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  • Did you check out the calendar widget on the NEWS tab?

    Hello,

    Now news is easy to access and revise! We have introduced a calendar widget on the NEWS tab so that you can hop on & around and date of any month and read the connected NEWS summaries of a particular day.

    Click on the “green text on top of every newscard” to go to the connected story so that you find a better analysis of the theme in full.

    We have been working on our STORY pages and have consolidated the CD explains articles under them so that you get everything under the same roof

    What’s more! NEWS is available in HINDI as well. Toggle the language switch on top right of the webpage.

  • Masala Bonds

    What’s New In The Masala Bonds?

     

    During his visit to the UK last week, Prime Minister Narendra Modi spoke about the Indian Railways issuing bonds and listing them on the London Stock Exchange.

     

    Let’s explore the Bonds as a financial instrument and then dive deep into Masala Bonds.

    What are Bonds?

    Bonds are debt instruments which allow the companies or govt. to raise funds only by incurring debt and lender is guaranteed of a fixed repayment (Principle and Interest).

    What are instrument available with Company to raise funds?

    1. Issue Bonds – Companies will have to pay the fixed amount when the bond matures.

    2. Issue Shares – Companies would like to raise money, but don’t want is as a debt, so company will issue shares.

    Can you imagine who (Company/Investor) will prefer what (Debt/Shares)?

    Companies will prefer to raise money through equities i.e. issuing shares because they will part a share of the company to the investors, while the investors will prefer to purchase bonds because bonds are more secured.

    Shares may give higher returns in the long run. So, it is risk-return trade-off.

    How the bonds are more secure than shares?

    In case of liquidation of the company, the bond holders are the one who get their claim before the share holders.

    Now, let’s get into main discussion on Masala Bonds

     

    What’s new in the Masala Bonds?

    Basically, overseas rupee bonds are known as Masala bonds.

    • Indian firms have earlier raised money abroad through bonds and other forms of borrowings, but always in foreign currency.
    • However, the first overseas rupee bonds were issued in 2013 by the International Finance Corporation, the World Bank’s private sector investment arm.
    • To raise funds for capital expenditure, the Indian Railway Finance Corporation will be issuing bonds denominated in rupees.

    What are the risk associated Indian companies with foreign currency overseas bond? 

    • An Indian company issuing a overseas bond(i.e. in other currencies specially dollar) runs into a risk on account of currency fluctuation.
    • If rupee weakens during the period of bond, then it add significantly to costs at the time of repayment, normally at the end of 5 years.

    How Masala Bonds will benefit Indian companies?

    • If the issuer, issues bonds in rupees, then he gets rid of this risk (currency fluctuation) which passes on to the investor.
    • This bond brings a new and diversified set of investors for Indian companies, and more liquidity in foreign exchanges, apart from bank funding and the corporate bond market in India.

    Does Masala bond offer something for foreign investors?

    The investor who purchases a bond issued by an Indian entity is betting on India, in a hope that currency and inflation would be stable enough to ensure good returns after hedging for foreign exchange risks.

    With India’s GDP or national income rising, and projected to grow at a reasonably fast clip over the next few years, many overseas investors would like to buy into such bonds to join the party and to earn higher returns compared to the US and Europe where interest rates are still low.

    How does Govt. and RBI view Masala Bonds?

    The local currency bond markets can contribute to financial stability by reducing currency mismatches and extending the duration of debt.

    It will also be a sign of early acceptance of the Indian currency in trading and settlement overseas, showing the confidence of investors and can lead to  internationalization of the currency over the medium- and long term.

    Foreign investors prefer to hedge their risks overseas because there are limited products in the Indian market, especially for longer periods.

    The other worry, if the overseas rupee bond market takes off, will be about the growth of the Indian corporate bond market and Indian banks as top companies shift to another market, impacting growth here.

    Was such an approach adopted by any emerging economies in past?

    China’s People’s Bank of China has previously issued yuan denominated bonds to raise funds at a little over 3%.

    China had issued bonds in its own currency in Hong Kong dubbed dimsum bonds and plans to issue more as part of its plan to push its currency for global trade.

    1. Unlike China, the Indian govt. has never borrowed abroad on its own, preferring to push its state owned firms, instead.
    2. RBI, unlike the Chinese central bank, cannot issue debt with no legal sanction for it.

    But these have been borrowings in dollar or other currencies. The Railways bond, on the other hand, will be denominated in rupees.

     

    Published with inputs from Pushpendra

  • UDAY Scheme for Discoms

    UDAY: Reviving Power Discoms

    In a bid to rescue almost bankrupt state electricity retailers, the Cabinet recently approved this scheme for reviving power utilities having debt amounting to Rs 4.3 lakh crore.

    uday-head-for-BLOG

    What is Ujjwal Discom Assurance Yojana?

    UDAY provides for the financial turnaround and revival of Power Distribution companies (DISCOMs), and importantly also ensures a sustainable permanent solution to the problem. It has ambitious target of making all discoms profitable by 2018-19.

    The scheme will ease the financial crunch faced by power distribution companies, that has impaired their ability to buy electricity.

    It is based on the premise that it is states’ responsibility to ensure that discoms become financially viable.

    UDAY

     

    How UDAY will revive Discoms?

