Daily Prelims Notes 2 May 2022
- May 2, 2022
- Posted by: OptimizeIAS Team
- Category: DPN
Daily Prelims Notes
2 May 2022
Table Of Contents
- Unemployment
- Retail Prime Lending Rate
- Deposit Insurance in India
- Jute Textile Issue
- E-Shram Portal
- Anabolic steroids
- Appointments to important offices
- Special Railway Establishment for Strategic Technology and Holistic Advancement (SRESTHA), Lucknow
Subject: Economy
Section: Unemployment
In April, unemployment was highest in Haryana, followed by Rajasthan and Bihar, CMIE data showed.
Details
- In the month of April, unemployment was highest in Haryana, followed by Rajasthan and Bihar at 34.5%, 28.8% and 21.1% respectively.
- Himachal Pradesh, Chhattisgarh, and Assam saw the lowest unemployment rate which stood at a miniscule 0.2 per cent, 0.6 per cent and 1.2 percent respectively.
- India’s labour force fell by 38 lakhs in the month of March, lowest level in the last eight months, possibly too disappointed with their failure to get a job and under the belief that there were no jobs available.
- The working age population had dropped out of the labour force as a large proportion was pursuing education or engaged in unpaid activities such as care giving according to the government and not due to ‘lost hope’.
Subject: Economy
Section: Monetary policy
Why in the news?
HDFC increases its Retail Prime Lending Rate (RPLR) on Housing loans, on which its adjustable rate home loans (ARHL) are benchmarked, by 5 basis points, with effect from May 1, 2022
Concept:
In India, the PLR is the rate on which commercial banks lend to their most trustworthy and creditworthy customers.
RBI does not decide the PLR of NBFCs or Housing finance institutions. RBI only announces the Repo rate which affects the cost of raising new funds for housing finance companies. Effective 1st april 2016, banks have been directed by the RBI to fix their loan interest rates benchmark to MCLR rate. However, HFC and NBFcs continue to offer loans at PLR rates.
Currently, all commercial banks have the authority to set their own benchmark prime lending rate (BPLR) with the sanction of their respective boards. The prime lending rate is crucial for borrowers, as the PLR directly affects the lending rates for a home loan.
The prime lending rate is the primary determiner of most of the interest rates charged by the lending institution; it is a component of the rate charged to the customer.
INTEREST RATES = SPREAD + PRIME LENDING RATE
The spread component is either positive or negative and remains constant throughout the tenure of the loan. Any change in PLR affects the Floating Rate of Interest only. In India, most loans have a fixed rate of interest, except home loans. So changes in PLR don’t affect the majority of loans; however, home loans with floating interest rates are dependent on the PLR.
BPLR vs Base rate vs MCLR: Benchmark Prime Lending Rate or BPLR was introduced by the Reserve Bank in 2003. It is the rate applied by a bank to its most creditworthy customers. But the major problem with BPLR was lack of transparency. Banks could lend below the BPLR to privileged customers. All commercial banks have the authority to set their own benchmark prime lending rate (BPLR) with the sanction of their respective boards. So, in 2010, the Reserve Bank of India introduced the Base Rate system, which replaced the BPLR system. Currently, the housing finance companies lend at retail prime lending rate, which is similar to BPLR. Base rate system?
Base Rate is linked to:
MCLR system: Banks were allowed to determine their actual lending rates on loans and advances with reference to the Base Rate and by including such other customer-specific charges as considered appropriate. Now, whenever RBI changes the Repo Rate under Base Rate, the changes in interest rate are not automatically transferred to borrowers. Therefore, in April 2016, the RBI introduced MCLR to tackle problems related to the Base rate regime. Banks stopped lending on base rate from April 2016. But, loans taken between June 2010 and April 2016 from banks remained on the base rate mechanism. What is MCLR?
