DAILY MAINS NEWSLETTER FOR UPSC|12 JULY 2021|RaghukulCS

Daily Mains Newsletter For UPSC
| RaghukulCS

12 July 2021 - Monday

Index

Mains Value Addition

Mains Analysis

Topic No

Topic Name

Source

1

A Kerala model for an anti-discrimination law

The Hindu

2

A check on bad loans

Indian Express

Mains Value Addition

U.P.’s new population policy keeps all sections in mind: Adityanath

Syllabus–GS 2: Government Policy

Analysis: –

  • Every section of society must join in the awareness programme for population control, Uttar Pradesh Chief Minister Yogi Adityanath said on Sunday as he launched the State’s population policy for 2021-2030.
  • Adityanath said increasing population was the root of major problems and prevailing inequality in society.
  • “Increasing population can be an obstacle to development,” he said here, stating that the new policy was drafted keeping in mind all sections of society.
  • If there is no gap between the birth of two children, then naturally it will affect their nutrition, he said explaining the need for spacing and control in population.
  • Targeting population stabilization, the draft of the policy also said the state would attempt to maintain a balance of population among the various communities.
  • “Awareness and extensive programmes would be held among those communities, cadres and geographical areas that have a higher fertility rate,” the policy read.
  • The policy comes at a time when The Uttar Pradesh State Law Commission has prepared a proposed draft bill for population control, under which a two-child norm would be implemented and promoted.

Book Review: How to Fight Inequality (and Why That Fight Needs You) by Ben Phillips

Analysis: –

  • In How to Fight Inequality, international civil society activist Ben Phillips offers a new book that aims to empower readers to join the fight to bring an end to inequalities, showing how lessons from the past are key to building a more equitable future.
  • Filled with powerful stories of change secured through the organising of ordinary people, this well-written book provides valuable insights for those who want to engage in a more just world, finds Samira Azabar.
  • In his book How to Fight Inequality (and Why That Fight Needs You), Ben Phillips urges for readers to join this battle, arguing that ‘winning the fight against inequality needs you’.
  • His three-part book consists of elaborating on why we need to win the fight against inequality, how we won the fight previously and how we’ll win the fight again.

Mains Analysis

A Kerala model for an anti-discrimination law

Why in News?

If enacted this law will be the largest expansion of civil rights in the State, and can be emulated by the rest of India

Syllabus— GS 2 Equality

Background: –

  • According to a recent Pew Research Center report, a significant majority of Indians prefer not to have a neighbour from a different religious community.
  • The Housing Discrimination Project at Jindal Global Law School has shown how extensive housing discrimination is across the country.

Instances of discrimination: –

  • A couple turned down for a home they wish to rent, because they are Muslim.
  • A qualified professional rejected for a job because he uses a wheelchair.
  • A pair of students denied facilities on campus because of their caste or ethnicity.
  • An air hostess dismissed for being above the weight deemed desirable, even though male stewards/pursers of that weight continue in their jobs.

Forms of Discrimination: –

  • We have seen various types of discrimination based on caste, creed, religion, ethnicity, language etc.
  • The absence of a proper legal recourse for those who suffer from housing discrimination only makes matters worse.
  • The constitution’s Article 15 does not prevent private individuals or organisations from doing things that the government is not allowed to do.
  • It also does not clearly ban discrimination based on ethnicity, linguistic identity, nationality, marital status, sexual orientation, handicap, physical appearance, or other personal traits.
  • The time has come to think over it.

Supreme Court judgements: –

  • In Patan Jamal Vali versus State of Andhra Pradesh, the Supreme Court recognised intersectional discrimination — discrimination based on the intersection of personal traits, such as that suffered by Dalit women as Dalits, as women, and as members of the distinct category of Dalit women.
  • Despite the Supreme Court of India reading down Section 377 of the Indian Penal Code to exclude consensual interactions between adults of the same sex, social prejudice against members of the LGBTQIA+ community in India remains entrenched.
  • Discriminatory practises can also be indirect, where policies that appear neutral and aren’t explicitly targeted at a certain group have a disproportionately negative impact on disadvantaged groups.

Legal remedies –

  • To fill the gaps in the law, a comprehensive anti-discrimination legislative framework is required. India is one of the few liberal democracies that does not have such a system in place.
  • In 2006, the Sachar Committee recognised the necessity for anti-discrimination legislation. The Expert Group on Equal Opportunity Commission, led by Prof. N.R. Madhava Menon, reaffirmed this.
  • Shashi Tharoor tried to revive the idea by introducing the Anti-Discrimination and Equality Bill, 2016 in the Lok Sabha but the Bill lapsed in 2019 with the dissolution of the Lok Sabha.
  • States have an important role in promoting our right to equality.
  • In any case, a national bill cannot encompass matters that are solely the responsibility of state governments.

