06 May, 2021 - Daily Current Affairs Analysis & MCQs - The Daily News Simplified from The Hindu

  • Maratha Quota unconstitutional, violates right to equality, says SC (Polity and Governance)
  • Small Businesses, MSMEs to get relief (Economy)
  • Cabinet clears IDBI bank strategic disinvestment (Economy)
  • Services activity eased to three-month low in April (Economy)
  • Scheme for revision (add-on)
  • QOD

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    UPSC Current Affairs:  Maratha Quota unconstitutional, violates right to equality, says SC  | Page 01

    UPSC Syllabus: Mains – GS Paper II – Polity and Governance

    Sub Theme: Maratha Quota | SEBC | UPSC

    A five-judge Constitution Bench of the Supreme Court on Wednesday struck down the Maharashtra law granting reservation to the Maratha community in admissions and government jobs in the state. The court had framed six questions of law on the issue; it unanimously agreed on three of those issues, while the verdict was split 3:2 on the other three.

    Why do the politically, socially and economically dominant Marathas want reservation?

    On August 9, 2016 Marathas under the banner of Maratha Kranti Morcha came together at Aurangabad to protest the rape and killing of a 15-year-old girl in Kopardi village of Ahmednagar district in Maharashtra. Although Kopardi was the trigger, the Maratha consolidation, leading to 58 silent, but massive, rallies across the state between 2016-17, was centred on reservation for the community in government jobs and educational institutions. The mammoth public attendance at the leaderless and apolitical rallies made inroads from cities to villages to taluka levels across Maharashtra.

    At the end of every rally, a ten-point charter of demands was presented to the district collector. High on the agenda was Maratha reservation. Apart from it the organisation demanded justice for the Kopardi girl and sternest punishment to perpetrators of the crime and loan waiver for farmers among other things.

    In the second phase of agitation between 2017-18, street protests took a violent turn and even led ot some suicides. The first case of suicide demanding Maratha reservation took place in Kannad taluka of Aurangabad district. Marathas proclaimed they would not settle for anything less than reservation. Ek Maratha, Lakh Maratha — was the slogan coined to show their might.

    Why was the M G Gaikwad Commission set up?

    Sensing the growing aggression amongst the Marathas, the ruling BJP government lead by then chief minister Devendra Fadnavis set up a 11-member commission headed by Retired Justice N G Gaikwad on June 2017. After detail study and depositions from various groups and individuals, the commission submitted a report stating Marathas should be given reservation under Socially and Educationally Backward Class (SEBC). Although the commission recommended reservation, it did not specify the quota percentage and left it to state government.

    When did state adopt the legislation?

    In November 2018, the Maratha community was given the reservation under the Maharashtra State Socially and Educational Backward Act. The special act was sanctioned by Maharashtra State Backward Class Commission and approved in both the assembly and council. The emphasis on legislation was to give reservation under SEBC, a legal and constitutional validity. The legislation proposed by then BJP-Sena government got unanimous support from then opposition parties Congress and NCP.

    Issue 1: On revisiting the Indra Sawhney ruling

    One of the key issues before the court was to examine whether the 1992 landmark ruling in Indra Sawhney v Union of India had to be revisited. The ruling by a nine-judge Bench, in which the Mandal Commission report was upheld, laid down two important precedents. First, it said that the criteria for a group to qualify for reservation is “social and educational backwardness”. Second, it reiterated the 50% limit to vertical quotas reasoning that it was needed to ensure “efficiency” in administration. However, the court said that this 50% limit will apply unless in “exceptional circumstances.”

    The Maratha quota exceeded the 50% ceiling. The arguments by state governments before the court was that the Indra Sawhney verdict must be referred to a 11-judge Bench for reconsideration since it laid down an arbitrary ceiling which the Constitution does not envisage. Additionally, in some judgements subsequent to Indra Sawhney, the Supreme Court itself had made exceptions to this rule.

    In a unanimous opinion on Wednesday, the court held that there is no need to revisit the case. The court said that the 50% ceiling, although an arbitrary determination by the court in 1992, is now constitutionally recognised.

