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The Hindu 9 August 2019

UPSC - Daily Current Affair
The Hindu August 2019






Economic milestone and a poignant anniversary



At CITES, India to seek boost to protection of status of 5 species



Statehood for Jammu & Kashmir will be restored: PM      






Syria rejects Turkey-US plan, Kurds give guarded welcome                  




1. Economic milestone and a poignant anniversary.    (The Hindu, Page 10)     


Mains: GS Paper III – Economy 




Timeline of Banking Reforms :


1947 :  On the eve of Independence the Banking sector in India was underdeveloped. Rural Financial system was marked by the domination of landlords, traders and moneylenders. 


1950s: With beginning of  five year plans efforts were started to improve the reach of the institutionalised banking. There were sporadic efforts to expand the reach of the institutional banking, particularly in the rural areas. Despite these measures, the predominantly private banking system failed to meet the credit needs of the rural areas.


1969 : Nationalisation of banks – Class Banking to Mass banking 


India’s banking policy after 1969 followed a multi-agency approach towards expanding the geographical spread and functional reach of the formal banking system

  • As a part of a new branch licensing policy, banks were told that for every branch they opened in a metropolitan or port area, four new branches had to be opened in unbanked rural areas. 

  • The concept of priority-sector lending was introduced. All banks had to compulsorily set aside 40% of their net bank credit for agriculture, micro and small enterprises, housing, education and “weaker” sections. 

  • A differential interest rate scheme was introduced in 1974. Here, loans were provided at a low interest rate to the weakest among the weakest sections of the society.

  • The Lead Bank scheme was introduced in 1969. Each district was assigned to one bank, where they acted as “pace-setters” in providing integrated banking facilities. 

  • The Regional Rural Banks (RRB) were established in 1975 to enlarge the supply of institutional credit to the rural areas. 

  • The National Bank for Agriculture and Rural Development (NABARD) was constituted in 1982 to regulate and supervise the functions of cooperative banks and RRBs.

  • Impact of Nationalization - The share of institutional sources in the outstanding debt of rural households increased from just 16.9% in 1962 to 64% in 1992.

  • India’s nationalisation led to an impressive growth of financial intermediation. The share of bank deposits to GDP rose from 13% in 1969 to 38% in 1991. The gross savings rate rose from 12.8% in 1969 to 21.7% in 1990. The share of advances to GDP rose from 10% in 1969 to 25% in 1991. The gross investment rate rose from 13.9% in 1969 to 24.1% in 1990.


Analysis of proposal of Privatization of Banks 


Arguments in Favour of privatization 


1. Public sector ownership has an inherent handicap due to it being extremely diffused. This makes it less amenable to effective control by shareholders, compared to private ownership.

2. Bank nationalization had given monopoly to the government in the banking industry. As in case of any monopoly situation, the quality of service went down and the people suffered.

3. State ownership of banks reduces competition and breeds inefficiency.

4. There is no evidence to suggest that State ownership lowers the probability of banking crises.

]5. The sale of public equity of banks may be particularly lucrative now. Twelve of the 27 PSBs and 19 private sector banks are listed on stock exchanges, and the market has appreciated their recent performance.

6. A sixth rationale for privatisation is that it enhances efficiency and productivity through proper management and control.

7. The competition, not merely ownership, is the key. And foreign competitors might bring additional benefits take fresh capital as shown in other emerging markets. A foreign owned bank, with large capitalization, can withstand local disturbances better.

8. The private sector and foreign banks can resist local government pressure to lend to favored sectors.

9. Frequent recapitalization of State-owned banks is a huge burden on the Government budget.


Arguments against Privatisation


1. One of the Directive Principles is that the Government would strive at redistributive justice in the country. Bank privatisation is a step away from this direction.


2. Public sector banks in India have already been exposed to increasing competition. The forces of competition have already pushed Public sector banks to optimize its resources in order to reach technical efficiency. It is felt that conclusions are being drawn on the basis of incomparable units – all of this to favour privatisation and even foreign ownership.