The main aspects while calculating MCLR:
The MCLR is determined by the current cost of funds, in contrast to the base rate, which is governed by the average cost of funds. It also provides transparency in the procedure followed by banks to arrive at interest rates on advances. MCLR is considered better in all respects because rates based on this system are more receptive to the changes in the policy rate. Any change in the Repo Rate is reflected almost immediately. This also ensures that the country’s monetary policy is implemented effectively across all spheres. Now, if you are planning to take a loan from a bank on a floating rate to buy a house, it will be linked to MCLR. And remember, you always have the option to convert your loans from base rate to MCLR. |
Subject: Economy
Section: Monetary policy
Serious thought to insuring deposits was given by the RBI and the Centre after the failure of the Palai Central Bank Ltd. and the Laxmi Bank Ltd. in 1960. The Deposit Insurance Act, 1961 came into force on January 1, 1962.
The preamble of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 states that it is an Act to provide for the establishment of a Corporation for the purpose of insurance of deposits and guaranteeing of credit facilities and for other matters connected therewith or incidental thereto.
The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a wholly owned subsidiary of the Reserve Bank of India, taking care of insuring bank deposits. The management of the Corporation vests with its Board of Directors, of which a Deputy Governor of the RBI is the Chairman.
Though the scheme’s prime objective is to protect bank depositors from the impact of bank failures, it has also served other unstated purposes like:
- Bailing out cooperative banks at the cost of commercial banks
- Generating income for the central government by way of income tax
- Penalising depositors of government banks without any utility
- Diverting sizable deposit funds to the DICGC.
Banks covered by Deposit Insurance Scheme
- All commercial banks including the branches of foreign banks functioning in India, Local Area Banks and Regional Rural Banks.
- Co-operative Banks – All eligible co-operative banks as defined in Section 2 (gg) of the DICGC Act are covered by the Deposit Insurance Scheme. All State, Central and Primary co-operative banks functioning in the States/Union Territories which have amended their Co-operative Societies Act as required under the DICGC Act, 1961, empowering RBI to order the Registrar of Co-operative Societies of the respective States/Union Territories to wind up a co-operative bank or to supersede its committee of management and requiring the Registrar not to take any action for winding up, amalgamation or reconstruction of a co-operative bank without prior sanction in writing from the RBI, are treated as eligible banks. At present all Co-operative banks are covered by the Scheme. The Union Territories of Lakshadweep and Dadra and Nagar Haveli do not have Co-operative Banks.
Under Section 11 of the DICGC Act, 1961, all new commercial banks are required to be registered as soon as may be after they are granted licence by the Reserve Bank of India under Section 22 of the Banking Regulation Act, 1949.
Insurance coverage
Initially, under the provisions of Section 16(1) of the DICGC Act, the insurance cover was limited to 1,500/- only per depositor(s) for deposits held by him (them) in the “same right and in the same capacity” in all the branches of the bank taken together. However, the Act also empowers the Corporation to raise this limit with the prior approval of the Central Government. Accordingly, the insurance limit was enhanced from time to time as follows:
- 5,000/- with effect from 1st January 1968
- 10,000/- with effect from 1st April 1970
- 20,000/- with effect from 1st January 1976
- 30,000/- with effect from 1st July 1980
- 1,00,000/- with effect from 1st May 1993 onwards.
- 5,00,000/- with effect from 4th February 2020 onwards.
Types of Deposits Covered
DICGC insures all bank deposits, such as saving, fixed, current, recurring, etc. except the following types of deposits.
- Deposits of foreign Governments;
- Deposits of Central/State Governments;
- Inter-bank deposits
- Deposits of the State Land Development Banks with the State co-operative banks;
- Any amount due on account of and deposit received outside India
- Any amount which has been specifically exempted by the corporation with the previous approval of the RBI.
Premium:
The Corporation has revised the premium further to 12 paise per 100 of assessable deposits per annum from the half year beginning April 1, 2020 onwards with the objective of maintaining a strong DIF.
The premium paid by the insured banks to the Corporation is required to be absorbed by the banks themselves so that the benefit of deposit insurance protection is made available to the depositors free of cost. In other words the financial burden on account of payment of premium should be borne by the banks themselves and should not be passed on to the depositors.
