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20th March Current Affairs

One Nation One Ration Card System

In News:

The ministry of finance has announced that 17 states have successfully implemented ‘one nation, one ration card system’ after Uttarakhand became the latest state to complete the operationalization of reforms.

About the scheme:

One Nation One Ration Card (RC) will ensure all beneficiaries especially migrants can access PDS across the nation from any PDS shop of their own choice.

Benefits: no poor person is deprived of getting subsidised foodgrains under the food security scheme when they shift from one place to another. It also aims to remove the chance of anyone holding more than one ration card to avail benefits from different states.

Significance: This will provide freedom to the beneficiaries as they will not be tied to any one PDS shop and reduce their dependence on shop owners and curtail instances of corruption.

Standard format of ‘one nation, one ration card’:

A standard format for ration card has been prepared after taking into account the format used by different states.

For national portability, the state governments have been asked to issue the ration card in bi-lingual format, wherein besides the local language, the other language could be Hindi or English.

The states have also been told to have a 10-digit standard ration card number, wherein first two digits will be state code and the next two digits will be running ration card numbers.

Besides this, a set of another two digits will be appended with ration card number to create unique member IDs for each member of the household in a ration card.

Annual democracy report

In News:

Fifth annual democracy report, titled ‘Autocratisation goes viral’, has been released by Sweden’s organisation Varieties of Democracy (V-Dem) Institute.

Details:

The report summarises the state of democracies of the world against the backdrop of developments that have taken place over the past decade.

Highlights of the report:

Regarding India:

India’s position has been downgraded from “the world’s largest democracy” to an “electoral autocracy”.

Reasons behind the downgrade: “muzzling” of the media, and overuse of defamation and sedition laws.

In censorship, India is now as autocratic as is Pakistan, and worse than both its neighbors Bangladesh and Nepal.

The use of defamation “frequently used to silence journalists” and the use of the Unlawful Activities Prevention Act (UAPA) have placed constraints on civil society and gone against the Constitution’s commitment to secularism.

Universities and authorities have also punished students and activists in universities engaging in protests against the Citizenship Amendment Act (CAA).”

However, the report notes that civil society is being increasingly muzzled while organisations aligned with the “Hindutva movement” have gained freedom.

Freedom at global level:

Liberal democracies have diminished over the past decade from 41 countries to 32 countries.

The global decline during the past 10 years is steep and continues in 2020, especially in the Asia-Pacific region, Central Asia, Eastern Europe, and Latin America.

The level of democracy enjoyed by the average global citizen in 2020 is down to levels last found around 1990.

“Electoral autocracies” remain the most popular regime type, and along with closed autocracies, number 87 states, home to 68 per cent of the world’s population.

Several G20 nations such as Brazil, India, Turkey, and the United States of America are part of this drift.

The number of democratising countries has dropped by almost half to 16, hosting a mere 4 per cent of the global population.

Why should India be worried?

  • This report comes within a week of US watchdog Freedom House downgrading India’s status to “partly free” in its ‘Freedom in the World’ report.
  • In March last year, Reports Without Borders (RSF) placed India alongside China, Russia, Iran and Saudi Arabia in a list of press freedom’s “worst digital predators”.
  • The US government’s Religious Freedom Monitor recommended that the country’s state department should include India in the list of “countries of special concern”.
  • Again in April, India was ranked 142nd out of 180 countries in RSF’s Press Freedom Index, sliding two ranks down.
  • The country also fell 26 places to rank 105th among 162 countries and territories on a global economic freedom index released by the Fraser Institute in Canada in September 2020.
  • Finally in December 2020, India was ranked 111th out of 162 countries in the Cato Institute’s Human Freedom Index 2020.

India’s slide in these reports only mirrors its decline in indices compiled by independent bodies which monitor democratic freedoms over the past few years.

Prompt Corrective Action Framework

In News:

The Reserve Bank of India has taken IDBI Bank Ltd out of its prompt corrective action list after it found the state-run lender was not in breach of the central bank’s parameters.

Background:

IDBI Bank was placed under the so-called PCA framework in 2017 over its high bad loans and negative return on assets, at a time when Indian lenders battled record levels of soured assets, prompting the RBI to tighten thresholds.

Now, the bank has provided a written commitment that it would comply with the norms of minimum regulatory capital, Net NPA and Leverage ratio on an ongoing basis and has apprised the RBI of the structural and systemic improvements that it has put in place which would help the bank in continuing to meet these commitments.

What is Prompt Corrective Action (PCA)?

PCA is a framework under which banks with weak financial metrics are put under watch by the RBI.

The RBI introduced the PCA framework in 2002 as a structured early-intervention mechanism for banks that become undercapitalised due to poor asset quality, or vulnerable due to loss of profitability.

It aims to check the problem of Non-Performing Assets (NPAs) in the Indian banking sector.

The framework was reviewed in 2017 based on the recommendations of the working group of the Financial Stability and Development Council on Resolution Regimes for Financial Institutions in India and the Financial Sector Legislative Reforms Commission.

When is Prompt corrective action framework invoked?

The PCA is invoked when certain risk thresholds are breached. There are three risk thresholds which are based on certain levels of asset quality, profitability, capital and the like.

What are the types of restrictions?

There are two type of restrictions, mandatory and discretionary. Restrictions on dividend, branch expansion, directors compensation, are mandatory while discretionary restrictions could include curbs on lending and deposit.

What will a bank do if PCA is triggered?

  • Banks are not allowed to renew or access costly deposits or take steps to increase their fee-based income.
  • Banks will also have to launch a special drive to reduce the stock of NPAs and contain generation of fresh NPAs.
  • They will also not be allowed to enter into new lines of business. RBI will also impose restrictions on the bank on borrowings from interbank market.