The practice of presenting a vote on account in India before a new government forms serves several crucial purposes:

• With elections often held close to the start of the fiscal year, there's limited time for a new government to formulate and garner parliamentary approval for a full budget. The vote on account provides a temporary spending plan to ensure essential government functions continue uninterrupted.
• Introducing a full budget before the new government takes charge would be seen as imposing the previous regime's policies on the incoming one. The vote on account avoids this by maintaining the status quo, allowing the new government to present a revised budget reflecting its own priorities and vision later.
• Without a spending plan, the government would face financial difficulties, potentially impacting public services and causing economic disruption. The vote on account bridges this gap, ensuring continuity and stability during the transition period.
• Since India's independence in 1947, the vote on account has become a well-established convention. This continuity provides predictability and facilitates smooth financial management during government changes.

3.1. Housing

• The government plans to launch a new housing scheme specifically targeting "deserving sections of the middle class" currently living in rented accommodations, slums, chawls, or unauthorized colonies. This scheme aims to empower them to purchase or build their own homes, potentially improving their living standards and financial security.
• To promote renewable energy and environmental sustainability, the government intends to enable one crore households to generate and utilize up to 300 units of free electricity per month through rooftop solarization. This initiative aligns with the Prime Minister's vision expressed during the historic consecration of Ram Mandir in Ayodhya, aiming for a cleaner and more self-sufficient future.
• Recognizing the growing demand for housing in rural areas, the PM Awas Yojana (Grameen) will be expanded to construct two crore additional houses in the next five years. This initiative addresses the needs of families and communities, fostering rural development and improved living conditions.

3.2. Healthcare

• The government announced a new vaccination program for girls aged 9-14 years against Human Papillomavirus (HPV), which can cause cervical cancer. This proactive step aims to safeguard the health of young women and reduce future cancer risks.
• To address the shortage of medical professionals, the government plans to create more medical colleges by leveraging existing hospital infrastructure within various departments. This strategy aims to increase the number of qualified doctors and improve healthcare accessibility.
• The "Saksham Anganwadi and Poshan 2.0" initiative will see further acceleration, focusing on upgrading Anganwadi centres, crucial for providing healthcare and nutrition services to young children and pregnant mothers.
• The U-WIN platform for managing immunization programs and the Mission Indradhanush immunization drive will be rolled out swiftly. This initiative aims to strengthen and expand immunization coverage, preventing childhood diseases and promoting public health.
• The government extends healthcare coverage under the Ayushman Bharat scheme to all ASHA workers, Anganwadi Workers, and Helpers. This move provides them with much-needed health insurance and financial protection.

3.3. Agriculture and Related Sector 

• The government plans to expand the application of Nano DAP, a fertilizer using nanotechnology, across various crops and agro-climatic zones. This aims to improve nutrient absorption and potentially increase crop yields.
• A strategic plan will be formulated to achieve "atmanirbharta" (self-sufficiency) in oilseeds, focusing on mustard, groundnut, sesame, soybean, and sunflower. This initiative aims to reduce reliance on imported oils and boost domestic production.
• A comprehensive program to support dairy farmers will be developed, leveraging the success of existing schemes like the Rashtriya Gokul Mission and National Livestock Mission. This aims to improve dairy farmers' income and increase milk production.
• The implementation of Pradhan Mantri Matsya Sampada Yojana (PMMSY) will be intensified to:

1. Increase aquaculture productivity from 3 to 5 tons per hectare.
2. Double fish exports to ₹1 lakh crore.
3. Generate 55 lakh employment opportunities.

• Five integrated aquaparks will be set up, combining fish farming with agriculture, potentially promoting sustainable and resource-efficient food production.

3.4. Empowering Women

• The Finance Minister acknowledged the significant role of Self-Help Groups (SHGs) in empowering rural women, highlighting their contribution to socio-economic transformation. This recognition underscores the government's awareness of the vital role SHGs play in women's financial independence and community development.
• The government aims to ambitiously increase the target of the "Lakhpati Didi" scheme from 2 crore to 3 crore women. This scheme empowers rural women by providing skill development training and facilitating their transition into entrepreneurs, aiming for an annual income of at least 1 lakh rupees. The expansion signifies the government's commitment to fostering women's economic participation and self-reliance on a larger scale.

