Daily Current affairs 25 January 2019Daily Current Affairs
Why in News?
- Various public sector banks are taking initiatives for Employee Share Purchase Schemes (ESPS).
- In March 2017, the government allowed public sector banks to offer stock options to their employees.
- The move was mainly aimed at raising capital for the NPA ridden banks and retaining their experienced hands and better incentives for them.
Highlights of the news
- The decision by banks to initiate ESPS is aimed at augmenting their capital through sale of shares to employees.
- The employees of some banks are saying that they are being asked by the banks to mandatorily buy a particular amount of shares, without any formal communication.
- This forceful scheme of selling the shares to employees is worrying the employees. Hence, trade unions are opposing this forceful selling of shares.
About Employees Share Purchase
- Companies often reward their employees with their stock in the form of:
- Employee stock option plans (Esops): Esops are stock options granted to employees over a vesting period, where the employee is given the right to purchase the company’s shares at a predetermined price.
- Employee stock purchase plans/Schemes (ESPP/ESPSs): ESPP/ESPSs allow employees to use their salary to purchase the stock of the company, usually at a discounted price.
- Unlike Esops, in ESPP/ESPSemployees do not have any option, but are mandated to buy the shares usually as deductions from their payment.
- Generally these schemes are offered to retain the best and experienced employees of the company.
Implications of the scheme
- Recapitalization of banks: By selling the shares of the banks to its employees, the NPA ridden banks can get the much needed working capital.
- Retaining experienced employees: Offering shares of the banks to the employees at discounted prices incentives them to remain in the same organization.
- Savings/investment by the employees: This is a lucrative path for the channelization of employee savings while improving their investment portfolio.
- Tax benefits: Dividends earned on shares are exempted from Tax. Hence, employees can enjoy the tax benefits.
- Building trust of the employees: Generally such schemes are offered to build trust between the employee and employer by making the previous a stakeholder in the organisation’s growth.
- Dilution of shareholding from bank to retail investors: As the emloyees can sell the shares in the market after the specified lock-in period, it paves way for passing of shares into the hands of retail investors.
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Section : Economics
- In the first ever attempt to reuse the 4th stage of a rocket, ISRO successfully launched the military satellite Microsat-R and Kalamsat experimental satellite on-board PSLV C-44.
Key Highlights of PSLV C-44 mission
- PSLV C-44 is the first mission where the 4th stage of a rocket is used.
- PSLV C-44 placed the military satellite Microsat-R in the low earth orbit (LEO).
- Subsequently, the 4th stage of PSLV C-44 was moved to a higher circular orbit where Kalamsat-V2 (1.26kg), a student experimental satellite, was injected into the orbital platform.
- This is the first time ever that the last stage of the rocket is used as a platform to perform experiments in space.
- PSLV is a 4-stage launch vehicle that uses alternate combination of liquid and solid fueled rocket stages.
- While the 1st and 3rd stages are solid-fueled, the 2nd and the 4th stages are propelled by liquid fuel.
- PSLV can deliver payloads of up to:
- 3,250kg to Low Earth Orbit
- 1600 kg to Sun Synchronous orbit
- 1400 kg to Geosynchronous Transfer Orbit
- In 2017 PSLV-C37 successfully launched 104 satellites, the highest number of satellites launched in a single flight so far.
4th stage of PSLV C-44
- In a normal scenario, the last stage of a PSLV rocket after releasing the primary satellite in space becomes dead and categorized as space debris.
- For the 1st time, the 4th stage of PSLV has been moved to a higher orbit to establish an orbital platform for about 6 months.
- This orbital platform is then used to house experimental satellites thus reducing the cost of launching separate experimental satellites.
- With this India becomes the first country to use a dead 4th stage of the rocket to perform micro-gravity experiments.
- Microsat-R is military imaging satellite.
- The 740-kg Microsat-R is placed in an orbit 274 km above the Earth surface.
- Thus it provides the advantage of better resolution compared to civil Earth observation satellites which orbit between 400 km and 700 km.
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Section : Science & Tech
- The South Asian Nitrogen Hub (SANH), a group of 50 institutions from Europe and South Asia, is all set to study the amount of nitrogen pollution and its impact in South Asia.
- Nitrogen is 300 times more potent greenhouse gas than carbon dioxide.
- South Asia, being predominantly agricultural economies, nitrogen pollution is rampant as agriculture is the single largest contributor to nitrogen emissions.
- Unscientific use of fertilizers in South Asia due to high subsidies is also adding to nitrogen pollution.