    It has all the 3 elements —

    1. Clear up the legacy issues of past losses and debt.
    2. Provide a financial road map to bring tariffs in line with costs by FY19.
    3. Provide enough deterrents for the state govt to not allow the state discoms to become loss ridden post FY18, as losses start to impact their FRBM limits.
    • The State govt. will takeover the discom liabilities over 2-5 year period.
    • This will allow discoms to convert their debt into State bond. These bonds will have a maturity period of 10-15 years.
    • It will allow transfer of 75% outstanding debts incurred by stressed discoms to States’ debt, 50% in 2015-16 and 25% in 2016-17.
    • The central government will not include the loans of the discoms in calculation of the state’s deficit till 2016-17.

    Why are these Discoms so stressed?

    There are various reasons that lead to Discoms becoming unsustainable over the period of time.

    1. Politics of free power, repressed tariffs and power thefts leading high transmission losses.
    2. Poor infrastructure and low standard of management.
    3. Power subsidies are given to all, irrespective of rich/poor.
    4. Discoms in states of Rajasthan, Tamil Nadu and UP are the most stressed ones.

    Almost 25% T&D ( Transmission & Distribution) losses suffered by discoms. Remaining 75% is sold at a price much lower than discoms’ procurement costs. Wondering Why??

    The most obvious reason is political interference, i.e. tariff is set by a group of largely political appointees.

    Financially stressed DISCOMs are not able to supply adequate power at affordable rates, which hampers quality of life and overall economic growth and development.

    What will be the impact of this scheme?

    • It is expected to help the banks in managing their bad loans.
    • It will relieve discoms who can push power distribution in right way.
    • It will allow states to align tariff costs, so that discoms run on a sustainable basis.

    What are thrust areas of UDAY to turnaround discoms?

    1. Improve operational efficiency.
    2. Reduction in cost of power – By monitoring technical and commercial losses by smart metering and feeder separation.
    3. Reduction in the interest cost of discoms.
    4. Enforcing financial discipline on discoms through alignment with States’ finances.

    What could be potential challenge to UDAY?

    • Electricity is not a central subject, states’ cannot be made to participate in the programme.
    • Finding buyers for such bonds might prove difficult, as these would enjoy the SLR status.
    • It has not laid down a specific performance-monitoring and compliance mechanism.
    • It does not cover inadequate investment in network & poor supply, which is essential for reliable and quality supply.
    • No central monetary assistance is provided, rather states’ will be provided subsidised funding from the central govt.’s power schemes as well as priority in supply of coal.
    Published with inputs from Pushpendra

     

  • WTO Nairobi meet: Updates on the 10th Ministerial Conference

    WTO Nairobi Ministerial Meeting – What’s at stake for India?

    Recently, the WTO Trade Ministers concluded their talks without any commitment on rich countries being asked to check their domestic subsidies. The negotiations exceeded by one day due to lack of consensus among the developed and developing world.

     

    India and other developing countries were particular about the re-affirmation to conclude the 14-year old Doha Round. < Let's begin with the basics of WTO negotiations>

    What is Doha Development Round?

    It is the latest round of trade negotiations among the WTO members, which started in 2001, to sign a pact to open up world trade by lowering or eliminating trade barriers.

    The focus is on helping developing countries join the global marketplace, and boost their economies as a result.

    The Doha Round is also known as the Doha Development Agenda.

    What are they negotiating?

    The goal of any trade talks is to make it easier for goods and services to be bought and sold across national borders.

    The negotiations includes:

    • Restricting countries’ use of subsidies for farmers and fishermen.
    • Lowering taxes and regulatory barriers that affect the cross-border trade in services, such as banking and consulting.
    • Negotiating new intellectual property rules on things such as drugs and copyrighted works.

    Why developing countries are pressing for conclusion of Doha round?

    Basically, the benefits for developing countries depends on the the kind of agreement the negotiators come up with.

    However, the developing countries are hoping that stronger restrictions on farm subsidies in developed countries would be good for farmers in the developing world.

    What was the outcome of 2013 Bali Ministerial Meeting?

    • Protection of the interests of poor farmers and food security.< This is what India wants to be honoured and implemented>
    • Exporters from Least developing countries(LDCs), will get duty free, quota free access to markets in foreign countries
    • Trade facilitation agreement, to ease the customs clearance.

    What is Special Safeguard Mechanism and its need for poor & developing countries?

    Basically, SSM will allow developing countries to temporarily increase the import duties on farm products, so as to counter the sudden increase in imports and price falls.< Actually, the developed countries have well-developed and mechanised agriculture along with that, huge subsidies are extended to farmers in these countries>

    This mechanism would empower the developing countries to impose additional duties on agri-products, when their imports breach specified ceilings or price.

    What’s the problem here?
    The negotiations are on the extent to which different categories of developing countries will be allowed to hike duties using the SSM, beyond their tariff.

    What are the new issues that have emerged?

    1. Rich countries are diluting the development dimension. Some developing countries are attempting to categorise nations such as India and China as emerging economies, instead of developing. 
    2. The developed countries are also redefining the developmental aspects.
    3. Rich countries wanted to revitalise WTO by introducing new issues, often called emerging trade issues:
      • Labour and environmental standards
      • Global value chains and promotion of supply chains
      • e-Commerce
      • Competition & investment provisions
      • Environmental and sustainable goods produced using clean and green energy
      • Transparency in govt. procurement
      • Transparency in state-owned enterprises and designated monopolies

    < If these issues are included in the agreement, developing and poor countries feel that these standards or rules might become non-tariff barriers, hurting their exports>

    What is India’s stand on these issues?