Under Section 15A of the DICGC Act, the Corporation has the power to cancel the registration of an insured bank if it fails to pay the premium for three consecutive half-year periods. However, the Corporation may restore the registration of the bank, which has been de-registered for non-payment of premium, if the concerned bank makes a request on this behalf and pays all the amounts due by way of premium from the date of default together with interest.
Tax liability:
The Corporation has been paying income tax since 1987-88. It is assessed for Income Tax as a ‘company’ as defined under the Income Tax Act, 1961, is also subject to service tax on premium income from October 1, 2011 and is liable to Goods and Services Tax with effect from July 1, 2017.
History: The Government of India, in consultation with the Reserve Bank of India, introduced a Credit Guarantee Scheme in July 1960. The Reserve Bank of India was entrusted with the administration of the Scheme, as an agent of the Central Government, under Section 17 (11 A)(a) of the Reserve Bank of India Act, 1934 and was designated as the Credit Guarantee Organization (CGO) for guaranteeing the advances granted by banks and other Credit Institutions to small scale industries. The Reserve Bank of India operated the scheme up to March 31, 1981. The Reserve Bank of India also promoted a public limited company on January 14, 1971, named the Credit Guarantee Corporation of India Ltd. (CGCI). The main thrust of the Credit Guarantee Schemes, introduced by the Credit Guarantee Corporation of India Ltd., was aimed at encouraging the commercial banks to cater to the credit needs of the hitherto neglected sectors, particularly the weaker sections of the society engaged in non-industrial activities, by providing guarantee cover to the loans and advances granted by the credit institutions to small and needy borrowers covered under the priority sector. With a view to integrating the functions of deposit insurance and credit guarantee, the above two organizations (DIC & CGCI) were merged and the present Deposit Insurance and Credit Guarantee Corporation (DICGC) came into existence on July 15, 1978. Consequently, the title of Deposit Insurance Act, 1961 was changed to ‘The Deposit Insurance and Credit Guarantee Corporation Act, 1961 ‘. Effective from April 1, 1981, the Corporation extended its guarantee support to credit granted to small scale industries also, after the cancellation of the Government of India’s credit guarantee scheme. With effect from April 1, 1989, guarantee cover was extended to the entire priority sector advances, as per the definition of the Reserve Bank of India. However, effective from April 1, 1995, all housing loans have been excluded from the purview of guarantee cover by the Corporation. |
Subject: Economy
Section:Monetary policy
Context:
The Office of the Jute Commissioner (JCO)’s September 30 notification mandated that no entity would be allowed to purchase or sell raw jute at a price exceeding ₹6,500 per quintal.
Details:
In simple words, mills are procuring raw jute at prices higher than what they are selling them after processing.
The government has a fixed Minimum Support Price (MSP) for raw jute procurement from farmers, which is ₹4,750 per quintal for the 2022-23 season. However, this reached his mill at ₹7,200 per quintal, that is, ₹700 more than the ₹6,500 per quintal cap for the final product. This high gap between MSP and procurement cost of the mills is due to the fact that they procure raw jute from intermediaries instead of farmers themselves, who charge a high commission.
Concept:
As per the Food and Agriculture Organisation (FAO), India is the largest producer of jute followed by Bangladesh and China. West Bengal, Bihar and Assam account for almost 99% of India’s total production.
In terms of acreage and trade, Bangladesh takes the lead accounting for three-fourth of the global jute exports in comparison to India’s 7%.This can be attributed to the fact that
India lags behind Bangladesh in producing superior quality jute fibre due to:
- Infrastructural constraints related to retting,
- Lack of farm mechanisation,
- Lack of availability of certified seeds and varieties suitable for the country’s agro-climate.
- Jute acreage competes with crops such as paddy, maize, groundnut, and sesame.
- The increased availability of synthetic substitutes is further bothering the demand for jute domestically.