- Now, SANH will study the impacts of the different forms of nitrogen pollution particularly in 8 countries including India, Pakistan, Bangladesh, Nepal, Afghanistan, Sri Lanka, Bhutan and Maldives.
- Nitrogen is an integral part of many molecules like proteins, nucleic acids DNA and RNA and some vitamins.
- Atmospheric nitrogen is inert and cannot be used by life forms directly.
- This atmospheric nitrogen has to be converted into nitrates and nitrites to facilitate its use by various organisms.
- Leguminous plants have nitrogen fixing bacteria (Azatobacter, Anabeana, Nostoc) living in their root nodules which help in fixing atmospheric nitrogen into nitrates and nitrites.
- Nitrogen is also fixed during lightning due to high temperatures and pressures created convert nitrogen in the air into oxides of nitrogen.
- Plants take up nitrates and nitrites and convert them into amino acids which are used to make proteins.
- Proteins and other complex compounds are then consumed by animals.
- When the animal or the plant dies bacteria present in the soil convert various compounds of nitrogen back into nitrates and nitrites.
- The decomposition of organic nitrogen of dead plants and animals into ammonia is called as ammonification.
- Ammonia is first oxidised into nitrites by the Nitrosomonas bacteria, then the nitrites are converted into nitrates by the Nitrobacter bacteria. This is called as nitrification.
- While atmospheric nitrogen is inert, oxides of nitrogen and other nitrogenous compounds like ammonia are highly polluting.
- For instance Nitrous oxide (N2O) is 300 times more potent greenhouse gas than carbon dioxide.
- Nitrogenous gases like ammonia (NH3) and nitrogen dioxide (NO2) are significantly contributing to air pollution.
- Nitrates from chemical fertilizers causes eutrophication in the water bodies posing a health risk for humans, fish, coral and plant life.
- Nitrogen is also linked to ozone depletion.
Nitrogen pollution in India
- Indian Nitrogen oxides emissions grew at 52% from 1991 to 2001 and 69% from 2001 to 2011.
- Agriculture is the largest contributor to nitrogen oxides emissions (nitric oxide and nitrogen dioxide).
- Non-agricultural emissions include sewage and fossil-fuel burning — for power, transport and industry.
- Nitrous oxide (N2O) has replaced methane as the second largest Greenhouse Gas (GHG) from Indian agriculture.
- India is also the biggest source of ammonia emission in the world with cattle accounting for 80% of the ammonia emission.
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Section : Environment & Ecology
Why in News?
- South African President Cyril Ramaphosa is the chief guest for the Republic Day celebrations.
- On his arrival, India and South Africa will update their Strategic Partnership by agreeing on a comprehensive “roadmap” on the way ahead, as well as relaxing visa restrictions.
- Updating partnership means the revision of the Strategic Partnership between India and South Africa, called the Red Fort Declaration, which was signed in 1997.
- The partnership would be reviewed and updated with a three-year plan of action on security cooperation, trade and investment, tourism, harnessing the ‘blue economy’, maritime cooperation, agriculture, science and technology projects.
- India and South Africa has MoUs in many areas, which now will be taken up in a time-bound manner, which will have all the areas on a roadmap with specific action plans.
- It is also expected that new defence deals will be signed in the backdrop of the lifting of a 13-year old ban on South African defence firm Denel that was barred from doing business in India since 2005.
- The South African President will also deliver the “First IBSA Gandhi Mandela Memorial Freedom Lecture”, instituted by the Indian Council of World Affairs in Delhi.
India -South Africa Relationship
- India and South Africa share common values and strong historical linkages that form the bedrock of close friendship.
- Trade: Bilateral trade between India and South Africa presently stands at about $10 billion and the potential for growth is significant. The two countries have set a target of $20 billion for trade and investment to be reached by 2021.
- Exports from India to South Africa: Vehicles, transport equipment, drugs and pharmaceuticals, engineering goods, footwear, dyes and intermediates, chemicals, textiles, rice, gems and jewellery, etc.
- Imports from South Africa to India: Gold, steam coal, copper ores & concentrates, phosphoric acid, manganese ore, aluminum ingots & other minerals.
- The India-South Africa Joint Commission at the level of Foreign Ministers was set up in 1994 to identify areas of mutually beneficial cooperation.
- Investments in South Africa: Some of India’s biggest corporations, such as Tata, Mahindra, and Vedanta, are among the 150 odd Indian companies that have invested in South Africa.