3. Privatisation opens the way for the domination of the economy by foreign capital. Since it is extremely difficult to distinguish in practice between domestic and foreign capital within the private sector when they are operating together in joint ventures, or when a domestic firm can be a front for foreign capital, any expansion in the scope for the private sector necessarily enlarges the sphere of operation of foreign capital as well.


4. Privatisation would remove a large chunk of the economy from the purview of public scrutiny and hence from the realm of social accountability. 


5. Social accountability is not merely intrinsically desirable. It becomes absolutely necessary when enterprises have to fulfill certain social functions going beyond mere profit- making. Privatisation, and even making public enterprises concentrate exclusively on profit- making, effectively does away with these social functions.


6. All privatisation involves the selling of state property at “throwaway” prices. This is true the world over. And it has been true in India too as the Comptroller and Auditor- General’s report pointed out some time ago.


7. India has been a planned economy for the last about five decades. But in absence of any effective control over the commercial banks, the economic planning was incomplete and monetary policy targets were difficult to achieve and pursue.



• The P J Nayak Committee or officially the Committee to Review Governance of Boards of Banks in India, was set up by the Reserve Bank of India (RBI) to review the governance of the board of banks in India in 2014. Main recommendations of PJ Nayak Committee Report – 

1. Repeal the Bank Nationalisation Act (1970, 1980), the SBI Act and the SBI Subsidiaries Act. This is because these acts require the government to have above 50% share in the banks. 

2. After the above acts are repealed, the government should set up a Bank Investment Company (BIC) as a holding company or a core investment company. 

3. The government to transfer its share in the banks to this BIC. Thus, the BIC would become the parent holding company of all these national banks, which would become subsidiaries. As a result of this, all the PSBs (public sector banks) would become ‘limited’ banks. BIC will be autonomous and have the power to appoint the Board of Directors and make other policy decisions.

4. Until the BIC is formed, a temporary body called the Bank Boards Bureau (BBB) will be formed to do the functions of the BIC. Once BIC is formed, the BBB will be dissolved. 5. The BBB will advise on appointments to the board, banks’ chairman and other executive directors. 


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2. At CITES, India to seek boost to protection of status of 5 species (The Hindu, Page 22)   


Prelims GS Paper I – Environment 




Context : India has submitted proposals regarding changes to the listing of various wildlife species in the CITES secretariat meeting, scheduled later this month in Geneva, Switzerland.

The proposals submitted are regarding changes in the listing of the smooth-coated otter, small-clawed otter, Indian star tortoise, Tokay gecko, wedgefish and Indian rosewood.



  • The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) is an interna- tional agreement between governments entered into force in 1975, and became the only treaty to ensure that international trade in plants and animals does not threaten their survival in the wild. 

  • Currently 176 countries are Parties to CITES. 

  • CITES is administered through the United Nations En-vironment Programme (UNEP). A Secretariat, located in Geneva, Switzerland, oversees the implementation of the treaty and assists with communications between countries. 


Protecting Species from Unsustainable Trade 

• Species for which trade is controlled are listed in one of three Appendices to CITES, each conferring a different level of regulation and requiring CITES permits or cer- tificates. 

Appendix I: 

• Includes species threatened with extinction and pro- vides the greatest level of protection, including restric- tions on commercial trade. Examples include gorillas, sea turtles, most lady slipper orchids, and giant pandas. 

Appendix II: 

• Includes species that although currently not threatened with extinction, may become so without trade controls. It also includes species that resemble other listed species and need to be regulated in order to effectively control the trade in those other listed species. 

Appendix III: 

• Includes species for which a range country has asked other Parties to help in controlling international trade. Examples include map turtles, walruses and Cape stag beetles. 

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3. Statehood for Jammu & Kashmir will be restored: PM      (The Hindu Page 01)


Mains: GS Paper II – Polity  


Article 370  



Rationale for abrogation?

  • Article 370 and 35A has given nothing but secessionism, terrorism, nepotism and widespread corruption on a large scale to Jammu-Kashmir. 