    • India has made it clear that it will not undertake any binding commitments.
    • The issues of labour and environment should be taken at concerned international bodies such as ILO and UNFCCC, not at WTO.
    • India wants new issues should also include those with a development angle such as easier movement of natural persons, such as skilled professionals.

    < Developed countries are fearing large scale migration, on account of increase in skilled manpower in developing countries such as India. India is looking for such concessions so that it's skilled manpower can find access to developed countries market.>

    What was India’s demand at Nairobi Meeting?

    • India wants the rich countries to drastically reduce their trade distorting farm subsidies.
    • India wants on priority that a permanent solution to the issue of public food stock holding in developing countries for the purpose of food security.
    • India is also looking for effective implementation of a package for LDCs including duty-free and quota-free market access.

    What does draft declaration at Nairobi says?

    • A commitment to allow developing nations to use special safeguards to protect farmers against import surges.
    • It reflects India’s demand for a reaffirmation from all members to work towards a permanent solution on public stockholding.
    • All countries agreed to the elimination of agricultural export subsidies subject to preservation of Special and Differential Treatment for developing countries such as longer phase-out period for transporting and export subsidies for exporting agricultural products.
    • Developed countries have committed to remove export subsidies immediately, except for a few agricultural products, and developing countries will do so by 2018.
    • However, developing countries will keep the flexibility to cover marketing and transport subsidies for agriculture exports until the end of 2023.
    • The talks concluded without any commitment on rich countries to check their domestic subsidies.
    • There was division among the WTO members on the issue of the reaffirmation of the Doha mandate.
    • However, some of the WTO members excluding India agreed on the timetable to implement a major deal to get rid off tariffs on 201 IT products valued at over $1.3 trillion/annum, and accounting for around 10% of total global trade.

  • Insolvency and Bankruptcy Code

    How is ease of doing business linked with the Insolvency and Bankruptcy Code?

    In India, lack of resolution of insolvency is one of the significant factors for the failure of credit market in the country. The present legislations governing insolvency are fragmented, multi-layered and the adjudication of insolvency matters take place in multiple forum, resulting in an unpredictable regime.

    The Insolvency and Bankruptcy Code has been hailed as an excellent reform for India that will pay a critical role in improving the ease of doing business.

    Why does India need a Bankruptcy law?

    Currently it takes, on an average, more than 4 years to resolve insolvency in India. The proposed Bankruptcy Code will replace over a century-old archaic insolvency act – The Presidency Towns Insolvency Act, 1909.

    • Delays in making decisions on the viability of business.
    • Sometimes, company promoters try to delay reorganisation or attempts to sell-off assets or change of management.
    • Delays in disposing off cases by Debt Recovery Tribunal.
    • Continued litigation at various levels and delays in appellate level.
    • Currently, there are 4 different agencies viz. the HC, the Company Law Board, the BIFR and the DRTs that handle insolvency-related cases.

    How can a modern law help?

    • Speedy closure will help firms on the verge of brink in two ways, i.e. either restructure the firm or sell-off the assets to recover the money.
    • It will promote efficient allocation and greater availability of credits for businesses, as it frees up capital.
    • Development of financial markets such as bond market, due to clarity on repayment for debtors.

    What is the international experience in this regard?

    • US Bankruptcy Code provides for fairly quick liquidation or reorganisation of the company.
    • In UK, once the cases are filed, then after 12 months, either the part of assets are discharged to pay-off debt or court-appointed administrators handle the case, if company can be turned around.

    Was any committee formed to suggest Insolvency reforms?

    • The Bankruptcy Law Reform Committee (BLRC) was set up in August, 2014 under the chairmanship of Mr. T.K. Vishwanathan.
    • It was the first committee with the mandate of suggesting comprehensive and not incremental reforms.
    • The BLRC extensively studied the insolvency regime within India as well as various international jurisdictions.

    What was the recommendation of the Committee?

    • The committee proposed an all-encompassing law for corporate and individual insolvency, reflecting the best practices from across the globe.
    • The corporates should assess the viability of an enterprise in the early stages of insolvency, such that the creditor and the debtors can negotiate a financial arrangement while preserving the economic value of the enterprise.
    • However, if the negotiations fail, then the enterprise is liquidated. The insolvency resolution is required to be done within a period of 180 days.
    • It also suggested fast track insolvency resolution for certain entities which is required to be completed within 90 days.

    What are the provisions of draft Insolvency and Bankruptcy Code?

    The code aims to bring modern framework to deal with bankruptcy and insolvency of variety of economic players, including individuals, but excluding financial firms.

    • It will restore some power to creditors, both financial and operational.
    • It will fast-track mechanism of insolvency resolution process may be applicable to certain categories of entities.
    • The corporate insolvency would have to be resolved within a period 180 days, extendable by 90 days.
    • It also provides for fast-track resolution of corporate insolvency within 90 days.
    • Debt Recovery Tribunals will be adjudicating authority over both individual & unlimited liability partnership firms.
    • National Company Law Tribunal will be adjudicating authority with jurisdiction over companies with limited liability.
    • It has a clause to provide for insolvency professionals who will specialize in helping sick companies. <These professionals will help revive control the management of distressed firm to revive it>
    • It also provides for information utilities that will collate all information about debtors to prevent serial defaulters from misusing the system
    • To setup Insolvency and Bankruptcy Board of India to act as a regulator for these utilities and professionals.
    • The bill also seeks to establish Insolvency and Bankruptcy Fund of India.

