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April 12, 2021
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10th April Current Affairs

Emergency Credit Line Guarantee Scheme (ECLGS)

In News:

The government has extended the ₹3-lakh-crore emergency credit line guarantee scheme by another three months till June 30 and also widened its scope to new sectors, including hospitality, travel and tourism.

Details:

ECLGS 3.0 would involve extending credit of up to 40% of total credit outstanding across all lending institutions as on February 29, 2020.

The tenor of loans granted under ECLGS 3.0 would be 6 years, including a moratorium period of 2 years.

About the scheme:

The scheme was launched as part of the Aatmanirbhar Bharat Abhiyan package announced in May 2020 to mitigate the distress caused by coronavirus-induced lockdown, by providing credit to different sectors, especially Micro, Small and Medium Enterprises (MSMEs).

100% guarantee coverage is being provided by the National Credit Guarantee Trustee Company, whereas Banks and Non Banking Financial Companies (NBFCs) provide loans.

The credit will be provided in the form of a Guaranteed Emergency Credit Line (GECL) facility.

No Guarantee Fee shall be charged by NCGTC from the Member Lending Institutions (MLIs) under the Scheme.

Interest rates under the Scheme shall be capped at 9.25% for banks and FIs, and at 14% for NBFCs.

Eligibility:

Borrowers with credit outstanding up to Rs. 50 crore as on 29th February, 2020, and with an annual turnover of up to Rs. 250 crore are eligible under the Scheme.

On 1st August 2020, the government widened the scope of the Rs. 3 lakh crore-ECLGS scheme by doubling the upper ceiling of loans outstanding and including certain loans given to professionals like doctors, lawyers and chartered accountants for business purposes under its ambit.

Benefits of the scheme:

The scheme is expected to provide credit to the sector at a low cost, thereby enabling MSMEs to meet their operational liabilities and restart their businesses.

By supporting MSMEs to continue functioning during the current unprecedented situation, the Scheme is also expected to have a positive impact on the economy and support its revival.

What is vaccine wastage, and how can it be prevented?

In News:

The Health Ministry has told the States and the Union Territories that there was no value in conserving vaccines for the second dose and directed that prompt supply should be ensured to all government and private hospitals where there was a demand.

Guidelines by the Centre to States:

Maintain vaccine wastage at less than 1% (present national wastage percentage being 6%).

Regularly review wastage across all levels to minimise the same.

Ensure timely utilisation of available stocks to avoid expiry of vaccines without usage.

Only eligible beneficiaries should be registered and vaccinated under the category of healthcare and frontline workers.

What is Vaccine Wastage?

Vaccine wastage is an expected component of any large vaccination drive. But high vaccine wastage inflates vaccine demand and increases unnecessary procurement.

Different stages where wastage occurs:

  • Cold chain points.
  • District vaccine stores.
  • Vaccination session site.

Ways to prevent wastage:

  • Proper planning.
  • Each vaccine session should serve maximum 100 beneficiaries.
  • Proper training to vaccinators.

Inflation targeting

In News:

The Centre has decided to retain the inflation target of 4%, with a tolerance band of +/- 2 percentage points for the Monetary Policy Committee of the RBI for the coming five years.

What is inflation targeting?

It is a central banking policy that revolves around adjusting monetary policy to achieve a specified annual rate of inflation.

The principle of inflation targeting is based on the belief that long-term economic growth is best achieved by maintaining price stability, and price stability is achieved by controlling inflation.

Inflation Targeting Framework:

Now there is a flexible inflation targeting framework in India (after the 2016 amendment to the Reserve Bank of India (RBI) Act, 1934).

Who sets the inflation target in India?

The amended RBI Act provides for the inflation target to be set by the Government of India, in consultation with the Reserve Bank, once every five years.

Current Inflation Target:

The Central Government has notified 4 per cent Consumer Price Index (CPI) inflation as the target for the period from August 5, 2016, to March 31, 2021, with the upper tolerance limit of 6 per cent and the lower tolerance limit of 2 per cent.

Panel submits report on farm laws to SC

In News:

A Supreme Court-appointed panel has submitted its report on the three agricultural reform laws in a closed cover. The report will be revealed during the next hearing of the case.

Background:

The three laws which were passed by Parliament in September and are being opposed by farmers’ unions are:

  • The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act.
  • The Essential Commodities (Amendment) Act.
  • The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act.

On January 12, the Supreme Court suspended the implementation of the three laws and appointed a four-member committee of experts “to listen to the grievances of the farmers on the farm laws and the views of the government and make recommendations”.

What’s the issue?

The laws aim to deregulate India’s enormous agriculture sector.

The government says these laws will “liberate” farmers from the tyranny of middlemen.

But many farmers fear that they stand to lose more than they could gain from the new regulations and that the main beneficiaries will be agricultural corporations with gargantuan financial firepower.

So what do these new farm laws do?

They make it easier for farmers to bypass government-regulated markets (known locally as mandis) and sell produce directly to private buyers.

They can now enter into contracts with private companies, a practice known in India as contract farming, and sell across state borders.

The new regulations also allow traders to stockpile food. This is a shift away from prohibitions against hoarding, which could make it easier for traders to take advantage of rising prices, such as during a pandemic. Such practices were criminal offences under the old rules.

Concerns of farmers:

More than 86 percent of India’s cultivated farmland is controlled by smallholder farmers who own less than two hectares (five acres) of land each.

The new rules remove many of their safeguards. Small farmers fear that they just do not have enough bargaining power to get the kinds of prices they need for a decent standard of living when they negotiate to sell their produce to larger companies.

The new laws also do not make written contracts mandatory. So in the case of any violation of their terms, it can be very hard for a farmer to prove that he or she has been aggrieved, giving them little recourse.

The new rules do not guarantee any minimum price for any product, and farmers worry that the existing MSP will be abolished at some point.