17 September, 2020
- LS nod to amend banking Act: Regulation of Cooperative Banks in India (Polity & Governance + Economy)
- Agriculture Marketing: Farmers fear end of MSP Regime + MSP is here to stay + Centre silent on sending farm Bills to committees - (Economy)
- Locals of same tribe oppose Bru resettlement in Tripura area - (Social Issues)
- Plea to make Punjabi official language in J&K (Polity & Governance )
- Unlawful activities Prevention Act (UAPA) (Internal Security)
- New order in West Asia- Reference- (International Relations)
- Question of the Day
UPSC Current Affairs: LS nod to amend banking Act: Regulation of Cooperative Banks in India Page 09
UPSC Syllabus: Mains:|GS Paper III | Indian Economy
Sub Theme: Regulation of Cooperative Banks | UPSC
Structure of Cooperative Banking in India
The Cooperative Banking in India is divided into two distinct segments- Rural and Urban. The Rural Cooperative structure comprises of short-term and long-term co-operative credit structures. The short-term co-operative credit structure operates with a three-tier system - Primary Agricultural Credit Societies (PACS) at the village level, Central Cooperative Banks (CCBs) at the district level and State Cooperative Banks (StCBs) at the State level. The long-term co-operative credit structure comprises of- SCARDBs: State Co-operative Agriculture and Rural Development Banks; PCARDBs: Primary Co-operative Agriculture and Rural Development Banks.
The Urban Cooperative Banks (UCBs) cater to the financial needs of customers in urban and semi-urban areas. UCBs are primarily registered as cooperative societies under the provisions of either the State Cooperative Societies Act of the State concerned or the Multi State Cooperative Societies Act, 2002 if the area of operation of the bank extends beyond the boundaries of one state.
Present Regulation of Cooperative Banks in India
Though the Banking Regulation Act came in to force in 1949, the banking laws were made applicable to certain categories of the cooperative societies only in 1966. Since then there is duality of control over such banks with banking related functions being regulated by the Reserve Bank and management related functions regulated by respective State Governments/Central Government.
Non-Applicability: The PACS and long-term credit co-operatives are outside the purview of the Banking Regulation Act, 1949 and are hence not regulated by the Reserve Bank. The NABARD conducts voluntary inspections of State Co-operative Agriculture and Rural Development Banks (SCARDBs).
Regulation of StCBs and DCCBs: The StCBs/DCCBs are registered under the provisions of the State Co-operative Societies Act of the state concerned. There is dual regulation of such Banks by the RBI and Registrar of Cooperative Societies. The Banking related functions are regulated by RBI, while the Management related functions are regulated by Registrar of Cooperative Societies. Here, the RBI has delegated its powers to NABARD under Sec 35A of the Banking Regulation Act to conduct inspection of state and central co-operative banks.
Regulation of Urban Cooperative Banks: There is duality of control over such Banks by RBI and Registrar of Cooperative Societies of concerned state/ Central Registrar of Cooperative Societies (Depending upon whether the Urban Cooperative Bank is registered under State Cooperative Societies Act of the State concerned or the Multi State Cooperative Societies Act, 2002). The management related functions such as incorporation, registration, recovery, audit, supersession of Board of Directors and liquidation are looked after by the Registrar of Cooperative societies. The banking related functions such as supervision of UCBs, prescription of prudential norms for capital adequacy, income recognition, asset classification and provisioning, liquidity requirements etc are looked after by the RBI.
Present Problems with the Regulation of Urban Cooperative Banks
Dual Regulation: As highlighted above, the Urban cooperative Banks are under the dual regulation of RBI and Registrar of Cooperative societies. Such form of dual regulation leads to lack of coordination between the regulating entities. This enables the cooperative Banks to escape from greater scrutiny leading to financial irregularities and lapses. This can be understood by looking at the PMC Bank which was consistently under-reporting its NPAs, but both the regulators fail to see the problem.
Poor regulation by Registrar of Cooperative Societies: Some of the core functions such as audit of the accounts and supersession of Board of Directors are required to be performed by the Registrar of Cooperative Societies. However, some of the UCBs are controlled by the local level influential political leaders and businessmen. Hence, due to strong political pressure, the Registrar of Cooperative societies have failed to perform their role efficiently.