- With the help of the Indian Council for Cultural Relations (ICCR), an intensive programme of cultural exchanges is organised throughout South Africa including scholarships for South African nationals
- The ITEC programme has contributed to improving skills and enhancing knowledge of nearly 1000 South African nationals since 1993-94, in areas such as Rural Development, Agriculture, Information and Communication Technology, Poverty Alleviation, Mass Communication, Journalism, Entrepreneurship and other multi-skill development training aimed at increasing competiveness in the job market.
- A number of bilateral agreements have also been concluded between the two countries in diverse areas ranging from economic and commercial cooperation, defence, culture, heath, human settlements, public administration, science and technology and education.
- Beyond bilateral, the two nations are engaged in a number of plurilateral initiatives like BRICS (with Russia, Brazil, and China), IBSA (India-Brazil-South Africa trilateral), Commonwealth and Indian Ocean Rim Association (IORA).
At a time when strategic geographies are getting redefined with the rise of Eurasia and the Indo-Pacific, key players like India and South Africa need to move beyond their comfort zones.
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Section : International Relation
- Recently, India has tested a new indigenous air-launched missile called new-generation anti-radiation missile (NGARM).
- The DRDO-Navy also conducted another successful test of the advanced Barak long-range surface-to-air missile (LR-SAM) system, jointly developed by DRDO and Israel.
About New- generation anti-radiation missile (NGARM)
- NGARM is the first air-to-surface missile completely designed and developed by DRDO.
- The missile is capable of destroying enemy radars, tracking systems and communication facilities.
- It will be mounted on the combat aircraft of the IAF such as Sukhoi Su-30MKI and HAL Tejas.
- It can be launched from different altitudes and velocities.
- It has a strike range of around 100-km.
- A sensor on the tip of NGARM will pick up radio frequencies and destroy radars, tracking apparatuses and other communication facilities of enemies.
About Barak 8 Long-range surface-to-air missile (LR-SAM) system
- The Long-Range Surface-to-Air Missile (LR-SAM) system is an operational Air and Missile Defence (AMD) system used by Israel's navy as well as by India's navy, air and land forces.
- It is designed to defend the warships against any type of airborne threat including aircraft, helicopters, anti-ship missiles, and UAVs as well as ballistic missiles, cruise missiles and combat jets.
- It is capable of countering newest generation anti-ship missiles.
- It has maximum speed of Mach 2.
- Its interception range is 70-100 km
- Apart from the missile, the system includes a Multi Functional Surveillance and Threat Alert Radar (MF-STAR) for detection, tracking and guidance of the missile. This would provide the users the capability to neutralise any aerial threats.
Note: MR-SAM is the land based configuration of Barak 8
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Section : Science & Tech
About Rotterdam Convention (adopted in 1998 and came into force in 2004).
- The Rotterdam Convention (formally, Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade) is a multilateral environmental agreement on the import and export of certain hazardous chemicals.
- Countries make informed decisions to accept the chemicals that they are prepared to receive, and exclude those they decide they cannot manage safely.
- It promotes open exchange of information and calls on exporters of hazardous chemicals to use proper labeling, include directions on safe handling, and inform purchasers of any known restrictions or bans.
- It has legally binding obligation for the implementation of Prior Informed Consent (PIC) procedure
- The Convention covers pesticides and industrial chemicals that have been banned or severely restricted for health or environmental reasons by Parties and which have been notified by Parties for inclusion in the PIC procedure.
- To provide technical assistance for developing countries and countries with economies in transition, to develop the infrastructure and capacity necessary to implement the provisions of the Convention.
- Promotion of shared responsibility and cooperative efforts among Parties in the international trade of certain hazardous to protect human health and the environment from potential harm;
- Sound use of those hazardous chemicals
What is Prior Informed Consent (PIC) procedure?
- The Prior Informed Consent (PIC) procedure is a means of sharing information globally regarding certain chemicals and pesticides that have been considered hazardous to human health or to the environment by the Conference of the Parties.
- This information allows Parties to determine how, or whether, they can safely use the substance.
- A Party can refuse future imports under the Convention, as long as they do so from all sources and do not produce the chemical domestically.
- Similarly, Parties who set restrictions on a substance can set conditions for import
- under the Convention to match these domestic requirements. The PIC procedure does not establish any barrier to trade if the treaty text is respected.
Implications of listing a chemical under the Rotterdam Convention
- Listing obligates all Parties to respect the PIC procedure when exporting and to submit import responses.
- It does not constitute ban on trade of that chemical.
- In 2012, the Secretariats of the Basel and Stockholm conventions, as well as the UNEP-part of the Rotterdam Convention Secretariat, merged to a single Secretariat with a matrix structure serving the three conventions.