• The budget aims to empower the "tech-savvy youth" by establishing a massive ₹1 lakh crore corpus offering 50-year interest-free loans. This initiative provides young entrepreneurs with access to long-term, low-cost financing to fuel their innovative ventures.
• The long repayment tenure (50 years) and low/zero interest rates offer significant benefits:

1. Young entrepreneurs can focus on investing in their businesses without worrying about high loan repayments.
2. The favourable loan terms allow for more experimentation and innovation.
3. Access to larger funds can support more ambitious and impactful ventures.

• A separate scheme that focuses on strengthening "deep-tech" technologies for defence purposes. This initiative aligns with the "atmanirbharta" (self-sufficiency) goal, aiming to:

1. Promote research and development in critical areas like artificial intelligence, robotics, and cyber security.
2. Foster domestic innovation and production of advanced defence equipment.
3. Equip the armed forces with cutting-edge technologies to enhance their capabilities.

The government has announced a significant increase in infrastructure spending for the next year, highlighting its commitment to developing this crucial sector. 

• The outlay for infrastructure development is being increased by 11.1% to a whopping ₹11,11,111 crore, representing 3.4% of the GDP. This substantial investment aims to accelerate infrastructure growth and improve connectivity across the nation.
• Three major railway corridor programs will be implemented:

1. Energy, mineral and cement corridors aim to improve transportation efficiency for key industrial resources, boosting economic activity in these sectors.
2. Port connectivity corridors will enhance connectivity between ports and hinterlands, facilitating smoother movement of goods and promoting international trade.
3. High-traffic density corridors will address congestion in high-traffic areas, improving overall logistics and reducing travel time.

• Multimodal Connectivity projects identified under the PM Gati Shakti initiative prioritize multimodal connectivity, ensuring seamless movement of goods and people across different modes of transportation (road, rail, air, waterways).
• The expansion of Metro rail networks and the NaMO Bharat program in large cities will focus on transit-oriented development (TOD). This approach integrates public transport with urban planning, promoting sustainable and livable cities.

• The budget announces the provision of viability gap funding for tapping into the offshore wind energy potential, emphasizing sustainable and clean energy sources.
• A forward-looking initiative aims to establish a coal gasification and liquefaction capacity of 100 MT by the year 2030, aligning with the commitment to reduce reliance on traditional energy sources.
• Financial assistance will be extended to facilitate the procurement of biomass aggregation machinery, promoting the utilization of biomass for energy generation.
• A phased approach towards the mandatory blending of compressed biogas (CBG) in compressed natural gas (CNG) for transport and piped natural gas (PNG) for domestic purposes will be instituted, emphasizing the transition to cleaner energy alternatives.
• The budget emphasizes support for the electric vehicle ecosystem, covering both manufacturing and charging infrastructure. This initiative aims to accelerate the adoption of electric vehicles for a more sustainable transportation system.
• A payment security mechanism will be introduced to encourage the greater adoption of electric buses in public transport networks, contributing to reduced emissions and enhanced environmental sustainability.
• To promote green growth, a new scheme for bio-manufacturing and bio-foundry will be launched. This initiative focuses on leveraging biological processes for manufacturing and fostering bio-based industries.
• The budget introduces Blue Economy 2.0, encompassing a scheme for restoration and adaptation measures, coastal aquaculture, and mariculture. This integrated and multi-sectoral approach aims to enhance the sustainable use of ocean resources while addressing environmental concerns.

The budget outlines a focused strategy to revitalize and promote domestic tourism in India, with several key initiatives:

• States will be encouraged to comprehensively develop iconic tourist destinations, encompassing branding and marketing them on a global scale. This aims to attract international tourists and enhance the overall tourism experience.
• A framework for rating tourist centres based on the quality of facilities and services will be established. This will ensure transparency and encourage continuous improvement, leading to a more attractive and satisfying tourist experience.
• Long-term, interest-free loans will be provided to states on a matching basis to finance the development of these iconic tourist centres. This financial assistance will act as a catalyst for infrastructure improvement and attract private investment.
• Recognizing the potential of island destinations, projects for port connectivity, tourism infrastructure, and amenities will be undertaken on various islands, including Lakshadweep. This aims to diversify the domestic tourism landscape and offer unique experiences to travellers.

