17 March Current Affairs
March 17, 2020
19 March Current Affairs
March 19, 2020
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18 March Current Affairs

Defence Fund Shortfall

In News:

Recently, a Parliamentary Standing Committee on Defence has shown concern at the widening gap between projections and allocations in the defence budget.

Details:

The Committee noted that since 2015-16, none of the three Services (Army, Navy and Air Force) has been given the matching allocation as per the projection.

Key Findings of the Committee:

There is a considerable shortage in the allocation in the Capital Head, which is 35% less than the projection.

The Committee noted that committed liabilities constitute a significant part of the Capital Head and inadequate allocation would definitely lead to ‘default situation’ on contractual obligations.

Committed liabilities are payments anticipated during a financial year for contracts concluded in previous years.

Such a situation is not conducive for preparation of the country to modern-day warfare, where possession of capital intensive modern machines is a prerequisite for tilting the result of the war in favour and also to have a credible deterrence.

Both the Navy and the Indian Air Force (IAF) have a situation where their committed liabilities are more than their share of the capital allocation in the Budget.

To offset this, the Services have been forced to defer payment of committed liabilities of the Defence Public Sector Undertakings (DPSU) among other measures.

The shortfall in expenditure will affect:

Operationalisation of three tri-service organizations  i.e. Defence Space Agency (DSA), Defence Cyber Agency (DCYA) and Armed Forces Special Operations Division (AFSOD).

Operational readiness of Andaman and Nicobar Command (ANC).

Maintenance of SIGINT (Signal Intelligence) equipment.

Administration of training institutes and operational units.

Recommendations:

The committee has recommended a dedicated fund for committed liabilities and procurements before the shortfall impacts modernisation, invariably from next Budget onwards (2021-22).

Tara Tarini Temple

In News:

The annual Chaitra Jatra festival scheduled to be held on 17th March, 2020 at Odisha’s Tara Tarini hill shrine has been cancelled as a precautionary measure against COVID-19 infection.

Details:

The festival is held on each Tuesday in the month of Chaitra, which falls in March-April as per the English calendar.

Key Points:

Tara Tarini hill shrine, located at a hilltop on banks of the Rushikulya river, is a major centre of Shakti worship in Odisha.

The twin goddesses Tara and Tarini represent one Shakti and are the main deity of Ganjam district (Odisha).

Tara is an important deity of Mahayana Buddhist Sect.

This temple had been built as per traditional Rekha style of Odia temple architecture, as per which famous Jagannath temple of Puri and Lingaraj temple of Bhubaneswar have been built.

Unlike other temples, it wasn’t built under the patronage of a King or a Noble, the temple was set up by a Brahmin named Basu Praharaj as per popular legend.

Since its inception it has been an established seat of Tantrism.

Indian Navy’s sailboat INSV Tarini was named after Tara Tarini hill shrine.The first Indian all-woman crew had circumnavigated the globe in INSV Tarini.

Krishna Raja Sagar Dam

In News:

The water level in the Krishna Raja Sagar (KRS) Dam in Mandya district (Karnataka) is coming down rapidly owing to the increase in the evaporation rate and the decrease in the inflows as a result of summer.

Key Points:

The Krishna Raja Sagar Dam was built across river Kaveri for the Mysore and Mandya districts in Karnataka in 1932.

The dam is named for the then ruler of the Mysore Kingdom, Krishnaraja Wodeyar IV.

The Dam is the creation of one of the greatest engineers that India had produced, Sir M. Vishweshwaraiah. His birthday, 15th September is celebrated as Engineers day.

The reservoir is also the main source of drinking water for all of Mysore city and almost the whole of Bangalore.

The water released from this dam is further used as an important source of water in the state of Tamil Nadu.

National Creche Scheme

In News:

The National Crèche Scheme is a centrally sponsored scheme being implemented by the Ministry of Women and Child Development. The scheme was earlier named as Rajiv Gandhi National Creche Scheme.

Details:

It aims to provide day care facilities to children (age group of 6 months to 6 years) of working mothers.

The salient features of the National Creche Scheme are as follows:

1) Daycare Facilities including Sleeping Facilities.

2) Early Stimulation for children below 3 years and pre-school Education for 3 to 6 years old children.

3) Supplementary Nutrition ( to be locally sourced)

4) Growth Monitoring

5) Health Check-up and Immunization

Further, the guidelines provide that:

Crèches shall be open for 26 days in a month and for seven and half (7-1/2) hours per day.

The number of children in the crèche should not be more than 25 per crèche.

User charges will be levied to bring in an element of community ownership.

The fund sharing pattern under National Creche Scheme amongst Centre, States/UTs & Non Governmental Organisations/Voluntary Organisations is in the ratio of 60:30:10 for States, 80:10:10 for North Eastern States and Himalayan States and 90:0:10 for UTs.

Benefits of Creche Facility:

It helps women to manage both their career as well as their family responsibility.

It promotes gender diversity at workplaces.

