11 November 2017-Current Affairs

  1. Anasuya Sarabhai
  2. Snehita- Kudumbasree’s gender help desks
  3. New government initiatives to boost the economy

  1. Anasuya Sarabhai
  • Played a pioneering role in India’s labour movement.
  • studied at the London School of Economics where she was influenced by the Suffragette movement.
  • In Ahmedabad, got involved with the plight of mill workers and took up their cause, fighting against 36-hour work shifts.
  • She was affectionately called Motaben, or elder sister, in Gujarati
  • In 1914, she helped the weavers organise their first strike for higher wages. She began negotiating with mill owners, including her brother, for better working conditions.
  • Mahatma Gandhi supported her work and with his help, she set up Gujarat’s oldest labour union the Ahmedabad Textile Labour Association, which later paved the way for the founding of the Self-Employed Women’s Association of India (SEWA).
  • Reference

http://www.thehindu.com/news/national/google-celebrates-132nd-birth-anniversary-of-anasuya-sarabhai/article20190056.ece

 


  1. Snehita- Kudumbasree’s gender help desks
  • The Kudumbasree Mission is reaching out to women and child abuse victims across Kerala with 24-hour gender help desks being set up in all districts for assistance.  (Currently 6 districts)
  • This initiative is termed as Snehita(Friend)
  • The range of services includes emotional support, legal aid, counselling and temporary asylum.
  • Victims can avail themselves of family counselling and telephonic counselling. Snehita also offers awareness activities against sexual abuse.
  • Kudumbasree is the women empowerment and poverty eradication program in Kerala.

It has joined hands with the Child Welfare Council, Police and Social Justice Department to improve Snehita services.

 


 

  1.  New government initiatives to boost the economy
  1. An Umbrella road building programme

Over the next five years with an expenditure of Rs6.92 trillion for 84,000km of roads.

a) Bharatmala Pariyojana 

  • Will have an outlay of Rs5.35 trillion for 35,000km of roads to generate 142 million man-days of employment.
  • The sources of financing Bharatmala are: Rs2.19 trillion provided by the government from accruals to the Central Road Fund, Rs2.09 trillion raised as debt from the market, and Rs1.07 trillion through private investment in public-private-partnerships.

b)The remaining 49,000km of roads will be under other current schemes funded from the Central Road Fund and budgetary support.

  • Pros
    • Building roads would ease supply constraints, provide much-needed connectivity, create employment opportunities, and stimulate growth in the economy through multiplier effects on the demand side.

 2. Bank recapitalisation plan worth Rs2.11 trillion over the next two years

The package has three components

  1. Rs18,000 crore from the budget (Rs52,000 crore has already been infused under Indradhanush program)
  2. PSBs would raise Rs58,000 crore from the market through equity (Rs21,000 crore has been raised so far under Indradhanush)
  3. The balance of Rs1.35 trillion is to be pumped in though recapitalisation bonds.
  • Recapitalisation bonds.
    • The government, or its designated entity, will issue the bonds.
    • PSBs flush with cash deposits after demonetization, will buy these bonds that would be interest-earning assets for them.
    • The government will use the money so raised to buy shares of PSBs.
    • There will be no cash outflow from the exchequer except for the interest payable on these bonds.
    • The infusion of equity capital into PSBs will help these banks to provision for their non-performing assets (NPAs). Capital for growth will be thus available and lending shall be revived.
    • Such recapitalisation could resolve the twin-balance sheet problem (PSBs with bad loans and over-leveraged companies with large unserviceable debts) that the economy is saddled with, at one stroke.
    • These would not add to the fiscal deficit according to International Monetary Fund norms because government borrowing is offset by buying shares in PSBs. In real terms, it will add to the overall public sector deficit. The fiscal cost will be the interest payable.
    • If the return on equity of PSBs (dividends) acquired by the government is higher than the interest paid, there would be a fiscal benefit. If not, there would be a fiscal strain.
  • Why this bailout is required for banks?
  1. Tier I or core capital of banks (equity plus reserves) must conform to global standards embodied in Basel III norms by April 2019
  2. Provisioning for NPAs constrains the lending ability of banks, or violates capital adequacy norms. Credit is the lifeblood of a market economy.
  • Why Recapitalisation may not be an immediate success?
  • Even if there is an increase in the supply of credit, recapitalisation cannot ensure demand for credit.
  • The demand for credit is sluggish because investment levels are low, investor confidence is weak, and interest rates are high.
  • What’s to be done to avoid crises in the future?
  • Behest lending prompted by the government must stop.
  • Inept lending and corrupt practices by banks must stop.
  • Governance problems in PSBs, often compounded through flawed appointments of independent directors by the government as a form of patronage for supporters or cronies, must be addressed.
  • PSBs must begin to exercise due diligence in their lending operations.
  • The regulatory failure of RBI, manifest in the current situation where private banks also have serious NPA problems, must be corrected
  • Issues with Recapitalisation
    • The burden of costs imposed by such bail outs, described as a “haircut”, have to be borne by the taxpayers.
    • Neither the negligent banker nor the defaulting borrower pays any price for their sins and might therefore repeat their errant behaviour creating a ‘moral hazard’
  • Reference
  1. http://grahya.com/28-october-2017-current-affairs/
  2. http://www.livemint.com/Opinion/Y3WV6X7ztlxKWCcKseF6kM/Will-roads-and-banks-stimulus-revive-the-economy.html