The budget speech mentioned two key points regarding Foreign Direct Investment (FDI) in India:

• The government emphasized the significant increase in FDI inflow during 2014-23, highlighting it as a "golden era" with USD 596 billion received, doubling the inflow compared to 2005-14. This achievement suggests that India has become a more attractive destination for foreign investors in recent years.
• The government expressed its commitment to attracting further foreign investment through:

1. Negotiating bilateral investment treaties aims to create a more stable and predictable investment environment for foreign companies, potentially reducing risks and encouraging investment.
2. The "First Develop India" approach emphasizes attracting FDI that aligns with India's development priorities, potentially leading to technology transfer, job creation, and infrastructure development.

• The loan provides states with much-needed financial resources to undertake significant reforms, potentially overcoming budgetary constraints that often impede progress.
• The 50-year loan term offers flexibility and reduces pressure on immediate repayment, allowing states to invest in long-term reforms with lasting impact.
• The loan is likely tied to specific reform initiatives identified by the central government or mutually agreed upon. This ensures the funds are directed towards desired outcomes.

The revised estimates for the 2023-24 financial year offer insights into the government's updated projections for revenue, expenditure, and fiscal deficit. 

• Revenue

1. Total receipts excluding borrowings are estimated at ₹27.56 lakh crore, exceeding the budget estimate. This suggests stronger revenue collection, potentially due to better economic performance or improved tax administration.
2. Tax receipts are expected to reach ₹23.24 lakh crore, highlighting positive growth in tax collection.
3. Revenue from other sources like dividends and asset sales is also expected to be higher than initially projected.

• Total expenditure is revised to ₹44.90 lakh crore, indicating higher spending than initially planned. This could be due to unforeseen circumstances, increased spending on specific programs, or adjustments in accounting practices.
• Despite the higher expenditure, the revised fiscal deficit stands at 5.8% of GDP, which is lower than the budgeted 6.4%. This improvement is attributed to the higher revenue collection and potentially reflects the government's commitment to fiscal consolidation.

• The government commits to adhering to the path of fiscal consolidation with a projected fiscal deficit of 5.1% of GDP for 2024-25, slightly lower than the revised estimate of 5.8% for 2023-24.
• The popular scheme of providing a 50-year interest-free loan for capital expenditure to states continues, with a total outlay of ₹1.3 lakh crore in 2024-25. This aims to boost infrastructure development at the state level.
• The total expenditure is estimated to grow by 6.1% to ₹47.66 lakh crore compared to the revised estimate for 2023-24. This indicates increased government spending across various sectors. Total receipts excluding borrowings are also projected to rise by 11.5% to ₹30.80 lakh crore. This suggests optimism about revenue collection, potentially driven by economic growth or tax reforms.
• Tax receipts are estimated to reach ₹26.02 lakh crore, indicating continued focus on tax collection while potentially avoiding major changes in tax rates.

• Over the past decade, direct tax collections have witnessed an impressive threefold increase. Simultaneously, the number of return filers has surged to 2.4 times the previous figure, indicating a substantial expansion in the taxpayer base.
• The introduction of a new tax scheme has elevated the tax exemption threshold, eliminating tax liability for individuals with an income of up to Rs. 7 lakh. This significant increase from Rs. 2.2 lakh in the financial year 2013-14 aims to provide relief to a broader segment of taxpayers.
• The presumptive taxation threshold for retail businesses has been raised from Rs. 2 crores to Rs. 3 crores, offering a more favourable taxation framework. Additionally, the eligibility threshold for professionals under presumptive taxation has been increased from Rs. 50 lakh to Rs. 75 lakh.
• In a move to boost economic growth, the corporate tax rate has been reduced from 30 per cent to 22 per cent for existing domestic companies. Furthermore, certain new manufacturing companies now enjoy a reduced tax rate of 15 per cent.
• The age-old jurisdiction-based assessment system has undergone a transformative shift with the introduction of Faceless Assessment and Appeal. This modernized approach enhances efficiency, transparency, and accountability in the tax assessment process.
• Introducing updated income tax returns, a new Form 26AS, and prefilling of tax returns have streamlined the tax filing process, making it more accessible and user-friendly for taxpayers.
• The average processing time for returns has been substantially reduced from 93 days in the year 2013-14 to a mere ten days in the current year. This improvement ensures faster and more efficient processing of refunds, benefiting taxpayers.