- Lack of export competitiveness-as Bangladesh provides cash subsidies for varied semi-finished and finished jute products.
Laws:
Government has expanded the scope of mandatory packaging norms under the Jute Packaging Materials (Compulsory Use in Packing Commodities) Act, 1987, also known as the JPM Act. Under it, the Government is required to consider and provide for the compulsory use of jute packaging material in the supply and distribution of certain commodities.
It mandates that 100% production of foodgrains and 20% sugar production must be packaged in jute bags.
Shemes:
- Jute-Improved Cultivation and Advanced Retting Exercise: Jute ICARE aims to improve the productivity and quality of raw jute. Under it, the Government is disseminating improved agronomic practices such as line sowing using seed drills, distribution of quality certified seeds, etc.
- Jute SMART: It is an e-govt initiative which was launched in December 2016 to promote transparency in the jute sector. It provides an integrated platform for procurement of sacking by Government agencies.
- Definitive Anti-Dumping Duty: It has been imposed on import of jute goods from Bangladesh and Nepal with effect from 5th January 2017 to protect the domestic sector.
- Incentive Scheme for Acquisition of Plants and Machinery: Launched in 2013, it aims to facilitate modernisation in existing and new jute mills and up- gradation of technology in existing jute mills.
- Collaboration between the National Jute Board and the National Institute of Design: It aims to support the diversification of the jute sector through a Jute Design Cell.
- National Jute Board under the Ministry of Textiles, acts as the apex body for the promotion of the products in India and abroad.
- Jute is included in the Minimum Support Price (MSP) regime of the country.
- The Jute Commissioner looks after orderly development and promotion of the jute industry in India. He has been discharging both regulatory and developmental functions. This not only includes jute mills, but covers right from raw jute marketing up to the finishing stage of jute goods production including development of machineries and accessories used in jute manufacturing units. The Jute Commissioner exercises regulatory powers under Jute & Jute Textiles Control Order, 2016.Administering of mandatory packaging under the JPM Act, declaration of MSP of jute, declaration of monthly price of B-Twill sacking, informal monitoring of R&D Projects. Regulator for the Jute Sector.
Functions:
- Monitoring and implementation of JPM (Compulsory use in Packing Commodities) Act, 1987 and Jute & Jute Textiles Control Order 2016.
- Furnishing technical advice to the Ministry on all policy matters related to the jute sector.
- Monitoring MSP prices for other grades of raw jute (based on CACP notification for TD-5 variety).
- Monthly fixation of Govt B-Twill Prices is based upon updated provisional price methodology duly approved by Ministry of Textiles.
- Coordination between all Govt. / Semi-Govt. and Autonomous bodies in the Jute Sector.
- Handling the functions taken over by DGS&D since November 2016 for purchase of B.Twill Jute Bags by the State Procurement Agencies (SPAs) to the tune of Rs.6,000 Crores.
Subject: Economy
Section: Employment
Context: New campaign to get more workers to register would also be planned after analysis of the registrations so far was being carried out, according to the Ministry.
Background:
- Budget Speech 2022-2023, Finance Minister had announced the linking of four portals — the National Career Service, e-Shram, UDYAM (for those interested in starting MSMEs) and ASEEM (Atmanirbhar Skilled Employee Employer Mapping).
- The Labour Ministry announced on April 20 that the inter-linking of the NCS and e-Shram portals had been completed.
- This linkage has enabled unorganised workers registered on e-Shram to seamlessly register on NCS and look for better job opportunities through NCS. So far, more than 26,000 e-Shram beneficiaries have registered on NCS and have started benefiting from this linkage.
About E-Shram Portal
https://optimizeias.com/e-shram-portal/
About UDYAM Portal
https://optimizeias.com/udyam-registration-portal-for-msme/
About ASEEM Portal
- ASEEM refers to all the data, trends and analytics which describe the workforce market and map demand of skilled workforce to supply.
- It will help skilled people find sustainable livelihood opportunities.
