within any new Democratic 10 or D10 coalition of 10 leading democracies.

    Try this question from 2019 CS Mains:

     

    Q.What are the challenges to our cultural practices in the name of secularism? (150W)

    UK’s resentment

    • In a critique of India’s diplomatic behaviour, the report points out that despite border clashes with China, “India did not join the group of countries that criticized China at the UN in July 2019 over HR violations in Xinjiang.
    • India has also been muted in its criticism of the passage of the new national security law in Hong Kong.

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  • Women empowerment issues – Jobs,Reservation and education

    Adultery Law and the Armed Forces

    SC Judgements | Indian Society | Mains Paper 1: Salient features of Indian Society

    The Supreme Court has admitted a petition filed by the Ministry of Defence (MoD) seeking to exempt armed forces personnel from the ambit of a Constitution Bench judgment of 2018 that decriminalized adultery.

    Q.  Personnels of the Indian Armed Forces constitute a ‘Distinct Class’.

    Discuss this statement in context to the extension of IPC section 497 to the Armed forces.

    What was the 2018 historic Judgment?

    • The Supreme Court had struck down Section 497 of the Indian Penal Code, which criminalized adultery.
    • It also declared Section 198 of the Criminal Procedure Code as unconstitutional, which deals with the procedure for filing a complaint about the offence of adultery.

    Important observations of the judgment

    • Section 497 was unconstitutional and is violative of Article 21 (Right to life and personal liberty) and Article 14 (Right to equality).
    • The court observed that two individuals may part if one cheats, but to attach criminality to infidelity is going too far. How married couples deal with adultery is absolutely a matter of privacy.
    • Besides, there is no data to back claims that abolition of adultery as a crime would result in “chaos in sexual morality” or an increase of divorce.
    • Any provision of law affecting individual dignity and equality of women invites the wrath of the Constitution.
    • It’s time to say that a husband is not the master of the wife. Legal sovereignty of one sex over other sex is wrong, ruled the court.
    • Marriage does not mean ceding autonomy of one to the other. Ability to make sexual choices is essential to human liberty. Even within private zones, an individual should be allowed her choice.

    What about Armed forces?

    • The judgment of 2018 created “instability”. It allowed personnel charged with carrying on an adulterous or illicit relationship to take cover under the judgment.
    • The bench had then referred the case to the CJI to pass appropriate orders to form a five-judge Bench to clarify the impact of the 2018 judgment on the armed forces.
    • This case is now being under the observation of the apex court.

    Govt. stance over this

    • The MoD has sought for an exemption to this decriminalization in the petition.
    • It said that there will always be a concern in the minds of the Army personnel who are operating far away from their families under challenging conditions about the family indulging in untoward activity.
    • The petition goes on to say that personnel of the Army, Navy and the Air Force were a “distinct class”. They were governed by special legislation, the Army Act, the Navy Act and the Air Force Act.
    • Adultery amounted to unbecoming conduct and a violation of discipline under these three Acts.
    • Unlike Section 497, the provisions of the three Acts did not differentiate between a man and a woman if they were guilty of an offence.

    Constitutional backing for an exception

    • These special laws imposed restrictions on the fundamental rights of the personnel, who function in a peculiar situation requiring utmost discipline.
    • The three laws were protected by Article 33 of the Constitution, which allowed the government to modify the fundamental rights of the armed forces personnel.

    The core idea behind govt. proposition

    • One has to remember that the armed forces exist in an environment wholly different and distinct from civilians. Honour is a sine qua non of the service.
    • The provisions of the Acts should be allowed to continue to govern the personnel as a “distinct class”, irrespective of the 2018 judgment.
    • This is because, the discipline necessary for the performance of duty, crucial for national safety, would break down.
    • It said the court would not, at the time, have been appraised of the different circumstances under which the armed forces operated.