  • Both these articles were used as a weapon by Pakistan to flare up the emotions of people. 

  • Due to this more than 42,000 people lost their lives in the last three decades. 

  • The development in Jammu-Kashmir and Ladakh could not be done on levels which the region deserved. 

  • Laws for betterment of Indians , were not applicable in Jammu and Kashmir: 

(Imagine children in rest of the country have a right to education while children in Jammu & Kashmir were deprived of this right. The daughters of Jammu & Kashmir were deprived of the right that our daughters had in rest of the states. In all the other states, Safai Karamchari Act was enacted for hygiene workers but the workers of Jammu & Kashmir were deprived of this. In other states, strict laws were enacted to stop atrocities on Dalits but no such laws could be implemented in Jammu & Kashmir. To protect the rights of blue-collar workforce, Minimum Wages Act was enacted and implemented in all the other states while such a law is only found on papers in the state of Jammu & Kashmir. In all other states, (our) brothers and sisters from Scheduled Tribes got reservation while contesting elections while such thing is unheard of in the state of Jammu & Kashmir)


What will happen in the UTs? What steps government will take?

  • In Union Territories, the government provides many such financial facilities like LTC, House Rend Allowance, Education Allowance for children, Health Schemes etc., most of which are not provided to the employees of Jammu and Kashmir government. Such facilities would soon be provided to the employees of Jammu and Kashmir government and state police personnel following a review.

  • The vacancies of central and state government will be filled in Jammu and Kashmir and Ladakh. This would provide adequate employment opportunities to the local youth. 

  • Besides, public sector units of the central government and big private sector companies would also be encouraged to provide new employment opportunities.

  • Apart from the above, Army and para military forces would organize rallies to recruit local youths. 

  • The government would also expand Prime Ministers Scholarship Scheme so that more and more students can get its benefit.  

  • Jammu and Kashmir also has huge revenue loss. The central government will ensure to minimize its impact. 

  • the Governor of the state will set up Block Development Council, which has been pending for past two-three decades, be constituted as early as possible.


Administration :

  • Why made it a UT and keep the administration under the central govt ? -Ever since the state has been under governor’s rule, the administration of Jammu and Kashmir is directly under the central government. As a result the good effect of Good Governance and Development have been observed on the ground. The schemes which earlier remained only in files, have been implemented on ground. Projects pending from decades have been speeded up.

  • People will still chose their representatives. The MLAs would be elected just as they were elected earlier. The forthcoming cabinet would just be as it was used to be earlier. The chief ministers would just be as they were before.

  • After becoming a Union territory, development of the people of Ladakh becomes  natural responsibility of the Govt. of India. Central Government with the cooperation of local representatives, Development Council of Ladakh and Kargil, will ensure benefits of all development schemes reaches to people at a faster pace. 



  • It will become one of the greatest tourist destination bringing in more employment and revenue 

  • It will help the youth of the region to progress in the field of sports. New sport academies, new sports stadium, training in scientific environment will help them to show their talent in the world.

  • Will help greater trade and commerce whereby unique plants and other herbal products of the region can be shared with all and it will benefit the framers of that area.  Eg, there is a plant in Ladakh, named solo. Experts say that this plant is like a sanjivini for people living in high altitude and for security forces deployed in heavy icy mountains. These plants have great role in maintaining the immune system of body in places with  low levels of oxygen. He therefore appealed to the people associated in Industry, Export, Food Processing Sector to come forward to ensure that local products of Jammu and Kashmir and Ladakh reach whole of the world.

  • Ladakh can  become the biggest center of spiritual tourism, adventure tourism and eco-tourism. Ladakh also has the potential to become a big centre of Solar Power generation.  

  • He took pride in many soldiers  who sacrificed and risked their lives for its security. Eg Maulvi Ghulam Din of Punch district, who had informed Indian Army about Pakistani intruders during 1965 war. He was conferred Ashok Chakra.Col. Sonam Wangchug of Laddakh district, who forced enemies to bite dust during Kargil war, was honoured with Mahavir Chakra. Kirti Chakra was conferred to Rukshana Kausar of Rajauri, who had killed a big terrorist.Martyr Aurangjeb of Punch, who was assassinated by terrorists last year and his two brothers are now serving the country after joining the Army.


