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The Hindu 27 August 2019

UPSC Current Affairs QUIZ







RBI showers Rs. 1.76 lakh crore bonanza on government 



A judicial overreach into matters of regulation



Giving wings to better air connectivity – Article    



Talking trade with the EU - Article  



Time to strike the gavel - Article



Britain must pay Brexit divorce bill even if there is no deal      




1. RBI showers Rs. 1.76 lakh crore bonanza on government (The Hindu Page 01)


Prelims: Indian Economy 

Mains: GS, paper III – Indian Economy  


Transfer of Rs 1.76 lakh crore to government by RBI  



  • The  RBI has recently decided to transfer a sum of  Rs 1.76 lakh crore to the Government comprising of  Rs 1.23 lakh crores surplus for the year 2018-19 and Rs 52,000 crore of excess provisions identified as per the revised Economic Capital Framework (ECF). This is the highest ever transfer from RBI to the Government.

  • The transfer of the finances from the RBI to the Government is in line with the recommendations of Bimal Jalan Committee whose recommendations the RBI has decided to adopt.



Why does the RBI pay the dividend?

The RBI is a statutory body under the RBI Act, 1934.The Section 47 of the RBI Act states that profits made by the RBI from its operations have to be sent to the Centre.


How does the RBI earn Profits?

The following are considered to be main sources of Income for the RBI:

  • Returns on the foreign currency assets such as bonds and treasury bills of other central banks.

  • Interest on its holdings of domestically issued government bonds or securities.

  • Interest on the loans given to the banks.

  • Management commission on handling the borrowings of state governments and the central government.

The net profit is calculated by subtracting the operation expenditures, and other expenses as stipulated in section 47 of the RBI Act.


Recent tussle between the RBI and Government

  • The total reserves with the RBI in 2017-18 was Rs 10 lakh crores. The Government believed that the reserves with the RBI is quite high and accordingly was  demanding the RBI to transfer at least one-third of its reserve assets in order to enable it to infuse more capital into PSBs to meet the BASEL III guidelines. However, RBI was opposing it on the grounds that it needs sufficient amount of reserves to tide over unforeseen circumstances in future.

  • In order to sort out this issue, the Government had appointed Bimal Jalan Committee to review the Economic Capital Framework and decide on the quantum of reserves to be transferred to Government.


Recommendations of Bimal Jalan Committee

Composition of Economic Capital: The committee has defined Economic capital as a combination of realized equity and revaluation reserves. The realised equity is the total realised profits of the RBI while the revaluation reserves is the unrealised and notional profits of the RBI which may arise from changes in the valuation of Gold, Foreign Currency or foreign securities.

Purpose of Economic Capital: The Committee has stated that realised equity could be used for meeting all risks and losses , while revaluation balances could be treated as risk buffers against market risks.

Adequacy of Economic Capital: The realised equity should be maintained at within a range of 6.5 per cent to 5.5 per cent of the RBI’s balance sheet, comprising 5.5 to 4.5 per cent for monetary and financial stability risks and 1.0 per cent for credit and operational risks. Further, any shortfall in revaluation balances would add to the requirement for realized equity. 

Transfer Policy:  The Committee has stated that the surplus distribution policy must take into the account the total realised equity. Only if realized equity is above its requirement (6.5 per cent to 5.5 per cent), the entire net income should be transferable to the Government. If it is below the lower bound of requirement, risk provisioning will be made to the extent necessary and only the residual net income should be transferred to the Government.


Decision of the RBI's Central Board

The Central Board accepted all the recommendations of the Committee.

Realized Equity: The available realized equity stood at 6.8 per cent of balance sheet, while the requirement recommended by the Committee was 6.5 per cent to 5.5 per cent of balance sheet. The Central Board has decided to maintain the realized equity level at 5.5 per cent of balance sheet and transfer Rs 52,000 crore of excess provisions identified as per the revised Economic Capital Framework (ECF).

Economic capital levels: The revised framework would allow the RBI’s economic capital levels to lie within the range of 24.5 per cent to 20.0 per cent of balance sheet . Presently, the economic capital stood at 23.3 per cent of balance sheet. In this regard, the RBI has decided to transfer its entire net income  of Rs 1.23 lakh crores (2018-19) to the Government.       