    Back2Basics: Article 33 of the Indian Constitution

    • It deals with the power of Parliament to modify the rights conferred by this Part III in their application etc.
    • Parliament may, by law, determine to what extent any of the rights conferred by this Part shall, in their application to-

    (a) the members of the Armed Forces; or

    (b) the members of the Forces charged with the maintenance of public order; or

    (c) persons employed in any bureau or other organisation established by the State for purposes of intelligence or counterintelligence; or

    (d) persons employed in, or in connection with, the telecommunication systems set up for the purposes of any Force, bureau or organisation referred to in clauses (a) to (c), be restricted or abrogated so as to ensure the proper discharge of their duties and the maintenance of discipline among them

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  • International Space Agencies – Missions and Discoveries

    NASA’s Curiosity Rover celebrates 3000 days on Mars

    Prelims Only | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    The Mars rover ‘Curiosity’ has completed 3,000 Martian days.

    Try this PYQ:

    Q.Which region of Mars has a densely packed river deposit indicating this planet had water 3.5 billion years ago?

    (a) Aeolis Dorsa

    (b) Tharsis

    (c) Olympus Mons

    (d) Hellas

    Curiosity Rover

    • Curiosity is an SUV-sized Mars rover designed to explore the Gale crater on Mars as part of NASA’s Mars Science Laboratory (MSL) mission
    • The main mission of Curiosity was “to search areas of Mars for past or present conditions favourable for life, and conditions capable of preserving a record of life.”
    • It has a suite of instruments:
    1. A gas chromatograph, a mass spectrometer, a tunable laser spectrometer, X-ray diffraction, fluorescence instrument help study the rocks
    2. The Mars Hand Lens Imager (for close-up pictures) and a Mast Camera (to take photos of the surroundings)
    3. An instrument named ChemCam to vaporize thin layers of Martian rocks.
    4. Radiation Assessment Detector to study the radiation environment at the surface of Mars
    5. Rover Environmental Monitoring Station to measure atmospheric pressure, temperature, humidity, winds, plus ultraviolet radiation levels
    6. Dynamic Albedo of Neutrons instrument to measure subsurface hydrogen

    Back2Basics: Martian Day/ Sol

    • Coincidentally, the duration of a Martian day aka ‘Sol’ is within a few per cent of that of an Earth day, which has led to the use of analogous time units.
    • A sol is slightly longer than an Earth day. It is approximately 24 hours, 39 minutes, 35 seconds long.
    • A Martian year is approximately 668 sols, equivalent to approximately 687 Earth days.
    • Mars has an axial tilt and a rotation period similar to those of Earth.
    • Thus, it experiences seasons of spring, summer, autumn and winter much like Earth.

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  • Historical and Archaeological Findings in News

    Sulawesi Cave Paintings

    Prelims Only | History | Mains Paper 1: Arts & Culture

    A team of archaeologists in Indonesia has discovered what may be the world’s oldest known cave painting dating back to more than 45,000 years.

    Try this PYQ:

    Q.There are only two known examples of cave paintings of the Gupta period in ancient India. One of these is paintings of Ajanta caves. Where is the other surviving example of Gupta paintings?

    (a) Bagh caves

    (b) Ellora caves

    (c) Lomas Rishi cave

    (d) Nasik caves

    Sulawesi Cave Paintings

    • The cave painting depicts a wild boar endemic to the Sulawesi island of Indonesia, where the painting was found.
    • The central Indonesian island, which occupies an area of over 174,000 sq. km, is situated between Asia and Australia.
    • It has a long history of human occupation.

    Significance of the painting

    • The archaeologists’ note that the dated painting of the Sulawesi warty pig seems to be the world’s oldest surviving representational image of an animal.
    • The painting was made using red ochre pigment and depicts a pig with a short crest of upright hairs and a pair of horn-like facial warts in front of the eyes.
    • These pigs have been hunted by humans for tens of thousands of years and are the most commonly depicted animal in the ice age rock art of the island.
    • It suggests that they have long been used as food and form a “focus of creative thinking and artistic expression” for people of that time.

    Must read:

    Chapter 1 | Stone Age – Paleolithic, Mesolithic and Neolithic

    How did the archaeologists date it?

    • The painting was first discovered in 2017 as part of surveys the team was carrying out with the Indonesian authorities.
    • For these painting archaeologists used a method called U-series isotope analysis, which uses calcium carbonate deposits that form naturally on the cave wall surface to determine its age.
    • They used a calcium carbonate deposit, also referred to as “cave popcorn” that had formed on the rear foot of one of the pig figures.
    • They were able to figure out a minimum age for the painting at around 45,500 years, which means the painting was made before this.