The budget speech emphasized several positive developments in India's indirect tax system, particularly regarding the Goods and Services Tax (GST)

• The speech highlighted that GST has reduced the compliance burden on trade and industry. This suggests that businesses are finding it easier to comply with the new tax regime compared to the previous system.
• The tax base of GST has more than doubled since its implementation, indicating that more businesses are now registered under the system. This potentially leads to wider tax collection and increased revenue.
• The average monthly gross GST collection has almost doubled to Rs. 1.66 lakh crore. This significant increase in revenue suggests the effectiveness of the GST system in generating income for the government.
• States' SGST revenue, including compensation released to states, has achieved a buoyancy of 1.22 in the post-GST period. This indicates that states are receiving their share of GST revenue effectively and consistently, contributing to their financial stability.
• The speech also mentioned that steps were taken in Customs to facilitate international trade. This suggests efforts to streamline customs procedures and reduce trade barriers, potentially boosting India's international trade competitiveness.

• The budget maintains stability in tax rates, with no alterations in the existing tax structure for both direct and indirect taxes, including import duties. This approach aims to provide consistency and predictability to taxpayers and businesses.
• Resolution of Outstanding Direct Tax Demands:

1. A significant step towards easing the tax compliance landscape involves the withdrawal of outstanding direct tax demands. This pertains to petty, non-verified, non-reconciled, or disputed direct tax demands, some dating as far back as 1962.
2. Direct tax demands up to Rs. 25,000 for the period up to the financial year 2009-10 and up to Rs. 10,000 for financial years 2010-11 to 2014-15 will be withdrawn. This initiative aims to provide relief to taxpayers and streamline the resolution of long-standing tax issues.

GOVERNORS AND THEIR ROLE

1. Context

2. Role of the Governor in the Parliamentary System

• The position, role, powers, and conditions of office of the Governor are described in Articles 153-161 of the Constitution. The Governor is the chief executive head of the state. But, like the president, he is a nominal executive head (titular or constitutional head).
• Being the head of the state's executive power, he acts on the advice of the council of ministers, barring some matters. The council of ministers, in turn, is responsible to the state legislature.
• Being appointed by the President, the governor acts as a vital link between the Union and the state governments. The governor appoints the Chief Minister and the Council of Ministers.
• The post was envisaged as being apolitical; however, the role of the Governor has been a contentious issue in Centre-State relations for decades.
• The Governor enjoys certain powers such as giving or withholding assent to a Bill passed by the state legislature or determining the time needed for a party to prove its majority or which party must be called first to do so, generally, after a hung Assembly-which have been weaponized by successive central governments against the political opposition.

3. Does Governor have the power to remove a Minister?

5.2 National Commission to Review the working of the Constitution (2000)

• The commission recommended significant changes in the selection of Governors.
• The Commission suggested that the "Governor of a state should be appointed by the President, after consultation with the Chief Minister of the State".

5.3 Punchi Commission (2007)

• The Commission proposed that a committee comprising the Prime Minister, Home Minister, Vice President, Speaker, and the concerned Chief Minister should choose the Governor.
• It further recommended deleting the "Doctrine of Pleasure" from the constitution but backed the right of the Governor to sanction the prosecution of ministers against the advice of the state government.
• It also argued for a provision for the impeachment of the Governor by the state legislature.

6. Important Judgements w.r.t. appointment/removal of Council of Ministers:

6.1 Shamsher Singh & Anr vs State of Punjab (1974)

• The Supreme court held that the President and Governor shall exercise their formal constitutional powers only upon and by the advice of their Ministers except in a few well-known exceptional situations.
• The court also added that even in case the Prime Minister/Chief Minister ceases to command the majority in the House Or the government loses the majority but refuses to quit office Or for "the dissolution of the House where an appeal to the country is necessitous".
• The Head of the state (President/Governor) should avoid getting involved in politics and must be advised by the Prime Minister(Chief Minister) who will eventually take responsibility for the step.