Creche facilities help promote gender equality and democracy by increasing participation of women in the economy.

AT-1 Bonds

In News:

Recently, the Reserve Bank of India (RBI) has made a proposal to write-down Additional Tier-1 (AT-1) bonds as part of the SBI-led restructuring package for Yes Bank.

Key Points:

AT-1 bonds are a type of unsecured, perpetual bonds that banks issue to shore up their core capital base to meet the Basel-III norms.

There are two routes through which these bonds can be acquired:

1) Initial private placement offers of AT-1 bonds by banks seeking to raise money.

2) Secondary market buys of already-traded AT-1 bonds.

AT-1 bonds are like any other bonds issued by banks and companies, but pay a slightly higher rate of interest compared to other bonds.

These bonds are also listed and traded on the exchanges. So, if an AT-1 bondholder needs money, he can sell it in the secondary market.

Investors cannot return these bonds to the issuing bank and get the money. i.e there is no put option available to its holders.

However, the issuing banks have the option to recall AT-1 bonds issued by them (termed call options that allow banks to redeem them after 5 or 10 years).

Banks issuing AT-1 bonds can skip interest payouts for a particular year or even reduce the bonds’ face value.

AT-1 bonds are regulated by RBI. If the RBI feels that a bank needs a rescue, it can simply ask the bank to write off its outstanding AT-1 bonds without consulting its investors.

Basel-III Norms:

It is an international regulatory accord that introduced a set of reforms designed to improve the regulation, supervision and risk management within the banking sector, post 2008 financial crisis.

Under the Basel-III norms, banks were asked to maintain a certain minimum level of capital and not lend all the money they receive from deposits.

According to Basel-III norms banks’ regulatory capital is divided into Tier 1 and Tier 2, while Tier 1 is subdivided into Common Equity Tier-1 (CET-1) and Additional Tier-1 (AT-1) capital.

Common Equity Tier 1 capital includes equity instruments where returns are linked to the banks’ performance and therefore the performance of the share price. They have no maturity.

Additional Tier-1 capital are perpetual bonds which carry a fixed coupon payable annually from past or present profits of the bank.

They have no maturity, and their dividends can be cancelled at any time.

Together, CET and AT-1 are called Common Equity. Under Basel III norms, minimum requirement for Common Equity Capital has been defined.

Tier 2 capital consists of unsecured subordinated debt with an original maturity of at least five years.

According to the Basel norms, if minimum Tier-1 capital falls below 6%, it allows for a write-off of these bonds.

Appropriation Bill

In News:

The Lok Sabha has passed the Appropriation Bill 2020-21 that empowers the government to draw over ₹110 lakh crore from the Consolidated Fund of India for its working, as well as for the implementation of its programmes and schemes.

Details:

Now, only the Finance Bill that pertains to the government’s taxation proposal awaiting passage.

The Appropriation Bill was passed by a voice vote.

Following this, Speaker Om Birla applied “guillotine” — the Parliamentary tool to club all other pending subjects for discussion.

What is Appropriation Bill?

Appropriation Bill is a money bill that allows the government to withdraw funds from the Consolidated Fund of India to meet its expenses during the course of a financial year.

As per article 114 of the Constitution, the government can withdraw money from the Consolidated Fund only after receiving approval from Parliament.

To put it simply, the Finance Bill contains provisions on financing the expenditure of the government, and Appropriation Bill specifies the quantum and purpose for withdrawing money.

Procedure followed:

The government introduces the Appropriation Bill in the lower house of Parliament after discussions on Budget proposals and Voting on Demand for Grants.

The Appropriation Bill is first passed by the Lok Sabha and then sent to the Rajya Sabha.

The Rajya Sabha has the power to recommend any amendments in this Bill. However, it is the prerogative of the Lok Sabha to either accept or reject the recommendations made by the upper house of Parliament.

The unique feature of the Appropriation Bill is its automatic repeal clause, whereby the Act gets repealed by itself after it meets its statutory purpose.

What happens when the bill is defeated?

Since India subscribes to the Westminster system of parliamentary democracy, the defeat of an Appropriation Bill (and also the Finance Bill) in a parliamentary vote would necessitate resignation of a government or a general election. This has never happened in India till date, though.

Scope of discussion:

The scope of discussion is limited to matters of public importance or administrative policy implied in the grants covered by the Bill and which have not already been raised during the discussion on demands for grants.

The Speaker may require members desiring to take part in the discussion to give advance intimation of the specific points they intend to raise and may withhold permission for raising such of the points as in his opinion appear to be repetition of the matters discussed on a demand for grant.

Amendments:

No amendment can be proposed to an Appropriation Bill which will have the effect of varying the amount or altering the destination of any grant so made or of varying the amount of any expenditure charged on the Consolidated Fund of India, and the decision of the Speaker as to whether such an amendment is admissible is final. An amendment to an Appropriation Bill for omission of a demand voted by the House is out of order.

In other respects, the procedure in respect of an Appropriation Bill is the same as in respect of other Money Bills.

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