    What about Financial Sector Insolvencies?

    • FSLRC recommended creation of a resolution corporation to monitor financial firms and intervene before they go bust.
    • The aim is to close-down the firms which can’t be revived or change their management to protect investors or depositors.

    The reform is dubbed as 2nd most important reform after GST, as it will also improve the ease of doing business in India.

     

    Published with inputs from Pushpendra

  • Monsoon Updates

    How does El Nino affect Indian Monsoon? A Comprehensive Explainer

    As many reports speculated that El Nino is the main cause of the worsening Indian Monsoon and has played badly with Indian agriculture, we thought that we should take a big picture of El Nino and it’s scope in India.

     

    • The Monsoon is basically a result of the flow of moisture laden winds because of the variation of temperature across the Indian Ocean.
    • There are a number of climatic phenomena which affect it namely the El nino, La nina etc.
    • We will look at their origin, impact and way forward.

    Now, let’s take a overview and develop our understanding. 

    What happens in a Normal Year?

    • Peru Current = Humboldt Current = Cold Current.
    • During normal year 2 things are very strong – Cold Peru Current and Trade Winds.
    • As a result, cold water is dragged from Peru towards Australia.

    What would be the result of this exchange?

    • Warm water region around Australia is called Western Pacific Pool (WPP).
    • WPP = low pressure = warm air ascends = cloud formation = rain over North Australia
    • This air also joins walker cell and begins descending near Peru.
    • Descending air = anti-cyclonic condition = high pressure = stability = no cloud/rain = Drought in Atacama Desert.

    (Simply, Walker cell is the result of a difference in surface pressure and temperature over the western and eastern tropical Pacific Ocean)

    What happens below the water from Peru to Australia ?

    At Peru coast, cold water upwelling brings nutrient to surface + more lunch for Plankton + more fishes = Peru fishermen gets happy.

    What happens above the water from Australia towards Peru?

    Warm water + low atmospheric pressure = good rainfall over Australia & Indonesia.

    What happens in La Nina Year?

    Same things as in a “normal” year, but 2 things become even “stronger” –

    • Cold Peru Current
    • Trade Winds

    What’s the Result?

    • Too many fishes at Peru coast = oversupply of fishes = prices become dirt cheap.
    • Too much rain / flood over Australia and Indonesia.

    This is what happens in normal and La Nino year, Let’s back to El Nino!

     

     

    What happens in an El Nino year?

    Two things become weak.

    • Cold Peru Current
    • Trade Winds
    • As result, cold water is not dragged from Peru to Australia.
    • But reverse happens, warm water is dragged from Australia towards Peru.
    • Consequently, warm water + low pressure condition develops in the Eastern Pacific (Peru) and Cold condition + high pressure in Western Pacific (Australia).

    What will happen if pressure is inversely related with amount of rainfall ?

    • Rain & Floods at Peru, Atacama and even Southern USA
    • Drought at Northern Australia, Indonesia- even bushfires.
    • Storms and Hurricanes in East Pacific.
    • Coral bleaching (high temperature coral dies)

    But, what is the El Nino?

    • El Nino is an Oceanic and Atmospheric phenomenon that leads to unusual warming of water in the Peru coast, occurs every 3-5 years.
    • Consequently, warm water + low pressure condition develops in the Eastern Pacific (Peru) and Cold condition + high pressure in Western Pacific (Australia).
    • Since Pressure is inversely related with amount of rainfall, El Nino causes drought situation in Australia and South East Asia.
    • It weakens the trade winds and changes in Southern Oscillation, thereby affects the rainfall pattern across the world.

    el-nino-phenomenon

    What is Southern Oscillation?

    • Alternating of (tropical) sea level pressure between the eastern and western hemispheres.
    • We can measure Southern Oscillation by observing the pressure difference between Tahiti (French Polynesia) and Darwin (Australia).

    How does El Nino affect Indian Monsoon?

    • El Nino-Southern Oscillation (ENSO) water circulation happens between Australia and Peru.
    • But, the wind movement is part of larger atmospheric circulation hence affects the rainfall over India. But, how?
    • We have learned that During normal year, the warm water moves towards Australia, this pool of warm water is called Western Pacific Pool (WPP).

    So, from WPP air rises above and moves towards two walker cells –

    • Towards Peru coast = this affects rainfall in South America.
    • Towards Mascarene High Pressure zone near East Africa. So, this affect Indian monsoon.

    Why should India worry about?

    • Drought condition decreases the agriculture output, leads to food inflation.
    • Declined supply of cotton, oilseeds and sugarcane negatively affects the textile, edible oil and food processing industries respectively.

    What is the way forward?

    Let’s discuss first Near-term Solutions?