6.2 Nabam Rebia, Etc. vs Deputy Speaker And Ors (2016)

For Prelims & Mains

LINGAYATS AND VOKKALIGAS

 

 

1.Context

The Panchamasali Lingayats, a dominant agrarian caste in Karnataka, are on a warpath again, demanding 2A category reservation under the OBC list.

2.About Lingayats & Vokkaligas

2.1.Lingayats

• The Lingayats are a dominant community who make up nearly 17% of Karnataka’s six crore population .
• The community can determine the outcome of polls in as many as 90-100 of the state’s 224 Assembly constituencies.
• The Lingayats, classified as a Hindu sub-caste called Veerashaiva Lingayats, are essentially followers of the 12th-century philosopher Saint Basavanna, who started a movement to help sections of society break away from the chains of caste.
• The Veerashaiva Lingayats are an amalgamation of the followers of Basavanna’s teachings and Veerashaivas who follow more traditional Hindu practices. 
• The Lingayat community has many sub-sects identified on the basis of the vocations they followed.

2.2.Vokkaligas

• The Yelahankanadu  Prabhus were Gowdas or tillers of the Land. They belonged to Gangatgar Vokkalu sect, the ancestors of which were migrants from Morasunadu near Kanjeepuram ,They used to speak Telugu.
• Fourth in succession from Rana Bhairave Gowda, founder of the dynasty of Avanti Nadu Prabhus and great grandson of Jaya Gowda, who established separate dynasty, the famous Yelahanka Nadu Prabhus, Kempe Gowda I ruled for 46 years commencing his reign from 1513
• Jaya Gowda accepted the sovergnity of the Vijayanagar emperor.
• Today the Vokkaliga community embraces within its fold the Morasu Vokkaligas, the Gangadicara Vokkaligas, Reddy Vokkaligas, Kunchitiga Vokkaligas, Hallikaru Vokkaligas and so on.

 

3.Key takeaways

• Veerashaiva Lingayats have been provided 5% reservation under a special category called 3B. 
• A sub-sect called the Panchamasali Lingayats basically agriculturists who account for nearly 70% of Lingayats  have now risen in protest seeking reservations under the category 2A, which currently provides 15% reservations to backward castes.
• Vokkaliga community, which is currently in the 3A category, will be moved to a newly-created 2C category with 4% reservation.
• Karnataka currently has 32% quota for OBC, and 17% and 7% quota for Scheduled Castes and Scheduled Tribes, respectively, taking the total to 56%.
• Lingayats are considered the most populous community in the state, followed by Vokkaligas. The new categories will not affect the existing reservation provided to other communities.
• The increase in reservation from the one granted currently to these communities — 4% for Vokkaligas and 5% for Lingayats  via redistribution of the EWS quota will be based on the population of various communities assessed by the Karnataka State Commission for Backward Classes

 

 

 

For Prelims: Lingayats, Vokkaligas, Basava For Mains: 1.Discuss the role of the National commission for backward classes in the wake of its transformation form a statutory body to a constitutional body

 

Previous Year Questions   1.With reference to the cultural history of medieval India, consider the following statements:(UPSC CSE 2016)   1. Siddhas (Sittars) of Tamil region were monotheistic and condemned idolatry. 2. Lingayats of Kannada region questioned the theory of rebirth and rejected the caste hierarchy. Which of the statements given above is/are correct? A. 1 Only B. 2 Only C. Both 1 and 2 D. Neither 1 nor 2 Answer (C) 2.Consider the following statements about the Lingayats: (UPSC CAPF 2020)   1. They bury their dead. 2. They are great believers in the caste system, especially in the theory of purity and pollution. 3. They are against child marriage and favour widow remarriage. Which of the statements given above is/are correct? A. 1 and 2 B. 1 Only C. 2 and 3 D. 1 and 3 Answer (D)

 

Source: The Hindu

NON PERFORMING ASSET (NPA)

 

 

 

1. Context

a significant reduction in bad loans and timely recapitalisation have meant that the banking sector is very well-placed to lend. Together with rising credit supply from alternative channels and financial innovation, the growth finance available for both the “great Indian infrastructure build-out” and corporate capital expenditure is arguably the largest in memory, including as a percentage of nominal GDP

 

2. What is a Non-Performing Asset (NPA)?

A Non-Performing Asset (NPA) refers to a classification used by financial institutions, primarily banks, to categorize loans or advances that are in default or are in arrears on scheduled payments of principal or interest. In simpler terms, when a borrower fails to make interest or principal payments for a certain period of time, typically 90 days or more past the due date, the loan is classified as a non-performing asset.