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2. A judicial overreach into matters of regulation (The Hindu –Page 11)


Prelims: Polity & Governance

Mains: GS Paper III – Polity & Governance     


On investigating cybercrimes 


Context: The article highlights that judiciary through Public Interest Litigations (PILs) has continuously expanded scope of issues considered in PILs. Even in the ongoing case in Madras High Court on Aadhaar – social media accounts linkage, the article mentions that judiciary has started to deliberate on a policy question which is under the purview of central government.       

Scope of PIL enlarged by Madras HC

  • The Court expanded the scope of writ petition to examine the adequacy of the legal framework on cybercrimes and the responsibilities of intermediaries who provide telecommunication and online services.  

  • The Court also considered whether platforms like WhatsApp that provide encrypted services shall provide traces (decrypting information) to law enforcement agencies to identify the preparators of crime. 

On Aadhaar Linkage – Decision of Madras HC

  • On linking Aadhaar with social media accounts, there are four different cases registered in different High Courts. Two in Madras High court and one each in Bombay High Court and Madhya Pradesh High Court. Even Supreme Court is hearing the same issue. 

  • Division Bench of Madras HC did not see any merit in the idea of linking social media accounts with Aadhaar. 

  • However, the Court expanded the writ petitions scope to examine the adequacy of the legal framework on cybercrimes and the responsibilities of intermediaries who provide telecommunication and online services.  

New Draft Rules

  • Ministry of Electronics and Information Technology notified new draft rules for intermediaries last year and called for public comments. The proposed rules envisage new obligations for service providers. One of the changes proposed is that intermediaries should help identify originators of offensive content.  

  • Social media companies have pleaded inability for data as there is end-to-end encryption of data. 

  • Further any state intervention on data needs to pass “proportionality test” as mentioned in Puttaswamy Judgment on Right to Privacy. 

Argument presented in the Article

  • The article highlights that decrypting information from social media accounts needs legal approval from the government. So the court by going through this technicality is interfering with the principles of separation of power. 

  • Thus, power of the court to deliberate on policy and regulatory measures of the government deserves critical questioning. 

  • Government in this case has not only failed to assert its power on policy making but also encouraged such PILs. This can be said on the basis of arguments provided by Attorney General where he urged the court to pass regulatory orders rather than arguing for case dismissal by referring to draft regulations published by Ministry of Electronics and Information Technology which aims to introduce “traceability” and to increase obligations on social media platforms.      

  • The article also highlights that to get information from social media based in foreign jurisdictions; the government has to rely on international agreements.  

  • For example, the hurdles posed by the Mutual Legal Assistance treaty between India and the U.S. effectively mean that it might take months to receive a response to information requests sent to U.S.-based platforms. 

  • So, the article argues that linking Aadhaar with social media accounts will not be of much use and will have its own set of challenges on infringement of privacy. 


Arguments on investigating cybercrimes

  • To make cybercrime investigation easier, India should push for fairer executive agreements possible under instruments like the United States’ Clarifying Lawful Overseas Use of Data (CLOUD) Act.  

  • For this, we need to first bring our surveillance laws in line with international human rights standards through reforms. 

  • India could use the threat of data localisation as leverage to negotiate bilateral agreements with other countries to ensure that agencies respond quickly for the information sought.   

  • So, the central government 

  • must engage in policy decision on such issues of data localisation by having more bilateral agreements and 

  • by aligning our domestic cyber laws in line with international human rights standards rather than supporting policies arrived through Court orders.      



3. Giving wings to better air connectivity – Article  (The Hindu -Page 10)


Prelims: Economy 

Mains: GS, paper II &III – Polity & Governance + Economy   


Ensuring regional connectivity through state participation 



  • Civil aviation is a central subject and therefore States have to look up to the Central government for the development of airports and enhancing air connectivity within their State.

  • However the Regional Connectivity Scheme- Ude Deshka Aam Naagrik (UDAN) has emerged as an important example of cooperative federalism whereby this scheme improves the stake and capability of States in the improvement of air connectivity within their State.