Lack of Empowerment of RBI: The RBI has been adequately empowered to regulate the Banking related functions of the Scheduled Banks. The RBI has been empowered to set minimum level of qualifications for the Board of Directors. The RBI can supersede the Board of Directors of the scheduled Banks. The auditing of such Banks is carried out in accordance with the best practices laid down by the RBI. However, such powers are not entrusted with the RBI with respect to the regulation of UCBs leading to laxity.
Salient Features of Banking Regulation (Amendment) Ordinance 2020
The ordinance does not put an complete end to the dual regulation of the Urban Cooperative Banks. The ordinance does not completely take the powers of the State Registrar of Cooperative Societies/ Central Registrar of Cooperative Societies. However, their powers have been substantially curtailed and the regulatory powers of the RBI has been substantially enhanced. For example, the audit of such Banks will take place according to the best practices laid down by the RBI. The RBI would be empowered to supersede the Board of Directors. The RBI would also be empowered to lay down the minimum level of qualifications for the Board of Members. Hence, the overall idea behind the Ordinance is to strengthen the regulatory oversight of the RBI.
UPSC Current Affairs: Farmers fear end of MSP Regime + MSP is here to stay, asserts Nadda + Centre silent on sending farm Bills to committees | Page 05 +09
UPSC Syllabus: Prelims: Economy |Mains: GS Paper III
Sub Theme: Agricultural reform in our country | MSP | UPSC
Amendments to Essential Commodities Act to enable better price realisation for farmers
Essential Commodities Act and its rationale
The Essential Commodities Act was enacted in 1955 to make available certain commodities to the consumers at fair prices. It is used by the Government to regulate the production, supply and distribution of commodities which are declared as essential under the act. The list of items under the Act includes drugs, fertilizers, pulses and edible oils, and petroleum and petroleum products. The Central Government may add or remove a commodity from the schedule in consultation with the State Governments.For instance, in march 2020, the Union Government declared masks and hand-sanitisers as essential commodities under the Essential Commodities Act, 1955 . This was done in order to ensure that they are available to people at the right price and in the right quality.
How does it work?
If the Centre finds that a certain commodity is in short supply and its price is increasing, it can notify stock-holding limits on it for a specified period. Anybody trading or dealing in a such a commodity, be it wholesalers, retailers or even importers are prevented from stockpiling it beyond a certain quantity. This improves supplies and brings down prices.
How Essential Commodities Act hinders the agricultural marketing?
Fails to realize stocking is essential: The fear of bringing the agricultural commodities under the act has prevented the traders and processors from undertaking bulk procurement of agricultural commodities during bumper harvest season. Hence, the increase in the agricultural production has not translated into higher income levels. Further, since almost all crops are seasonal, ensuring round-the-clock supply requires adequate build-up of stocks during the season.
Poor investment in Storage infrastructure: With frequent stock limits, traders have not invested in better storage infrastructure.
Adverse impact on Food Processing Industry: Food processing industries need to maintain large stocks to run their operations smoothly. Stock limits curtail their Operations. In such a situation, large scale private investments are unlikely to flow into food processing and cold storage facilities.
Impact on agriculture exports: Whenever the Government declares an agricultural commodity as essential, it imposes a number of restrictions on it including ban of export of such commodities. This prevents the Indian farmers to get the best prices on their agriculture produce from the international markets.
Outdated Act: The Act is not in tune with present times. This act was enacted in 1955 when we used to frequently faced shortage of agricultural commodities. Hence, it needed government intervention to clamp down on black marketing and hoarding. However, now situation has changed completely. Now, we have surplus production of agricultural production. Hence, accordingly, we must give the necessary freedom to the traders, aggregators and food processing industries to undertake bulk procurement of the agricultural commodities.
The Government will amend Essential Commodities Act. Agriculture food stuffs including cereals, edible oils, oilseeds, pulses, onions and potato shall be deregulated. Stock limit will be imposed under very exceptional circumstances like national calamities, famine with surge in prices. Further, No such stock limit shall apply to processors or value chain participant, subject to their installed capacity or to any exporter subject to the export demand.
