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GS Paper II Statutory, regulatory and various quasi-judicial bodies.

Aadhaar linkage to school subsidy schemes worries HRD Ministry

What’s Happening-
The Human Resource Development (HRD) Ministry has expressed concern over the Centre’s push to link the Aadhaar number with subsidy schemes related to school education.

Key Points discussed were:

  • As the schemes are huge, impacting education of children across the country.
  • The Human Resource Development Ministry, asking all the Ministries to issue notification under Section 7 of the Aadhaar Act, 2016, which makes the use of Aadhaar “an identifier for delivery of various subsidies or benefits or schemes” to beneficiaries.

31 schemes identified:

  • So far, the Centre has identified 31 schemes where the Aadhaar number can be used as identification for providing various benefits.
  • Ministries would either ask all beneficiaries to furnish Aadhaar details for receiving benefits under Central government schemes or would help them get enrolled under Aadhaar.
  • Some of the identified schemes include –
  • Direct cash transfer of food subsidy under the National Food Security Act,
  • Supplementary nutrition to children below six and pregnant mothers, alongwith monthly honorarium for anganwadi workers under the Integrated Child Development Services, and
  • Subsidy on housing loans under the Pradhan Mantri Awas Yojana (Grameen).
  • However, there is uncertainty over the 11 schemes of the Human Resource Development Ministry identified to be covered under the Aadhaar Act.

Background-
The Unique Identification Authority of India (UIDAI) is a statutory authority.
It is established under the provisions of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (“Aadhaar Act 2016”) on by the Government of India, under the Ministry of Electronics and Information Technology (MeitY).
UIDAI was created with the objective to issue Unique Identification numbers (UID), named as “Aadhaar”, to all residents of India that is
(a) robust enough to eliminate duplicate and fake identities, and
(b) can be verified and authenticated in an easy, cost-effective way.

GS Paper II – Important aspects of governance, transparency and accountability.

Mobile phone towers in Hisar cantonment under the scanner

What’s Happening-
The Central Bureau of Investigation (CBI) has begun a preliminary inquiry into the alleged irregular installation of mobile phone towers and misappropriation of funds at the Hisar Military Station in Haryana.
Among those under the CBI scrutiny is a retired Lieutenant General.

Key Points discussed were:

  • The CBI initiated the inquiry on a reference from the Defence Ministry about three years after The Hindu carried a series of reports.

Report:

  • Reports on the alleged irregularities in the sensitive installation, which is the base headquarters for the battle formation of the Army’s 33rd Armoured Division.
  • As reported in January 2014, at least two functioning base transceiver stations installed by a private mobile phone service provider on the Hisar cantonment premises had come under the scanner of intelligence agencies for suspected irregularities and security implications.
  • They were functioning since 2012, it was alleged.

Enquiry: Defence Land Leased

  • Enquiries revealed that defence land could not be leased out for the installation of signal towers.
  • As in the case of private entities, it had to be done through the Quarter Master General Branch in consultation with the Military Intelligence, following a mandatory Cabinet Committee authorisation.
  • Therefore, the service provider installed the towers on the chassis of heavy vehicles, calling them “cell-on-wheels”. 
  • The Intelligence wing found that in June 2010, the service provider had been given an approval by the Signal Regiment of Hisar Cantonment to construct three modern bus shelters on the campus.

BSNL failed to get nod:
During the inquiry, the Intelligence wing found that government-owned BSNL had also sought permission to install signal towers at Hisar Station, but it did not get the approval.
It had also installed a digital exchange for the Army base in 2009.
Allegations of Corruption:
Alleging irregularities and corruption at the Hisar Station, a Colonel lodged a complaint with the Defence Ministry and the President’s Secretariat, and sought their intervention.
The reports on mobile towers in his complaint which was filed under a provision mandating that if his allegations were proven wrong, he would face action.

Sources- The Indian Express, The Hindu. Page 5

GS Paper III – Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

An Indian sub-prime crisis in the making?

What’s Happening-
The Indian corporate sector is grappling with a severe bad debt crisis, and as a result, the banks (public sector banks) are increasingly getting saddled with non-performing assets.
Calling it India’s sub-prime crisis might be an exaggeration but I would just like to add ‘not yet’!.

Key Points discussed were:

  • With the global economic crisis in the background, it’s better to be cautious rather than looking back at the data when it’s all over.
  • This might also help policymakers to take regulatory steps in time to control the contagion before it spreads in the banking system in a big way.

Bad Corporate Debt:

  • There are two statistics for a corporate house, which need to be looked at to understand the nature of the debt crisis.
  • One is the amount of bank loans taken in a particular year and the other is whether the firms were financially healthy enough to take the loan in the first place.

Healthy vs ponzi firms:

  • The Ponzi Firms is measured by whether they made enough profits in a particular period to even cover for the interest payments accrued on past debts. 
  • For a firm to be financially healthy, just as a family taking a loan, it should make enough profits to cover for both (in financial terms, these are called hedged firms).
  • On the other hand, an unhealthy firm is one which does not even cover its interest payments (the ponzi firm).
  • At the heart of the U.S. sub-prime crisis was the fact that loans were dished out increasingly to ponzi households. That’s where the similarity lies. What was true for the household sector could be true for the corporate sector in India.

Bank NPAs
Most of the burden of bad loans since 2011 has been borne by public sector banks as opposed to the foreign banks or privately-owned banks.
The share of stressed loans, which is the sum of non-performing loans and restructured loans, as a percentage of total advances made has been skyrocketing for public sector banks.
Conclusion:
The banks have knowingly put themselves in the current position, the real culprits are the big borrowers and promoters who are not paying up as promised and the government, instead of being strict on the defaulters, is expecting the central bank to inject liquidity into the banking system to write off these bad loans.
It would be travesty of justice if this were allowed to be done.