    • Government must expand farm insurance cover and advice financial institutions to settle crop insurance claims in the drought-hit areas without delay. Otherwise, it results in farmer suicides (e.g. Maharashtra farmers’ suicide ).
    • High quality seeds of alternative crops must be distributed among farmers in drought-affected areas.
    • Need of realistic assessment of ground level situation in order to estimate the shortfall of oilseeds and pulses and help traders with market intelligence.
    • Scrapping the APMC Act and allowing free flow of agricultural goods among the states.
    • This would help bridge the mismatch of demand and supply of goods, which is the underlying factor contributing inflation.

    What should be the Long-term Solutions?

    • Developing drought free crop varieties and distributing its subsidized seeds to the farmers. It is a part of National Action plan on climate change in Agriculture.
    • Using low water use technologies like drip and sprinkler irrigation.
    • The MSP regime in India has to provide more remuneration for less water consuming crops.
    • Strengthening community watershed management and development by protecting and conserving local water sources like ponds, lakes etc.
    • Developing early warning systems and alerting the farmers much in advance like recently launched Kisan SMS scheme.

    Do you find more solutions or any way out? then, Let us know!

     

    Published with inputs from Arun

  • Soil Health Management – NMSA, Soil Health Card, etc.

    Soil Health Card – A Tool For Agri Revolution

    Launched by the central government in February 2015, the scheme is tailor-made to issue ‘Soil card’ to farmers which will carry crop-wise recommendations of nutrients and fertilizers required for the individual farms.

    Agriculture as primary activity in India

    • Agriculture since ages is the mainstay of the Indian population.
    • The story of Indian agriculture has been a spectacular one, with a global impact for its multi-functional success in generating employment, livelihood, food, nutritional and ecological security.
    • Agriculture and allied activities contribute about 18% to the GDP of India (as of 2014-15). The green revolution had heralded the first round of changes.
    • India is the second largest producer of wheat, rice, sugar, groundnut as also in production of cash crops like coffee, coconut and tea.

    What is the scope and focus of government in agriculture?

    • India is now eyeing second Green Revolution in eastern India.
    • The need for enhanced investment in agriculture with twin focus on higher quality productivity and welfare of farmers.
    • In the entire scenario, importantly the government has laid emphasis on the awareness campaign and enhanced agri knowledge for the farming community.

    Why is there a need of awareness in assessing soil health position?

    • Awareness of soil health position and the role of manures would help in higher production of foodgrains in eastern India too and this would help tackle the decline in production in central and peninsular India.
    • The growth in foodgrains, rice and wheat, from eastern India would provide an opportunity to procure and create foodgrain reserves locally.
    • This would reduce the agricultural pressure on Punjab and Haryana as well.

     

    Is it Gujarat’s model programme?

    • From 2003-04, Gujarat has been the first state to introduce Soil Health cards, to initiate the scientific measures for Soil Health care.
    • In Gujarat, over 100 soil laboratories were set up and the result of scheme was found quite satisfactory.
    • To start with, the agriculture income of Gujarat from Rs 14000 crore in 2000-01 had gone up to staggeringly high Rs 80,000 crore in 2010-11.

    Why did government start taking effective action on soil health card initiative?

    • According to renowned expert and the ‘father of Green Revolution’, M S Swaminathan, there is need to opt for wide range of crops cultivation.
    • The awareness of soil health conditions would only make these operations easier and more result oriented. The government can help farmers adopt crop diversification.
    • The Soil Health Card mechanism definitely aims to help herald some essential revolutionary changes and salutary effect in country’s agricultural scene.
    • Farmers would understand the fertility factor of the land better and can be attracted towards value added newer crops.
    • This would help reduction in risk in farming and also the cost of overall cultivation process would get reduced.

    Why has Soil Health Card portal been launched?

    • Some states are already issuing Soil Health Cards but, it was found that, there was no uniform norm for sampling, testing and distribution of Soil Health Cards across the states.
    • Taking a holistic view on these, the central government has thus rightly taken measures like launching of a Soil Health Card portal.
    • This would be useful for registration of soil samples, recording test results of soil samples and generation of Soil Health Card (SHC) along with Fertilizer Recommendations.
    • Soil Health Card portal aims to generate and issue Soil Health Cards based on either Soil Test-Crop Response (STCR) formulae developed by ICAR or General Fertilizer Recommendations provided by state Governments.

    How will it be implemented by Union and State governments?

    • The scheme has been approved for implementation during 12th Plan with an outlay of Rs.568.54 crore.
    • For the current year (2015-16) an allocation of Rs.96.46 crore – only for the central government share-has been made.
    • The scheme is to be otherwise implemented on 50:50 sharing pattern between Government of India and state Governments.
    • In order to improve quality of soil and ultimately for better nutrient values and higher yields.
    • Experts say while at present, general fertilizer recommendations are followed by farmers for primary nutrients, the secondary and micronutrients are often overlooked.

    Can proactive steps and such programs lead to efficient and effective agriculture? Really?

    • The government is effectively marching in quite ambitiously for a grand success of the Soil Health Card scheme and proposes to ensure that all farmers in the country have their respective Soil Health Cards by 2017.
    • In the first year of NDA regime 2014-15, a sum of Rs 27 crore was sanctioned and in 2015-16, there is an allocation of Rs 100 crore to all the states to prepare soil health cards.
    

    
			
    
		
    
		
	
  • 
		
		
    
			
			
    BCCI Reforms – Lodha Committee, etc.
    