    Issues 2&3: On whether the Maratha law can be saved under the exception

    Since the 50% ceiling is held valid, the court looked into whether the Maratha quota law falls under the exceptional circumstances contemplated by Constitution Bench in Indra Sawhney’s case. The court also looked into the Maharashtra State Backward Commission report that the Maharashtra government had relied on to see if a case can be made out for exceptional circumstances.

    The state government’s argument was that since the population of backward class is 85% and reservation limit is only 50%, an increase in reservation limit would qualify as an extraordinary circumstance.

    All five judges disagreed with this argument. “The Marathas are dominant forward class and are in the main stream of National life. The above situation is not an extra-ordinary,” Justice Ashok Bhushan and Justice Abdul Nazeer held. Their view was accepted by the remaining three judges — Justice Nageswara Rao, Justice Hemant Gupta and Justice Ravindra Bhat.

     

    UPSC Current Affairs: Small businesses and MSMEs get relief | Page 14

    UPSC Syllabus: Mains – GS Paper III – Indian economy

    Sub Theme:  RBI measures | UPSC

    Context: RBI announced some measures to protect small individual borrowers and MSMEs during current medical emergency. RBI has launched Resolution Framework.

    What is Resolution Framework?

    An opportunity for small borrowers to get their due repayments clear. A resolution plan is a proposal that aims to provide a resolution to the problem of the  debtor’s insolvency and its consequent inability to pay off debts.

    For example: Under IBC, resolution plan needs to be approved by the committee of creditors (“COC”) and comply with mandatory requirements prescribed in IBC.

    Who are eligible?

    • Those with aggregate exposure of up to 25cr,
    • who have not availed restructuring previously, and
    • whose loan is classified as standard.
    • Those who have already availed the previous framework could get extension on the period of

    RBI has also allowed Small Finance Bank to lend afresh to Micro Finance Institution (with asset size upto 500 crore).

    RBI has also increased the window of overdraft facility to state from 36 days to 50 days in one quarter.

    Debt restructuring is a process used by companies, individuals, and even countries to avoid the risk of defaulting on their existing debts, such as by negotiating lower interest rates. Debt restructuring provides a less expensive alternative to bankruptcy when a debtor is in financial turmoil, and it can work to the benefit of both borrower and lender.

    Moratorium period is the time during a loan term when the borrower is not required to make any repayment. It is a waiting period before which repayment of EMIs resumes.

     

    UPSC Current Affairs: Cabinet clears IDBI bank strategic disinvestment| Page 14

    UPSC Syllabus: Mains – GS Paper III – Indian economy

    Sub Theme:  Disinvestment | UPSC 

    Context: Union Cabinet has cleared approval for the strategic disinvestment of IDBI bank. It is based on the budget announcement.

    Decision By: Cabinet Committee on Economic affairs. It is chaired by Prime Minister.

    Background: Finance Minister Nirmala Sitharaman earlier announced in the budget to raise up to rupees 1.75 lakh crore through privatisation of Public sector banks and institutions.

    Objective: to get new investments in the entity from the expected buyer. It would raise bank’s business potential.

    Disinvestment is the action of an organization or government selling or liquidating an asset or subsidiary. Disinvestment also refers to capital expenditure (CapEx) reductions, which can facilitate the re-allocation of resources to more productive areas within an organization or government-funded project.

    • In disinvestment, also called divestment, there is no change in the management of PSUs from the public to private hands as the government still holds majority equity (51 percent). 
    • Even when the government's share falls below 51 percent, the rest of the equity may be sold in such a way that no one institution or individual holds enough stake to take control of the management.
    • Disinvestment is primarily a money-raising exercise. The proceeds of disinvestment are treated as non-debt creating capital receipts.

    Drawbacks of Disinvestment

    • Government shareholding in PSUs is a public asset which should not be liquidated to meet the immediate needs.
    • PSUs contribute to public finances through dividends and disinvestment can reduce this important source of finance.
    • PSUs act as a check on private enterprises and safeguard the wider public interests in the market. For example, in the absence of PSUs, private enterprises may form a cartel.
    • When the government goes for a strategic sale/privatization, there are chances of a PSU being sold off at a lower value to a private entity which can be against the larger public interest.