Agriculture Marketing Reforms to provide marketing choices to farmers
Background: Agriculture is a subject which is placed under the State List. Accordingly, the state governments have enacted their respective APMC Acts to regulate the marketing of agriculture commodities. However, the APMCs are considered to be highly restrictive and prohibitive and hence go against the interest of farmers. For example, the farmers are required to compulsorily sell their produce only to the registered traders in the APMCs. They cannot sell their produce directly to the end consumers, processors or exporters. Similarly, some of the states have restricted the farmers from selling their produce outside their APMC Zones. However, such kind of restrictions are not applicable to sale of industrial goods.
Considering the fact that there are around 22,000 such APMCs, the APMC act has led to fragmented marketing infrastructure.
Accordingly, in order to bring about agriculture marketing reforms, the Central Government has come out with Model Agriculture produce and livestock marketing act, 2017. It has been persuading the state government to adopt the features of this model legislation.
The Inter-state trade and commerce is placed under the Union list. So, accordingly, the Centre can formulate a law to promote, regulate and restrict the inter-state trading of various goods.
As discussed before, presently, the APMC Acts are highly restrictive and prohibit the farmers from selling their produce to whomsoever they want to. We need to give adequate freedom to the farmers to sell their produce anywhere within India where they are likely to get higher prices. We need to dismantle fragmented agriculture marketing infrastructure and move towards integrated domestic market or agriculture goods.
In pursuance of such an objective, the Government had declared that it would come up with a new central law. Such a central law would incorporate the following:
- Adequate choices to farmer to sell produce at attractive price;
- Barrier free Inter-State Trade;
- Framework for e-trading of agriculture produce.
Facilitative Legal Framework for Contract Farming
What is Contract farming?
Under contract farming, agricultural production (including livestock and poultry) can be carried out based on a pre-harvest agreement between buyers (such as food processing units and exporters) and producers (farmers or farmer organizations). The producer can sell the agricultural produce at a specific price in the future to the buyer as per the agreement. This benefits both the producers as well as the buyers. The producer can get support from the buyer for improving production through inputs (such as technology, pre-harvest and post-harvest infrastructure) as per the agreement. The producer can
also reduce the risk of fluctuating market price and demand. On the other hand, the buyer can reduce the risk of non-availability of quality produce.
Current Legal Framework
Currently, contract farming requires registration with the Agricultural Produce Marketing Committee (APMC) in few states. This means that contractual agreements are recorded with the APMCs which can also resolve disputes arising out of these contracts. Further, market fees and levies are paid to the APMC to undertake contract farming. The central government has formulated Model Agriculture Produce and Livestock Contract Farming and Services (Promotion & Facilitation) Act, 2018 which provides for contract farming. Accordingly, the central Government has asked the states to use this as reference while enacting their respective laws.
The Government will finalise a facilitative legal framework to enable farmers to engage with processors, aggregators, large retailers, exporters etc. in a fair and transparent manner.
Risk mitigation for farmers, assured returns and quality standardization shall form integral part of the framework.
Evaluation of these Reforms
- Amendments to Essential Commodities Act (ECA) 1955
ECA was enacted when India used to face food shortages and hence considered to be anachronistic in present times. As against its stated objective, ECA has led to price volatility and reduced consumer welfare.
Hence, the amendments to ECA to deregulate Agriculture food stuff is in right direction.
However, as hinted by Economic Survey 2019-20, there was a need to abolish ECA completely. The Government still retains option of imposing stock limits under exceptional circumstances and hence it is a half-hearted measure.
- Central Legislation to Promote Inter-State Trading
Government’s move to enable farmers to sell their produce wherever and whomsoever they like is a welcome step. However, based upon previously failed experiences, it should be accompanied by - Increased Market density, Organising farmers into FPOs, Increased Private sector Investment, Linkages with E-NAM etc.
- Promotion of Contract farming
The introduction of separate law to promote and regulate contract farming would have multiple benefits – Access to inputs and technology, elimination of middlemen, higher price realisation, lower post-harvest losses, increased investment in agriculture etc.
However, success would depend on number of factors- consolidation of land holdings through land leasing, formation of FPOs to enable small farmers to reap economies of scale etc.
Undoubtedly, recent reforms can prove to be a game-changer in liberalising the agricultural market. At the same time, as highlighted, to ensure their success, these reform measures should be accompanied by conducive ecosystem.