			
    Lodha Committee Report: Restoring the glory of the game
    

    To put an end to excesses and imbalances, corruption and red tape, all of which have harmed the game, the Lodha committee has examined reforms in the working of the Board of Control for Cricket in India (BCCI) to make its functioning transparent.
    



    

     
    

    What is the Lodha committee?
    

    The Lodha committee was formed in January, 2015 by the Supreme Court after the Mudgal committee report on IPL.
    

    In its earlier report in July 2015, the Lodha committee delivered its judgement by banning Meiyappan and Kundra for life and suspending the owners of Chennai Super Kings and Rajasthan Royals for 2 years.
    

    Let’s analyse the report under various dimensions
    

    The Lodha Committee has suggested sweeping reforms in the structuring and governance of cricket in the country.
    



    

     
    

    Structural Reforms: A major overhaul
    

      

    • The committee recommended that a 9-member apex council replace the 14-member BCCI working committee.
      • 

    • Each of these office-bearers has a three-year term and can contest for a maximum three terms.
      • 

    • The Lodha Committee also calls for dividing the governance into two parts: cricketing and non-cricketing.
      • 

    

    The non-cricketing management will be handled by 6 professional managers headed by a CEO, and the cricket matters like selection, coaching and performance evaluation should be left to the players
    

    Organisation & Office-bearers: Restrictions imposed
    

      

    • Each of these office-bearers has a 3-year term and can contest for a maximum three terms.
      • 

    • There will be a mandatory cooling off period after each term. Therefore, no office-bearer can hold office consecutively in a row.
      • 

    • No BCCI office-bearer can be Minister or government servant.
      • 

    

    State Cricket Associations: One Vote/State
    

    The Committee recommended that one association should represent an entire state and only one vote per state.
    

    Indian Premier League: Maintain distance
    

      

    • It recommends separate governing bodies for the IPL and BCCI.
      • 

    • There should be a 15-day gap between IPL season and national calender.
      • 

    

    Betting: Legalize it
    

      

    • It made a strong recommendation to lawmakers to legalise betting in cricket for all except cricket players, officials and administrators.
      • 

    • The players and others banned officials should disclose their assets to BCCI in a measure to ensure that they do not bet.
      • 

    

    Betting is a $ 400 billion phenomenon practised across the globe and lawmakers in India should enact laws to legalise it.
    

    Fixing: Criminalize it
    

    The committee said that match-and spot-fixing should be made a criminal offence.
    

    Conflict of Interest & Corruption
    

      

    • One individual hold only one post in cricket administration. The office-bearers would have to choose between positions in respective state associations and the parent body.
      • 

    • A former High Court judge should be appointed as ethics officer by the BCCI to administer issues relating to conflict of interest, misdemeanour and corruption.
      • 

    • A former Supreme Court judge should be appointed ombudsman to resolve internal disputes.
      • 

    

    Transparency: Bringing RTI to BCCI
    

    It recommended that the Legislature must seriously consider bringing BCCI within the purview of the RTI Act
    

    Securing player’s interest
    

      

    • It recommended the setting up of a Players’ Association to safeguard the interests of the cricketers.
      • 

    • The report said players that are the driving force of the game, but they had been reduced to the status of employees and subordinates of those governing the game.
      • 

    • The idea is to give players voice, use their expertise and skills for the development and betterment of the game
      • 

    

    Women Cricket: Often ignored by BCCI
    

    The Women’s Cricket Committee to be formed to exclusively pay attention to this much ignored department, along with Women’s Selection Committee.
    

    The proposed measures could radically alter the way the BCCI functions as well as vastly improve its public image and impart much-needed credibility.
    

    

     
    

    Published with inputs from Pushpendra 
    

    
			
    
		
    
		
	
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    PPP Investment Models: HAM, Swiss Challenge, Kelkar Committee
    
			
    Kelkar Committee Report: Reforming the PPP
    

    In the Union Budget 2015-16, Finance Minister announced that the PPP mode of infrastructure development has to be revisited, and revitalized. In pursuance of this announcement, a Committee was constituted to look into the issues.
    

    The proposals include a provision for monetisation of projects, revamp of the model concession agreement and creation of a new institutional mechanism.
    

    What was committee asked to look into?
    

      

    • Review of the experience of PPP Policy.
      • 

    • Analyse risks involved in PPP projects in different sectors and suggest optimal risk sharing mechanism.
      • 

    • Propose design modifications in PPP based on international best practices and our institutional context.
      • 

    • Measure to improve capacity building in govt for effective implementation of the PPP projects.
      • 

    

    Why is there need to reform PPP framework?
    

    Background: PPP contracts are typically of very high-value, often with huge capital and operating costs.
    

      

    • The emergence of risks not foreseen at the time of signing the agreement exposes such projects to potential distress, making them unviable for the developers and prompting demands for a renegotiation of the original terms.
      • 

    

    



    

    How to manage risks in PPP projects?
    

      

    • Optimal allocation of risks across PPP stakeholders to boost investment.
      • 

    • Sector specific model concession pacts to capture interest of all stakeholders.
      • 

    

    What are the design modifications proposed by the committee?
    

    The Kelkar panel has come out with clear-cut norms on resolving issues and clarifying norms on re-negotiation of contracts.
    