    Sulawesi: Oldest human habitat

    Try memorizing these Islands of the Indo-Pacific in their East-West alternations.

    • Sulawesi island contains some of the oldest directly dated rock art in the world and also some of the oldest evidence for the presence of hominins beyond the southeastern limits of the Ice Age Asian continent.
    • Hominins include modern humans, extinct human species and our immediate ancestors.
    • Homo sapiens are the first modern humans who evolved from their hominid predecessors between 200,000-300,000 years ago.
    • It is estimated that these modern humans started migrating outside of Africa some 70,000-100,000 years ago.
    • Even so, it is not yet clear as to when modern humans first colonised Sulawesi.

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  • Festivals, Dances, Theatre, Literature, Art in News

    Kashmir’s ancient art of papier-mache

    Prelims Only | History | Mains Paper 1: Arts & Culture

    This newscard is an excerpt of the original article published in The Hindu.

    Tap to know about other Geographical Indicators in news.

    Kashmiri papier-mache

    • It is a handicraft of Kashmir that was brought by Muslims saint Mir Sayyid Ali Hamadani from Persia in the 14th century to medieval India.
    • It is based primarily on paper pulp, and is a richly decorated, colourful artefact; generally in the form of vases, bowls, or cups (with and without metal rims), boxes, trays, bases of lamps, and many other small objects.
    • These are made in homes, and workshops, in Srinagar, and other parts of the Kashmir Valley, and are marketed primarily within India, although there is a significant international market.
    • The product is protected under the Geographic Indication Act 1999 and was registered by the Controller General of Patents Designs and Trademarks.

    Back2Basics: Geographical Indication (GI)

    • The World Intellectual Property Organisation defines a GI as “a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin”.
    • GIs are typically used for agricultural products, foodstuffs, handicrafts, industrial products, wines and spirit drinks.
    • Internationally, GIs are covered as an element of intellectual property rights under the Paris Convention for the Protection of Industrial Property.
    • They have also covered under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

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  • Zoonotic Diseases: Medical Sciences Involved & Preventive Measures

    Covid-19 vaccine policy

    op-ed snap | Governance | Mains Paper 2: Health & Education

    The article explains the challenge in the vaccination program for the Covid-19 vaccine.

    Issue of lack of data about the vaccine

    • In the COVID vaccine roll out, there is no clear data for either of the two vaccines proposed for use in the programme.
    • We do not know if they provide protection for life, for a year or six months, its efficacy among the elderly or the very sick or in stopping new infections.
    • Getting such data requires at least three years and cannot be obtained in a few months.

    Guidelines for implementing vaccine programme

    • Given these limitations, the government has drawn up strategic guidelines for implementing an vaccine programme covering 30 crore people by July.
    • The guidelines draw upon the knowledge of running national campaigns acquired over three decades of implementing the Universal Immunisation Programme.
    • These guidelines detail the skills, roles and responsibilities of the required human resources, logistics for delivering vaccines at point of use, physical infrastructure, monitoring systems based on digital platforms and feedback systems for reporting adverse events.
    • The approach involves 19 departments, donor organisations and NGOs at the national, state, district and block level.
    • The guidelines also mention the priority criteria — caregivers, front line workers of the departments of health, defence, municipalities and transportation; persons above the age of 50 and those below 50 having diabetes, hypertension, cancers and lung diseases.

    Issues with the guidelines

    • Of the 28,932 cold chain points, half are in the five southern states, Maharashtra and Gujarat.
    • Combined with poor human resources — doctors, nurses, pharmacists — a weak private sector, poor safety and hygiene standards, frequent power outages, poor infrastructure, the capacity to implement with the expected speed, quality and accuracy is daunting.
    • The immunisation can disrupt routine health service delivery — antenatal care, national programmes like those pertaining to TB or other immunisation drives.
    • While data for the above-50-year-olds is available in the electoral rolls, line listing of the under 50s with comorbidities can be challenging.
    • Not only are urban-rural variations substantial, but urban areas have weak public health infrastructure and a multiple number of private providers due to the poor implementation of the Clinical Establishment Act, 2010.
    • Patient tracking can be problematic.
    • The non-availability of efficacy data could also impact the procurement and supply of vaccines, result in huge wastage, and can introduce scope for errors and duplication.