- The Rotterdam Convention mainly deals with the export and import of certain hazardous pesticides and industrial chemicals. But Stockholm Convention, does ban or restrict the use of a hazardous substance in products.
- India ratified the Convention in 1992.
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Section : Miscellaneous
Significance of agricultural credit:
- Agricultural credit is an indirect (as opposed to direct) input into agriculture, i.e. credit enables the farmer to buy inputs like seeds, fertilisers, pesticides, insecticides, etc.
- This has a bearing on what happens in a farmer's field and, ultimately, on his income.
- This makes agriculture credit more critical than any other indirect input.
Growth in credit:
- Growth in agriculture credit is essential for supporting production.
- In the last decade, agriculture credit has registered a per-annum average growth of 16.5%.
- In terms of physical outreach, the three credit purveying agencies (commercial banks, cooperative banks and regional rural banks) have been able to add about 7 crore accounts between 2007-08 and 2017-18 (reaching more than 11 crore accounts).
But imbalanced across regions:
- The agriculture credit system still had a long way to go in terms of equity aspects.
Regional distribution of agriculture credit is skewed:
- The five southern states together account for almost 43% of the amount disbursed and agriculture accounts.
- The increased share for the southern region may be because of better infrastructure facilities, better outreach and credit delivery outlets.
- The next largest share in terms of amount is garnered by the northern region and is almost half of southern region (see table).
Not in sync with GCA:
- For areas where the demand-side factors are conducive, resources (read agriculture credit) should theoretically flow towards those regions.
- Yet, the share in credit of the eastern region is quite low compared to its share in the gross cropped area.
- Similar is the case with the central region.
- Clearly, the regional imbalance in agriculture credit has persisted for long despite the demand-side mapping reflecting a different picture.
Making agriculture credit distribution more equitable:
While policy stakeholders have been aware of the distortions, a more hands-on approach is required.
- Covering all farmer households:
- There is a need to make concerted efforts to cover all farmers’ households within the fold of agriculture credit across regions, especially in central and eastern regions.
- The gap between farmer households and agriculture accounts is the highest in the central and eastern regions, at 1.6 crore and 1.5 crore, respectively.
- Priority sector lending (PSL):
- The current PSL guideline require uniform norm of 8% credit going to small (less than 2 hectares) and marginal (less than 1 hectare) farmers, under the 18% overall target of agriculture credit.
- These current uniform norms need to be revisited.
- PSL targets must become a more granular exercise based on regional realities.
- Introducing differential weight to the credit disbursed in agriculture credit-starved regions could be considered.
- Small and marginal holdings constitute 95%, 82% and 86% of total operational holdings in the eastern region, north-eastern region and central region, respectively.
- For these regions, the current targets should be changed to those of a higher order.
Digital interventions shouldn’t further skew the distribution:
- Digital technology has opened alternatives for banking services through business correspondents, business facilitators, mobile telephony technology, digital card technology, etc.
- Now, the policy challenge is to ensure that these interventions help leapfrog these hitherto credit-starved regions into the next league.
- Focus should also be on the case of farmers’ collectives like farmer producer organisations (FPOs) and joint liability groups (JLGs).
- They help reap economies of scale both on the output and input markets and become vehicles of purveying credit to small and marginal farmers.
Digitisation of land records:
- Digitisation of land records needs to be completed on a mission mode in the eastern and north-eastern regions.
- This can provide the much-needed reform at the bank branch level for credit expansion.
- Digitisation of land records will also pave way to bring vibrancy in developing a land lease market.
Credit flow to the new command areas:
- The government has embarked on a mission to complete the identified irrigation projects in a time-bound manner providing irrigation facility to 80 lakh hectares.
- This shall increase the credit absorption capacity in the command areas of these projects.
- To hasten the credit flow in these areas, banking plans are required under an ‘area development’ approach.
Rural infrastructure creation:
- There is significant impact of public infrastructure creation in rural areas, be it irrigation, connectivity, health, sanitation or education, on enhancing credit absorption capacity.
- In the credit-starved regions, rural infrastructure creation needs to be dovetailed with the small area-based plans to get credit flowing for various agriculture investments that require bank credit.
- Agriculture credit has, over the last few years, has seen good growth.
- However, there is a need to get the distribution aspect right.
- This is the immediate unfinished agenda of ‘agriculture credit in India’, which requires focused attention from all the stakeholders.
GS Paper III: Indian Economy
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Section : Editorial Analysis