      

    • Formulate a national PPP policy and seeking Parliament’s backing for it to be effective.
      • 

    • It emphasised upon the need to establish independent sector regulators for faster implementation of infrastructure projects and swifter dispute resolution mechanisms.
      • 

    • The report stated that the PPP structure should not be adopted for small projects.
      • 

    • It added that the govt should encourage development of airports, ports and railways through PPP, by ensuring easier funding for projects with long gestation periods.
      • 

    

    Let’s take a look at much deeper level about various specific dimensions of PPP framework and panel’s recommendation.
    

    How to streamline the stalled projects?
    

    Background: The Ministry of Statistics and Programme Implementation (MOSPI) says that 40% of all central govt infrastructure projects are behind schedule or have overshot their original cost estimates.
    

    Panel’s view: Follow the example of the Ministry of Road Transport and Highways, and NHAI, which has taken several successful steps in reducing the number of stalled projects in the sector.
    

    What are the institutions proposed in the report?
    

      

    • An Infrastructure PPP Project Review Committee be constituted.
      • 

    • It recommends creation of an Infrastructure PPP Adjudication Tribunal. 
      • 

    

    How to renegotiate the PPP contracts?
    

    Background: More than 50% of PPP projects come up for renegotiation.
    

    The panel has suggested extensive guidelines stipulating the reasons that form the basis for re-negotiation & those that should not be entertained as valid reasons.
    

    The panel wants full disclosure of few items prior to the renegotiation:
    

      

    • Long-term costs
      • 

    • Risks and potential benefits
      • 

    • Financial implications for the govt
      • 

    

    Panel has suggested formation of an independent body, like a renegotiation commission, which can oversee the renegotiation of model concession agreements across sectors.
    

    What is panel’s view on Swiss Challenge method?
    

    Swiss Challenge Method: It is a process of awarding contracts as any person with credentials can submit a development proposal to the govt, which will be made online and a second person can give suggestions to improve and beat that proposal.
    

    The Panel wants Swiss Challenge method to be actively discouraged.
    

    Reason: It brings information asymmetries in the procurement process and result in lack of transparency and in the fair and equal treatment of potential bidders in the procurement process.
    

    Criticism: India’s ambitious plan to build new expressways across the country by adopting the ‘Swiss Challenge’ method has become uncertain.
    

    Why report calls for changes in anti-corruption law?
    

    The report calls for promptly amending the Prevention of Corruption Act, 1988
    

    Reason: To differentiate between genuine errors in decision-making and plain corrupt practices.
    

    What is panel’s view on 3P India?
    

    Background: Finance Minister had announced the setting up of 3P India in 2014-15 budget with a corpus of Rs 500 crore.
    

    The panel wants the revival of a defunct proposal to establish 3P India to support PPP projects. It can function as a centre of excellence, enable research, and review and roll out activities to build capacity
    

    How to deal with private sector?
    

    The private sector must be protected against the loss of bargaining power over long time spans. It has asked for comprehensive guidelines to be framed in this regard.
    

    How to build capacity in PPP projects?
    

      

    • Strengthen 3 key pillars of PPP framework – governance, institutions and capacity.
      • 

    • Structured capacity building programmes for different stakeholders.
      • 

    • A national level institution to back institutional capacity building activities.
      • 

    

    The report pitches for pragmatism, transparency and a business-like attitude for all stakeholders.
    

    

    

    Published with inputs from Pushpendra 
    

    
			
    
		
    
		
	
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    Foreign Policy Watch: India-Myanmar
    
			
    India and Myanmar relations: Change in dynamics by democratic triumph
    

    After decades of struggle, finally democracy triumphed over military junta and Myanmar parliament enters democratic era after 54 years of military rule. It’s time to glance over India-Myanmar relations and how India will be benefited from such stable democratic government.
    

    India and Myanmar have traditionally had much in common, with cultural, historical, ethnic and religious ties, in addition to sharing a long geographical land border and maritime boundary in the Bay of Bengal. Let’s see it in brief!
    

    How did India and Myanmar engagement begin ?
    

      

    • Myanmar is India’s bridge to east, and an important ally for growing its regional power.
      • 

    • India and Myanmar’s relationship officially got underway after the Treaty of Friendship was signed in 1951.
      • 

    • For many years, India did not open up to the authoritarian regime, and it was only over a period of time that India started engaging with the military junta of Myanmar.
      • 

    • The region’s focus has revolved around the SAARC countries and China, Myanmar is becoming increasingly important for India in both a strategic and economic context.
      • 

    

    What about bilateral trade ties?
    

      

    • Bilateral trade has grown from $12.4 million in 1980-81 to $2.18 billion in 2013-14.
      • 

    • Agricultural items like beans and pulses and forest based products make up nearly 90 percent of India’s imports.
      • 

    • Myanmar is also the beneficiary of a duty-free tariff preference scheme for least developed countries (LDCs).
      • 

    • Both countries also signed a border trade agreement in 1994 and have 2 trade points along their 1,643 km border.
      • 

    • India has also promoted some trade events such as the India Product Show 2012, which represented 19 Indian companies.
      • 

    

    But, How shared cultural links promote unique relations between both countries?
    