    Types of Disinvestment

    Disinvestment of a minority stake in PSUs can be done in the following ways:

    • Initial Public Offering (IPO): an offer of shares by an unlisted PSU to the public for the first time.
    • Follow-on Public Offering (FPO): also known as Further Public Offering, it's an offer of shares by a listed PSU.
    • Offer for sale (OFS): shares of a PSU are auctioned on the platform provided by the stock exchange. This mode has been used extensively by the government since 2012.
    • Institutional Placement Programme (IPP): under this, only selected financial institutions are allowed to participate and the government stake is offered to only such institutions. E.g., mutual funds, insurance, and pension funds such as LIC etc.
    • Cross-holdings: in this method, one listed PSU takes up the government stake in another listed PSU.
    • CPSE Exchange Traded Fund (ETF): Through this route, the government can divest its stake in various PSUs across diverse sectors through a single offering. This mechanism allows the government to monetize its shareholding in those PSUs which form part of the ETF basket.

    Disinvestment of a majority stake in PSUs:

    • Strategic sale: it is the sale of a substantial portion of government shareholding, 50 percent or higher, in a PSU, along with the transfer of management control.
    • Privatization: it's a type of strategic sale in which the government divests its entire shareholding, along with the transfer of management control, to a private entity.

     

    UPSC Current Affairs: Services activity eased to three-month low in April| Page 14

    UPSC Syllabus: Mains – GS Paper III – Indian economy

    Sub Theme: Service sector | UPSC

    Context: India’s service sector growth in at three-month low as per April Data.

    Reason: Ongoing Pandemic and low economic activity. The pandemic has reduced demand, particularly in overseas markets. Nationwide store closures and prohibition to leave the house weighed heavily on the services economy.

    Purchasing Managers Index (PMI)

    • PMI and is considered as an indicator of the economic health, business momentum in the industrial sector of an economy and investor sentiments about the manufacturing sector.
    • In PMI data, a reading above 50 points indicates economic expansion, while a reading below 50 points shows the contraction of economic activities.
    • The PMI is constructed separately for manufacturing and services sector. But the manufacturing sector holds more importance.
    • India’s PMI went down to 47.9.

     

    UPSC Current Affairs: Scheme for revision

    UPSC Syllabus: Mains – GS Paper III – Indian Economy and Agriculture income

    Sub Theme:  Pradhan Mantri Kisan Samman Nidhi | UPSC

    The Government with a view to augment the income of the farm families is implementing a Central Sector Scheme, namely,"Pradhan Mantri KIsan SAmman Nidhi (PM-KISAN)".  The Scheme is in effect from 01.12.2018.

    Objective

    With a view to provide income support to all land holding eligible farmer families, the Government has launched PM-KISAN. The scheme aims to supplement the financial needs of the farmers in procuring various inputs to ensure proper crop health and appropriate yields, commensurate with the anticipated farm income.

    Eligibility - It will be given per year to all landholder farmers’ families in the country except,

    1. All Institutional Land holders.
    2. Farmer families in which one or more of its members belong to following categories,
    3. a) Former and present holders of constitutional post.
    4. b) Former and present - Ministers/ State Ministers, MPs & MLAs
    5. c) Former and present Mayors of Municipal Corporations, Chairpersons of District Panchayats.
    6. d) All serving or retired officers and employees of Central/ State Government Ministries /Offices/Departments and its

    field units Central or State PSEs and Attached offices /Autonomous Institutions under Government as well as regular

    employees of the Local Bodies.

    1. e) All superannuated/retired pensioners whose monthly pension is Rs.10,000/-or more (Excluding Multi-Tasking

    Staff / Class IV/Group D employees)

    1. f) All Persons who paid Income Tax in last assessment year.
    2. g) Professionals like Doctors, Engineers, Lawyers, Chartered Accountants, and Architects registered with

    Professional bodies and carrying out profession by undertaking practices.

    Conditions of the scheme:

    • The amount will be given in three instalments of Rs.2000 each.
    • The amount will be transferred directly to the bank account of beneficiaries through Direct Benefit Transfer to ensure transparency and save time for the farmers.
    • The changes in land records after February 1, 2019 shall not be considered for this scheme.
    • State Government and UT Administration will identify the beneficiaries.
    • The cash transfer is not linked to the land size and hence it becomes an income supplement to landowning households.
    • However, it has left the landless tenants out of its scope.
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