What should be done then?
Increase the Market Density: Adequate number of markets should be set up closer to agricultural fields so that the farmers have access to APMCs. This also leads to decrease in transportation costs for the farmers and cut down post-harvest losses. Accordingly, the National Commission for Farmers had recommended that each APMC should serve a market area of around 80sq.km and it should be available to farmers within a radius of 5km.However, an average APMC in India serves an area of around 450 sq.km, which denotes poor access of the farmers to the APMCs. On account of this, the farmers are forced to sell their produce at lower prices outside the APMCs.
Organize Small and Marginal Farmers into FPOs: Almost 85% of the farmers in India are small and marginal. These farmers with lower marketable surplus find it difficult to aggregate
their produce and sell it in the APMCs through auction. Hence, these farmers resort to sell their produce to local agents and traders at much lower prices. Accordingly, these farmers should be organized into FPOs which would enable them to aggregate their produce, carry out value addition and earn higher incomes.
Improve Infrastructure in existing APMCs: The infrastructure in the APMCs such as Godowns, Cold chain infrastructure etc. continue to remain quite poor. This leads to improper storage and consequently higher post-harvest losses. Further, most of the APMCs have not able to set up electronic auction platforms which are quite important for offering remunerative prices to the farmers. We must also ensure that all the existing APMCs are connected to e-NAM platform as early as possible to offer diversified market base for the farmers.
UPSC Current Affairs: Locals of same tribe oppose Bru resettlement in Tripura area - Page 05
UPSC Syllabus: Prelims: Polity & Governance |Mains: GS Paper II
Sub Theme: Bru Tribe | Tribal Resettlement | UPSC
About Bru Refugees
- The Brus are spread across Tripura, Mizoram and parts of southern Assam--are the most populous tribe in Tripura.
- Also known as Reangs in the state, they are ethnically different from the Mizos, with their own distinct language and dialect and form one of the 21 scheduled tribes of Tripura. In Mizoram, they are largely restricted to Mamit and Kolasib districts.
- In 1997, following ethnic tension, around 5,000 families comprising around 30,000 Bru-Reang tribals were forced to flee Mizoram and seek shelter in Tripura. These people were housed in temporary camps at Kanchanpur, in North Tripura.
- Since 2010, Government of India has been making sustained efforts to permanently rehabilitate these refugees. The Union government has been assisting the two State governments for taking the care of the refugees. Till 2014, 1622 Bru-Reang families returned to Mizoram in different batches.
- On 3rdJuly, 2018, an agreement was signed between the Union government, the two State governments and representatives of Bru-Reang refugees, as a result of which the aid given to these families was increased substantially.
- Subsequently, 328 families comprising of 1369 individuals returned to Mizoram under the agreement. There had been a sustained demand of most Bru-Reang families that they may be allowed to settle down in Tripura, considering their apprehensions about their security.
Settlement of Bru Refugees in Tripura
- Under the new agreement, around 34,000 Bru refugees will be settled in Tripura and would be given aid from the Centre to help with their rehabilitation and all round development, through a package of around Rs 600 crores.
- These refugees will get all the rights that normal residents of the States get and they would now be able to enjoy the benefits of social welfare schemes of Centre and State governments.
- Under the new arrangement, each of the displaced families would be given 40x30 sq.ft. residential plots, in addition to the aid under earlier agreement of a fixed deposit of Rs. 4 lakhs, Rs. 5,000 cash aid per month for 2 years, free ration for 2 years and Rs. 1.5 lakhs aid to build their house. The government of Tripura would provide the land under this agreement.
UPSC Current Affairs: Plea to make Punjabi official language in J&K | Page 11
UPSC Syllabus: Prelims: Polity & Governance |Mains: GS Paper II
Sub Theme: Official language| Regional languages | UPSC
UPSC Current Affairs: Unlawful activities Prevention Act (UAPA)| Page 10
UPSC Syllabus: Prelims: Prelims: UAPA |Mains: GS Paper II
Sub Theme: UAPA | UPSC
Context: A total of 3,005 cases were registered in the country under anti-terror law Unlawful Activities (Prevention) Act (UAPA) in 2016, 2017 and 2018, and 3,974 people were arrested under the Act. The National Crime Records Bureau (NCRB) is the central agency that compiles the data on crimes as reported by the States and Union Territories, and publishes the same in its annual publication Crime in India. According to information received from the NCRB, there are 232, 272 and 317 cases, wherein charge sheets have been filed under the UAPA in 2016, 2017 and 2018, respectively.