  • Currently thirty States and Union Territories have already signed memoranda of understanding with the Central government to improve airports and air connectivity within their State.
    Steps required to be undertaken by States to further improve air connectivity:

  • The cost of Aviation Turbine Fuel (ATF) forms about 40% of the total operational cost for airlines. Now currently petroleum products are out of the purview of Goods and Services Tax (GST) and therefore what has been seen is that States have very high rates of value-added tax (VAT) on ATF sometimes as high as 25%. This negatively impacts the growth of civil aviation sector in States with high taxes.

  • Now within that context, the author makes the point that need to reduce taxes on ATF. Any loss in tax revenue would be a notional revenue loss which can be offset by enhanced economic activities such increase in employment, tourism, etc as a result of increased air connectivity to the region. 

  • Now the author highlights that UDAN has motivated State governments to reduce the VAT on ATF to 1% for the flights that are operated under this scheme. Airports such as Jharsuguda (Odisha) and Kolhapur (Maharashtra) have successfully attracted airlines to connect these unconnected regions.    

  • The second area is in the development and management of airports. There are many regional airports which can be developed by States on their own or in collaboration with the Airports Authority of India (AAI) or through PPP model. 

  • Airlines & airports must be supported in Himalayan States so as to develop air services in the remote regions. To reduce operational cost of airlines and airport operators, incentives in form of financial support, VAT reduction, viability gap funding and non-financial incentives such as providing security and fire services free of cost to airport operators. 

  • Similarly, under the scheme, the Union government has declared concessions on excise duty on ATF and made budgetary allocations for airport development.   

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4. Talking trade with the EU - Article  (The Hindu –Page 11)


Prelims: Economy & IR

Mains: GS Paper III & II – Economic Issues & IR


Broad-based Trade and Investment Agreement (BTIA)- India & European Union 


Context: The Broad-based Trade and Investment Agreement (BTIA) is an intended trade agreement in negotiation between India & European Union.   


Differences on BTIA        

• There is a disagreement between India and EU on whether the protection of foreign investments will be part of the BTIA or will be dealt with in a separate agreement. 
• The provision under BTIA makes it mandatory for foreign investors to initially pursue Indian judicial & admin. remedies for at least a period of five years before pursuing a claim under international law. This provision is being opposed by the EU.
• India wants a greater ease of movement of temporary skilled workers to provide services in the EU. European nations have been pursuing a policy of protectionism after successive financial crisis caused a rise in unemployment. Moreover, liberalization in immigration policies including for migrant workers is subject to decisions of individual countries, thereby limiting the mandate of EU to negotiate with India. 
• The EU wants greater market access for its wines and spirits, and that India should lower its tariffs for their imports. Wines and spirits are considered luxury items in India and therefore there is no reasonable cause for such a tariff reduction.  
• EU is not granting data secure certification to India, which would facilitate the cross-border transfer of personal data that is required by Indian companies especially in the IT industry. 
• Agricultural products have been excluded from the negotiations. European countries give 
huge subsidy to their agro products, due to which Indian agricultural products are not able to compete. 
• EU has also asked India for change in government procurement policies. India has denied these prospective changes as agricultural procurement is followed on basis of developmental motive rather than profiteering motive.
• EU is vary of the data localisation rules within India especially of recent RBI guideline of compulsory financial data localisation. This has led to disagreement on the operating guidelines for e-commerce companies. 
• India currently enjoys benefits under EU’s Generalized Scheme of Preferences (GSP), however it is not clear on extension of those benefits under BTIA.

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5. Time to strike the gavel - Article (The Hindu –Page 10)


Prelims: Polity & Governance

Mains: GS Paper III – Polity & Governance     


Habeas Corpus – overruling of ADM Jabalpur v Shivkant Shukla 


Context: The article highlights about writ of habeas corpus and its significance through its ruling in ADM Jabalpur v Shivkant Shukla and then reversing the Judgment by Justice D.Y. Chandrachud. 


Writ of Habeas Corpus

  • Habeas Corpus is a Latin word which literally means "that you have the body." This writ is issued by High Court under Article 226 and by Supreme Court under Article 32 to examine the legality of the order of arrest by the government. 

  • So, writ of habeas corpus is issued by the court to produce the body before the Court. The Court then examines the cause and legality of detention. 

  • The court can set the person free if the order of arrest is found to be without any legal basis. So, this writ is considered as a bulwark of individual liberty against arbitrary detention. This writ can be issued against private individual and public authorities.      