NPAs are detrimental to banks and financial institutions as they indicate a risk of default and can lead to financial losses. These assets can hamper the lender's ability to generate income through interest and can also impact their capital adequacy and liquidity.

Financial institutions employ various strategies to manage and recover NPAs, such as restructuring loans, loan recovery processes, selling off bad debts to asset reconstruction companies, or writing off the non-recoverable amount from their books

3. NPA (Non-Performing Assets) –Classifications

Non-performing assets (NPAs) are classified based on the period for which the loan remains overdue and the likelihood of recovery. The classifications typically involve three categories:

1. Substandard Assets: These are assets that have remained non-performing for less than or equal to 12 months. They are characterized by the bank or financial institution experiencing a potential loss if full repayment occurs. Substandard assets have a higher risk of turning into bad loans.

2. Doubtful Assets: These assets have remained in the non-performing category for more than 12 months. There is a significant risk associated with these assets, where the full repayment of the loan is highly uncertain. However, there might still be some potential, albeit remote, for recovery.

3. Loss Assets: When the assets' loss has been identified by the bank or financial institution or an external auditor, and these assets have very little chance of recovery, they are classified as loss assets. These assets are considered uncollectible and of such little value that their continuance as assets is not warranted, and the entire outstanding balance is written off.

These classifications are crucial for banks and financial institutions to assess the health of their loan portfolios and take appropriate measures to manage and mitigate risks associated with NPAs

4. What is the difference between Bank fraud and Non-Performing Assets (NPA’s)?

Bank fraud and Non-Performing Assets (NPAs) are two distinct issues in the banking sector, although they can sometimes be interconnected.

Bank Fraud: Bank fraud involves deliberate deception or dishonest actions carried out by individuals or groups, intending to gain an unfair or unlawful advantage, causing financial loss to the bank or its customers. Fraud can take various forms, such as embezzlement, forgery, loan fraud, identity theft, money laundering, or manipulating financial statements. It's essentially a criminal act involving deceit, misrepresentation, or illegal activities that lead to financial losses for the bank.

Non-Performing Assets (NPAs): NPAs refer to loans or advances that have stopped generating income for the bank because the borrower has defaulted on repayment. When a borrower fails to pay interest or principal for a specified period, typically 90 days or more, the loan is classified as an NPA. NPAs can arise due to various reasons such as economic downturns, borrower insolvency, mismanagement, or inadequate risk assessment by the lending institution.

While these issues are distinct, there can be situations where bank fraud contributes to the creation of NPAs. For instance, if a fraudulent loan is issued based on false documents or misrepresented information, it might result in the borrower defaulting on payments, eventually turning the loan into an NPA

5. What are the impacts of Non-Performing Assets (NPA)

Non-Performing Assets (NPAs) can have significant impacts on banks, the economy, and the overall financial ecosystem.

Here are some of the key effects:

• NPAs erode a bank's profitability as they stop generating income through interest payments. This affects the bank's ability to lend further and impacts its overall financial health. A high level of NPAs can weaken a bank's capital base, affecting its ability to absorb losses and maintain stability
• Banks with high NPAs become cautious about lending, especially to risky sectors or borrowers, leading to a credit crunch. This restricted lending can hamper economic growth as businesses and individuals find it challenging to secure credit for expansion or investment
• High NPAs can dent depositor and investor confidence in the banking system. Customers might withdraw deposits or shift to more stable institutions, causing liquidity issues for the affected bank
• NPAs can have broader economic repercussions. When banks face financial strain due to NPAs, their ability to support economic growth through lending diminishes. This can affect employment, investments, and overall economic development
• Regulators monitor and impose stricter norms on banks with high levels of NPAs to ensure financial stability. Banks might face regulatory penalties or restrictions, impacting their operations and growth prospects
• Banks might need additional capital infusion to cover the losses arising from NPAs. This can strain the bank's resources or necessitate seeking external funding, impacting shareholders and overall financial planning

6. Measures to control Non-Performing Assets (NPA)

Controlling Non-Performing Assets (NPAs) is crucial for the financial health of banks and the stability of the financial system. Several measures can be implemented to manage and control NPAs effectively:

Prudent Lending Practices: Implementing robust credit appraisal and risk assessment mechanisms before disbursing loans can prevent potential NPAs. Thoroughly evaluating borrower creditworthiness, financial stability, and collateral can mitigate risks.