    Way forward

    • Central to the success of the roll out will be the confidence of the people in the vaccines.
    • Coming out of this messy situation is necessary and one option — as adopted for the polio eradication programme — is to establish an independent team of experts under the aegis of the WHO to ensure the safety of the vaccine.
    • This will create confidence in the community and international authorities as well.

    Conclusion

    it is important to understand that vaccination is an incomplete solution to ending the epidemic, since the virus is mutating. Adopting safe behaviour is.

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  • Government Budgets

    Improving fiscal situation through budget

    op-ed snap | Economics | Mains Paper 3: Government Budgeting

    The budget could be an opportunity to increase the consumption which has been impacted by the pandemic and still continues to show the declining trends.

    Continuing decline in consumption

    • The first advance estimates of GDP for 2020-21 are much better than the earlier market consensus.
    • The demand side, however, continues to be in a decline with private consumption falling by 9.5 per cent and its share in the overall GDP reducing by full 100 basis points.
    • Per capita private consumption has contracted by 10.4 per cent, while capital formation has contracted by 14.5 per cent, with imports and exports also contracting.
    • Only government consumption remains in positive territory.

    What should be the growth in nominal GDP for 2021-22?

    • In terms of specific numbers, the average growth in nominal GDP for the decade ending in 2013-14 was 15 per cent, but the average GDP deflator at 7.6 per cent far outpaced average real GDP at 6.8 per cent.
    • For the six year period ending in 2019-20, average nominal GDP growth was 10.4 per cent, with real GDP growth of 6.8 per cent far outpacing the GDP deflator at 3.6 per cent.
    • It is thus extremely important that we ensure that the current inflation trajectory is kept under control through policy interventions.

    Policy recommendations for the farmers

    1) Changing condition for renewal of loan on Kisan Credit Cards

    • Out of the outstanding bank credit of about Rs 12 lakh crore to the agriculture and allied activities sector, Rs 7 lakh crore is for Kisan Credit Cards.
    • The KCC portfolio of banks is under stress over the years due to a variety of factors like crop losses, unremunerated prices, debt waivers and the rigidity of the KCC product.
    • Currently, the renewal of KCC loans with payment of both principal and interest ensures interest subvention.
    • It is proposed that for renewal of KCC loans of small and marginal farmers and for loans of other categories of farmers for amounts up to Rs 3 lakh, the payment of interest must be a sufficient condition for renewal as with other loans.
    • The above measure has the potential to reduce the credit cost for banks considerably on KCCs as NPAs can be prevented more easily and the interest rate on KCC loans can be further reduced.

    2) Formalise tenancy and provide credit to tenant farmers

    • There are 11.5 crore farmers who are PM-KISAN beneficiaries — 6.5 crore farmers have KCC.
    • Thus, the remaining 4-5 crore could be land owning cultivators and at least 3-4 crore of such could be tenants/lessees/landless.
    • Currently, such tenant farmers are not formalised into the credit deliveries of scheduled commercial banks.
    • As of now, it requires state interventions for tenancy certificates which is only available in Andhra Pradesh.
    • Formation of a SHG model under the Deen Dayal Antodoya Yojana will formalise tenancy even without formal documentation of tenancy.
    • This will enable formal lending to take place to three crore landless farmers.

    3) Increasing investment in health and education

    • For health, it government could introduce medical savings account with a defined scheme to deduct interest from the savings account and pay towards a Mediclaim policy.
    • For the record, the size of the health insurance is Rs 32,000 crore and the savings bank interest is Rs 1.15 lakh crore.
    • The government should also consider exempting all retail and health insurance products from GST.

    Three suggestions on the fiscal situation

    • First,Withdraw all tax appeals.
    • Second, accept all domestic arbitration decisions against government departments/agencies.
    • Third, clear all outstanding dues to all parastatal agencies within a stipulated time.
    • This will be a milestone structural administrative change that could be even thought of as a one-time balance sheet entry recognising liabilities and paying them off.
    • As a consequence, we could jump multiple positions on the Ease of Doing Business rankings.

    Conclusion

    By implementing these steps in the budget the government could use this opportnity to stimulate the economy and aid the economic recovery.

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