- It is developed and managed by National Skill Development Corporation (NSDC) in collaboration with Bengaluru-based Company named Betterplace.
- It is an AI-based portal which will map details of workers based on regions and local industry demands and will bridge the demand-supply gap of skilled workforce across sectors.
- It will provide employers with a platform to assess the availability of a skilled workforce and formulate their hiring plans.
- It will also provide real-time granular information by identifying relevant skilling requirements and employment prospects.
About National Career Service
- The Ministry of Labour and Employment has started offering free online career skills training through its National Career Service (NCS) project for job-seekers registered with it.
- The training will assist the learners in enhancing personality development with modules on corporate etiquette, improving interpersonal skills, making impactful presentations including other necessary soft skills demanded by the industry today.
- It is a one-stop solution that provides a wide array of employment and career related services to the citizens of India.
Subject :Science and Technology
Section : Basic
Content:
- Anabolic steroids are essentially lab-made versions of the male hormone testosterone.
- They have a similar effect of increasing muscle mass as the natural hormone
- It also increases male characteristics in a person, such as facial hair and a deeper voice.
- However, anabolic steroids are very different from the steroids that are prescribed by doctors for inflammations, several autoimmune diseases, or to suppress the body’s immune system during a Covid-19 infection. These medicines are called corticosteroids and are lab-made molecules that mimic the action of the hormone called cortisol that controls the body’s stress response, metabolism, and inflammation.
- Unlike corticosteroids, anabolic steroids have limited medical use. “Anabolic steroids are mainly misused by athletes and sportspersons nowadays.
How are anabolic steroids misused?
- Misused mainly by those who want to bulk up as it helps increase one’s muscle mass.
- Although no concrete estimate exists of the number of people using the drug across India, a 2018 study from Jammu and Kashmir found that 7.1 per cent of athletes used it.
What are the health impacts of anabolic steroids ?
- Use of anabolic steroids in the short-term can cause acne and hairfall.
- Extended misuse of the substance can also lead to gynaecomastia (growth of breasts in men) and erectile dysfunction.
- In women, it can lead to growth of facial hair.
- It may also cause extreme anger, paranoia, and impaired judgement.
- Long-term use can lead to kidney disease and even failure, liver damage and tumours, enlarged heart, and high blood pressure.
- It can also lead to stunted growth in teenagers.
7. Appointments to important offices
Subject: Polity
Section: National
Context:
The tenures of three high- profile offices — the Union Home Secretary; Director, Intelligence Bureau (IB); and Secretary, Research and Analysis Wing (RAW) — are ending in the next few months.
Process of appointment and tenure of services:
- They generally have two-year fixed terms.
- The Appointments Committee of the Cabinet (ACC) approved their appointments.
- According to the Fundamental Rules, 1922 that govern the appointment and tenures of all government servants, the posts of Union Home Secretary; Director, IB; and Secretary, RAW can be extended by up to two years beyond the two-year fixed tenure in “public interest”.
- A Supreme Court ruling in 2017 had fixed a two- year term for Director, ED but the new appointment rules under the Central Vigilance Commission Act, 2003 (Rule 45 of 2003) relaxed the tenure limit to up to five years.
- The amendment is also applicable to the Director, CBI’s post, extending the fixed two-year tenure to up to five years under the Delhi Special Police Establishment Act, 1946 (Rule 25 of 1946).The Director of CBI is to hold the post for not less than two years as held by the Vineet Narain judgment of 1998.
Subject: Polity
Section: National Organisation
Context: Indian Railways has announced the closure of the Special Railway Establishment for Strategic Technology and Holistic Advancement (SRESTHA), Lucknow.
Established in March 2016, the SRESTHA directorate,part of the Research Designs and Standards Organisation (RDSO), was tasked with the role of taking up long term railway research projects requiring technological advancement. As part of the restructuring plan, the Railways also decided to merge 32 directorates of the RDSO and brought them under seven verticals — administration, infrastructure, rolling stock,traction and power supply, signal and telecommunication, resource and testing and traffic and psychology.