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4. Knee Jerk                                                                                                                          (The Hindu Page 10)      


Mains GS Paper II – International relations 


India – Pakistan 


Context : In retaliation to India's internal decision on Article 370, Pakistan has decided to expel India’s High Commissioner, snap trade relations and observe August 15 as a black day, halt Samjhuta Express and other expected steps to downgrade ties with India.


MEA's Response:


  • India has asserted that downgrading of relations by Pakistan is a unilateral action, and India hopes that Pakistan will reverse its decision. 


  • Recent decisions by the Government and Parliament of India are driven by a commitment to extend to Jammu and Kashmir opportunities for development, which would also result in the removal of gender and socio-economic discrimination. 

  • It is also expected to result in an upswing of economic activity and improvement in the livelihood prospects of all people of Jammu and Kashmir.

  • Therefore, Pakistan is negatively precieveing such developmental initiatives in J&K because development in J&K reduces Pakistan's ability  to fuel negative images of J&K to justify its support for cross-border terrorism and use against India in international community.

    The recent developments pertaining to Article 370 are entirely the internal affair of India. The Constitution of India was, is and will always be a sovereign matter.


News in transition, lets wait and see on how Indo-Pak. relations moves forward. 

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5. Syria rejects Turkey-US plan, Kurds give guarded welcome                  (The Hindu Pg no 11)


Prelims GS paper I– International Relations  


West Asia 


Who are the Kurds? (Prelims Perspective)

  1. The Kurds are one of the indigenous groups in the Middle East and the region's fourth-largest ethnic group. They speak Kurdish, an Indo-European language, which differs from the dominant Arabic spoken in the region. They are predominantly Sunni Muslims.  

  2. They are distinct from other indigenous groups in Middle East in terms of language, clothing, cultural practices, and several other parameters.

  3. There are estimated 30 million Kurds that reside primarily in regions of present-day Iran, Iraq, Syria, and Turkey and remain one of the world's largest group without a sovereign state.


Demand for Kurdish State: (G.S. I in World History)

  1. Following World War I, the Treaty of Sevres of 1920 dissolved the Ottoman Empire and had a provision for the creation of an autonomous Kurdish State in Ottoman territories through a referendum.

  2. Turkey, formed from the dissolution of Ottoman Empire rejected the Treaty of Sevres and a new Treaty of Lausanne was negotiated in 1923 and this treaty omitted any reference to a Kurdish State.

  3. The Kurds, inhabiting previously Ottoman territories, were confined in the newly demarcated nations of Turkey, Iraq, Syria, and others in the Middle East.

  4. Moderate Kurds and their organisations have been struggling for autonomy within these nations while militant Kurdish organisations had been struggling to attain independence from these nations.


Current Context:

  1. Turkey and Unisted States intend to create a safe zone between the Kurdish controlled Syrian border with Turkey. Syrian government has opposed such a zone, while Syrian Kurds are awaiting the details of the agreement to be released.

  2. Turkey has accused the Syrian Kurds of fueling separatism among the Turkish Kurds, and has threataned Syrian Kurds with the use of force. However, U.S. has opposed such actions by Turkey since it is the U.S. that have supported the Syrian Kurds in their fight against ISIS and as a counter-measure against the Russia backed Syrian government.

  3. City to remember for prelims: Manbij, Syria. The Manbij roadmap was signed between NATO and Turkey in 2018 for the withdrawal of Kurdish YPG from Manjib, whereby Turkey considers Kurdish YPG as a terrorist organisation. Manjib roadmap is a required precursor for the success of the intended safe zone.

  4. In addition, voters in Iraqi Kurdistan and Kurdish Kirkuk region of Iraq overwhelmingly choose independence in a referendum held in 2017. (Question asked in Prelims 2018)

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