      

    • The two countries have shared cultural exchanges through various cultural troupes.
      • 

    • One such exchange was in 2009 when Myanmar sent a 13 member student group that attended a SAARC cultural festival in India.
      • 

    • This was followed by another major event at which the Indian embassy in Yangon organized the annual Indian Film Festival, which is a major event on the Yangon cultural calendar.
      • 

    

    Does India have historical bond with Myanmar?
    

      

    • Yes! Yangon was once a center for India’s independence struggle.
      • 

    • The Indian National Army (INA), formed by Indian nationalists during World War II in 1942 with the motto of Ittehad, Itmad aur Qurbani (Unity, Faith and Sacrifice).
      • 

    • Comprised over 40,000 soldiers, who fought valiantly against the British imperialist forces.
      • 

    • Netaji Subhas Chandra Bose became leader of the INA in 1943 and undertook a groundbreaking march towards Indian territories from Burmese soil with the aim of achieving Indian independence.<This time we can expect question on Netaji and his work, as we know current happenings about Netaji’s files declassified>
      • 

    • General Aung San, Burma’s independence hero, was a close friend of Netaji, the supreme commander of the INA.
      • 

    • That friendship was reflected in cordial relationship between the soldiers of the INA and their counterparts in the Burmese National Army (BNA).
      • 

    • So, it’s good to use this historical bond for building more coherent and strong relations with Myanmar.
      • 

    

    How Myanmar is Strategically significant to India?
    

      

    • Myanmar is strategically important to India as it is the only ASEAN country that shares a land border with India.
      • 

    • It is also the only country that can act as a link between India and ASEAN.
      • 

    • Myanmar is India’s gateway to Southeast Asia and could be the required impetus to realize India’s Look East Policy.
      • 

    • India has also decided to upgrade the Kalewa-Yargyi road segment to highway standard.
      • 

    • Myanmar would develop the Yargyi-Monywa portion, and this would help to connect Moreh in India to Mae Sot in Thailand via Myanmar.
      • 

    • This in turn would improve India’s connectivity and relationship with both Myanmar and Thailand.
      • 

    

    How can India become regional pivot in Asia?
    

      

    • If India is to become an assertive regional player in Asia, it has to work toward developing policies that would improve and strengthen it domestically.
      • 

    • This will encourage more confidence in its ability to lead the region and be an important global player.
      • 

    • Competition with China should also be considered and taken seriously. As China’s growing influence in the region would lead to a more one-sided dynamic in the region.
      • 

    • China has asserted itself through its soft power as well as through its trade and economic relations with Myanmar by taking up large infrastructure projects in the country.
      • 

    • India on the other hand needs to use its soft power more effectively, and at the same time strengthen itself domestically and regionally.
      • 

    

    What are advantages that India has over China with regard to Myanmar?
    

      

    • One is the democratic process, which results in different governments at the center and states through free and fair elections.
      • 

    • There is also the respect for institutions that are strong enough to hold the country together.
      • 

    • Finally, cooperation in different multilateral forums such as ASEAN and BIMSTEC strengthen the relationship between the 2 countries.
      • 

    • Apart from these reasons, India has sent a clear signal that while economic ties are important, it is keen to build a holistic relationship and is prepared to assist in institution building in Myanmar.
      • 

    

    What is the significance of Connectivity in India-Myanmar Relations? 
    

    <How North-Eastern region can play vital role in this?>
    

      

    • Myanmar’s vast oil and natural gas reserves and other resources make it a natural partner for many countries in the world.
      • 

    • India, being its next door neighbour, cannot be indifferent to this reality.
      • 

    • Besides, geo-political considerations, historical and civilizational links, and the ethnic overlap across their borders, have all come together to make India’s North-East the land bridge between the South and South-East Asia through Myanmar.
      • 

    • The 1,640 km-long border between Myanmar and the Indian states of Arunachal Pradesh, Nagaland, Manipur and Mizoram signifies the importance of this eastern neighbour for India.
      • 

    • India expects to reap various economic benefits by bolstering bilateral trade and investment, which critically depends upon better connectivity in the region.
      • 

    

    How bilateral cooperation agreement gives impetus to India’s Look-East Policy?
    

      

    • The strategic location of Myanmar is pivotal to India in reaching out to the economically vibrant South-East Asian countries.
      • 

    • India’s Look-East Policy envisages building infrastructure and expanding the transportation network including railroads, aimed at furthering surface connectivity in the region.
      • 

    • It is recognized that in addition to more economic contacts, such connectivity will promote social stability in the region by facilitating people-to-people contact amongst trans-border ethnic groups.
      • 

    • It is expected that insurgent outfits would lose their recruitment base once the local resources begin to be exploited and employment is generated leading to overall development. 
      • 

    • Concrete economic benefits are expected to come up in the region with establishment of border haats.
      • 

    • In addition, internal trade routes have the potential to enhance accessibility to sub-regional markets that connect Bangladesh, Myanmar and Bhutan.
      • 

    

    Way forward
    

      

    • The basic foundation for the relationship between India and Myanmar has been laid by previous governments, the onus is on the present Indian administration to demonstrate that it can take the relationship to a higher level.
      • 

    • India can become a strong regional player through a more proactive approach, cement India’s place in the region and grow into a powerful, global country.
      • 

    

     
    

     
    

    Published with inputs from Arun
    

    
			
    
		
    
		
	

	
	

		
	

	
	
	

		
	

	




	


	
	
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