Unlawful Activities (Prevention) Act, 1967 (also referred as UAPA) has mentioned about unlawful associations, punishment for terrorist activities including defining terrorist act (section 15), offences by companies, forfeiture of proceeds of terrorism or any property intended to be used for terrorism, listing of terrorist organisation under Schedule I of the Act and constituting Unlawful Activities (Prevention) Tribunal under section 5 and Three Schedule.
- Schedule I – List of Terrorist Organisation
- Schedule II – International Conventions and Protocols to curb and suppress terrorism
- Schedule III – It provides security features to define high quality counterfeit Indian currency notes which includes watermark, latent image and see through registration in currency notes
- Schedule IV – Name of Individuals – Added by 2019 Amendment
Changes Made through 2019 Amendment
- Chapter VI of UAPA 1967 is about “Terrorist Organisation”. 2019 Amendment has changed the chapter to “Terrorists Organisations and Individuals”.
- Section 36 of the original Act provides for “Denotification of terrorist organisation”. The 2019 Amendment adds the word “Individual” along with terrorist organisation.
- Accordingly, the 2019 Amendment adds a new schedule namely Fourth Schedule providing names of individual terrorists.
- Section 25 of UAPA 1967 provided for “Powers of investigating officer and designated authority and appeal against order of designated authority”. The 2019 Amendment adds - “Investigation to be conducted by an officer of the National Investigation Agency, with the prior approval of the Director General of National Investigation Agency”.
- Section 43 of UAPA 1967 provided for Officers competent to investigate offences. The 2019 Amendment provides investigative powers to National Investigation Agency below the rank of Inspector.
- In the Second Schedule, International Convention for Suppression of Acts of Nuclear Terrorism (2005) has been added.
Purpose of the 2019 Amendment made to UAPA
- As per Home Minister, object of amendment is to facilitate speedy investigation and prosecution of terror offences by empowering National Investigative Agencies (NIA) and designating an individual as terrorist in line with the international practices.
- The Home Minister also stated in Parliament that Amendment made to UAPA will not be misused against any individual unless individuals including Urban Maoists engage in terrorist activities against the security and sovereignty of India.
- The Home Minister said that this law does not take away powers of the state police. However, when National Investigative Agency (NIA) takes up a case having international and inter-state ramifications, all the facts pertinent to the case are with the NIA, and not with the state police.
- Previously under the 1967 UAPA law, it required that NIA take prior permission from the respective state DGPs to start investigation in terror cases. This delayed the investigation process and allowed the accused to hide their traces or activities.
- The 2019 amendment also gives powers to DG, NIA to attach properties acquired from proceeds of terrorism.
- Earlier, under section 43 of UAPA, an officer not below the rank of DSP or equivalent was competent to investigate offences under UAPA. Amendment to section 43 has allowed to make the Inspectors of NIA competent to investigate offences punishable under UAPA.
- The Act defines terrorist acts to include acts committed within the scope of any of the treaties listed in Second Schedule to the Act. The Second Schedule earlier listed Nine treaties.
- The Amendment has added another treaty to the list namely The International Convention for Suppression of Acts of Nuclear Terrorism (2005).
SECOND SCHEDULE – UAPA
- Convention for the Suppression of Unlawful Seizure of Aircraft (1970);
- Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1971);
- Convention on the Prevention and Punishment of Crimes against Internationally Protected Persons, including Diplomatic Agents (1973);
- International Convention against the Taking of Hostages (1979);
- Convention on the Physical Protection of Nuclear Material (1980) as amended from time to time;
- Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, supplementary to the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1988);
- Convention for the Suppression of Unlawful Acts against the safety of Maritime Navigation (1988);
- Protocol for the Suppression of Unlawful Acts against the Safety of Fixed Platforms located on the Continental Shelf (1988);
- International Convention for the Suppression of Terrorist Bombings (1997).
- International Convention for Suppression of Acts of Nuclear Terrorism (2005).