The Kerala Bill –

  • The draft bill prohibits employers, landlords, traders, service providers, private persons performing public functions, and public authorities, from discriminating on grounds of caste, race, ethnicity, descent, sex, gender identity, gender expression, pregnancy, sexual orientation, religious identity, tribe, disability, linguistic identity, HIV-status, nationality, marital status, dietary preference, skin tone, physical appearance, place of residence, place of birth, age or analogous characteristics which are beyond the control of an individual or those that constitute a fundamental choice.
  • At the same time, the Bill strikes a balance between the anti-discrimination duty and other constitutional rights.
  • The anti-discrimination obligation might be limited to achieve a reasonable goal.
  • The bill also includes affirmative action rules, which require public employers to gradually diversify their workforces by hiring members of disadvantaged groups who are marginalised in society, such as transgender people or people with disabilities.
  • Because of the backlogs in our legal system, the bill creates a ‘Kerala Equality Commission’ to hear complaints and provide policy recommendations to the state government.

Way Forward: –

  • If passed, this bill will be the most significant expansion of civil rights in the state since the Constitution’s inception, and it could serve as a model for other states.
  • We recognise that an anti-discrimination statute is not a solution for our society’s deep-seated problems of inequality and social prejudice.
  • Nonetheless, it is a necessary move — a notion that has reached its peak.

Question: –

If States take the lead, the desire for a national anti-discrimination law that covers services and institutions under the Union government’s jurisdiction would be renewed. Discuss the statement.

A check on bad loans

Why in News?

Radhika Pandey writes: Higher recoveries, improved capital position could help increase credit growth in the economy.

 

Syllabus—GS3: Issues related to the Banking Sector

Background: –

  • The Reserve Bank of India’s latest Financial Stability Report presented an assessment of the health of the banking sector in the pandemic year.
  • There were concerns that the balance sheets of banks would be adversely hit by the pandemic-induced disruption. 
  • Before the report, there were concerns that the balance sheets of banks would be adversely hit by the pandemic-induced disruption.
  • However, the report shows that banks fared much better as the NPA ratio was under control at the March-end.
  • A series of regulatory forbearance policies & their timely withdrawals along with deleveraging by firms have helped that banks balance sheets to survive the pandemic.
  • For the current year, RBI has projected that the NPA of banks will rise to 9.8%.
  • The deterioration is projected to be much steeper under various stress scenarios.

NPA Ratio:

  • The NPA ratio for banks at the end of March stood at 7.5%, which was much better than the earlier projections.
  • While in July 2020, the RBI report projected that due to various stress scenarios the NPA ratio could rise from 8.4% to anywhere between 12.5% to 14.7% at the March-end.
  • However, RBI seems to have overestimated the bank’s NPA position, as NPAs were settled at much lower figures.

CRAR:

  • The capital position of banks measured as the capital to risk-weighted assets ratio (CRAR) is also projected in the July report, to deteriorate from 14.6% in March 2020 to 13.3% in March 2021 in the baseline scenario.
  • However, banks were able to raise capital through various modes & improved their capital positions during 2020-21.
  • Despite the pandemic, the banks CRAR is improved to 16% in March-end, which is above the regulatory threshold of 9%.
  • Moving forward, the bank’s capital position won’t pose any major concerns, even in the severe stress scenario RBI doesn’t expect any of the banks to fall short of capital.

Gross Non-Performing Assets (GNPA):

  • Another positive feature from the report is that banks have enough capital cushions against deterioration in their assets.
  • The proportion of provisions to GNPA increased from 66.2% in March 2020 to 68.9% in March 2021.

Regulatory Support Measures:

  • The main factor that the banks NPAs remained under the control is due to regulatory support measures such as:
    • Loan moratoriums,
    • Restructuring of loans,
    • Standstill on NPA classification &
    • Timely withdrawals.
  • While banks were incentivized by RBI through the TLTROs to aggressively lend to sectors hit by the pandemic, they adopted a cautious approach & also there were fewer takers for the cheap loan windows.

Current Projections & Risks highlighted by the Report:

  • For the current year, the report projects that the banks NPAs would rise to 9.8% in the baseline scenario by March 2022.
  • The report also projects unlikely two stress scenarios that involve GDP growth slowing to 6.5% & less than 1% in 2021-22 in the medium & severe stress scenarios respectively.
  • The key risk highlighted by the report is the weakness in the MSME portfolio of banks.
  • Despite loan structuring since 2019, the report notes that the stress in the MSME sector remained elevated as the NPA ratio for the public sector stood at 15.9% at March-end compared with 13.1% in December 2020.
  • While stress in MSMEs needs to be monitored but it is unlikely to pose a systemic risk.
  • Despite a series of measures to boost credit flows to the MSME sector, the share of MSMEs in the outstanding bank credit is less than 5%.
  • The increase in credit flow to the sector is primarily due to the ECLGS scheme that is aimed to provide 100% guaranteed coverage to banks & other lenders.
  • Thus, banks will be guarded against a possible slippage of loans under this scheme.
  • Additionally, RBI’s restructuring schemes & pre-packaged insolvency resolution process should allow for better handling of MSME credit stress.

Way Forward: –

  • Moving ahead in the absence of regulatory support measures, there could be fresh additions to NPAs.
  • As the economy picks up, it is high time to ensure timely repayment of loans by companies, better recoveries & faster credit growth to keep NPAs under control.
  • The need of the hour is also to improve the capital positions of banks to able to support a recovery in credit demand.

 

Question: –

The Reserve Bank of India’s latest Financial Stability Report presented an assessment of the health of the banking sector in the pandemic year. In this context discuss what is NPA. Also enlist the Regulatory support measures that will ensure banks’ NPAs remain under control.

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