Development of Habeas Corpus   

  • The writs are borrowed from English law where they are known as ‘prerogative writs’ as they were issued in the prerogative of the King who was considered as fountain of justice.    

  • A writ of habeas corpus is used to bring a prisoner or other detainee before the court to determine if the person's imprisonment or detention is lawful.  A habeas petition proceeds as a civil action against the State agent who holds the defendant in custody. 

  • The Habeas corpus first originated back in 1215, through the 39th clause of the Magna Carta signed by King John, which provided "No man shall be arrested or imprisoned...except by the lawful judgment of his peers and by the law of the land,”. English courts began actively considering petitions for habeas corpus in 1600.  

  • While habeas corpus had initially originated as an instrument in opposition to the king’s “divine right to incarcerate people,” there were many other constables and other authorities during those times, who imprisoned people for various reasons.  

  • Accordingly, habeas corpus also developed as the king's role to demand account for his subject who is restrained of his liberty by other authorities.  

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6. Britain must pay Brexit divorce bill even if there is no deal (The Hindu –Page 14)


Prelims: International Relations

GS Paper II - International Relations


EU says that Britain has to pay if it exits EU without any deal


Context: The British PM said that in event of “no deal” with EU on BREXIT, Britain will be free from financial obligations of 39 billion pound agreed by his predecessor Theresa May. This has resulted in stern rebuff from EU and there looms a future threat of taking Britain to court in case Britain does not pay the reparations.     

  • Britain was originally going to leave European Union (EU) on 29th March 2019. Before Britain leaving EU, Britain and EU were supposed to sign the Brexit deal. Now, Theresa May, the Prime Minister of Britain last month agreed to a Brexit deal with EU but the deal got rejected by the British parliament.    

  • So now, EU and Britain don't have a deal and because of this, EU and Britain have decided to move the date of Britain leaving EU to 31st October 2019. 

  • The author further highlights on how there is a blame game among the important leaders within British government and by the British opposition on having no Brexit deal. 

  • Moreover, the authors also says that nobody in British politics has a solution for a Brexit deal while some politicians are even calling for another Brexit vote in the hope that the British voters may now vote to stay in the EU. 

Important Aspects about Brexit:

  • The EU is a political and economic union of 28 countries which trade with each other and allow citizens to move easily between the countries to live and work. The UK joined the EU, then known as the EEC (European Economic Community), in 1973.  

  • A public vote - called a referendum - was held on 23 June 2016 when voters were asked just one question - whether the UK should leave or remain in the European Union.

  • The 2016 vote was just the start. Since then, negotiations have been taking place between the UK and the other EU countries.

  • The discussions have been mainly over the "divorce" deal, which sets out exactly how the UK leaves - not what will happen afterwards. This deal is known as the Withdrawal Agreement. The process of leaving the EU formally began on March 29, 2017, when May triggered Article 50 of the Lisbon Treaty.   

  • The “Irish backstop” is effectively an insurance policy in UK-EU Brexit negotiations. It’s meant to make sure that the Irish border remains open (as it is today) whatever the outcome of the UK and the EU’s future relationship negotiations. It would keep the UK very closely aligned to EU customs rules, with some regulatory differences between Northern Ireland and the rest of the UK.

  • The Belfast Agreement is also known as the Good Friday Agreement, because it was reached on Good Friday, 10 April 1998. It was a peace agreement between the British and Irish governments, and most of the political parties in Northern Ireland, on how Northern Ireland should be governed. The talks leading to the Agreement addressed issues which had caused conflict during previous decades. The aim was establish a new, devolved government for Northern Ireland in which unionists and nationalists would share power.  

  • Customs Union is a type of Free Trade Agreement (FTA) which involves the removal of tariff barriers between members, together with the acceptance of a common (unified) external tariff (CET) against non-members.   

  • The internal market of the European Union (EU) is a single market in which the free movement of goods, services, capital and persons is assured, and in which citizens are free to live, work, study and do business.

  • Since its creation in 1993, the single market has opened itself more to competition, created jobs, and reduced many trade barriers. The Single Market Act was put forward in two parts, in 2011 and 2012, containing proposals to further exploit the opportunities afforded by the single market, in order to boost employment and improve confidence in European business.  

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