Early Detection and Monitoring: Early identification of potential NPAs is crucial. Banks should closely monitor repayment schedules and intervene at the first signs of distress. Timely action can prevent assets from slipping into the NPA category.

Loan Restructuring and Rescheduling: Offering viable borrowers alternative repayment structures can help them meet their obligations. Loan restructuring involves altering repayment terms, interest rates, or extending the tenure to make repayments more manageable.

Asset Quality Review (AQR): Conducting regular asset quality reviews helps in identifying stressed assets early on. This enables banks to take proactive measures to prevent assets from turning into NPAs.

Asset Reconstruction Companies (ARCs): Collaborating with ARCs allows banks to transfer NPAs to specialized entities that focus on recovering these assets. It helps banks clean up their balance sheets and concentrate on core operations.

Strengthening Recovery Mechanisms: Banks should have robust recovery mechanisms in place, including legal recourse and debt recovery tribunals, to expedite the recovery of NPAs. Effective recovery minimizes losses for the bank.

Loan Recovery through Securitization and Asset Sale: Selling NPAs to other entities or securitizing them can provide liquidity and reduce the burden on banks. However, this should be balanced with ensuring fair value realization.

Prudential Norms and Regulatory Compliance: Adhering to prudential norms set by regulatory authorities helps in maintaining healthy asset quality. Compliance with regulations ensures timely recognition and provisioning for NPAs.

Debt Recovery Tribunals (DRTs) and SARFAESI Act: Utilizing legal mechanisms like DRTs and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act expedites the recovery process and acts as a deterrent against defaulting borrowers

7. Way forward

Implementing these measures collectively and consistently can aid in controlling NPAs, maintaining a healthy loan portfolio, and preserving the stability of the banking sector.

 

For Prelims: Current events of Economy in Indian Scenario, RBI measurement to Control Non Performing Assets (NPAs) For Mains: General Studies III: Non Performing Asset (NPAs), Bad Bank

 

Previous Year Questions 1.Consider the following statements: Non-performing assets (NPAs) decline in value when (UPSC ESE 2018) 1. Demand revives in the economy. 2. Capacity utilization increases. 3. Capacity utilization, though substantive, is yet sub-optimal. 4. Capacity utilization decreases consequently upon merger of unit. Which of the above statements are correct? A.1, 3 and 4 only B.1, 2 and 4 only C.1, 2 and 3 only D.1, 2, 3 and 4 Answer (C)

Source: Indianexpress

INVASIVE ALIEN SPECIES 

 

 

 

 

1. Context

 

 

Invasive wasps are posing a significant threat to South African ecosystems. An entomologist explains how citizen scientists can help monitor and control these harmful species to protect local biodiversity

 

 

2. About Invasive alien species

 

Invasive alien species (IAS), also known simply as invasive species, are non-native organisms that, when introduced to a new environment, can cause harm to the native ecosystem, economy, or human health. These species often thrive in their new environment due to the absence of natural predators or competitors, leading to rapid population growth and ecological disruption.

The key points about invasive alien species

Invasive species can be introduced intentionally or accidentally by humans. Intentional introductions often occur for agricultural, horticultural, or ornamental purposes, while accidental introductions can happen through global trade, transport, or tourism.

• Invasive species can outcompete native species for resources such as food, water, and habitat, leading to declines in native populations. They may also alter ecosystem processes such as nutrient cycling and fire regimes, leading to long-term ecological changes.
• Invasive species can have significant economic impacts by damaging crops, forests, fisheries, and infrastructure. Control and management efforts to mitigate these impacts can be costly and time-consuming.
• Some invasive species can pose direct threats to human health by transmitting diseases or causing allergic reactions. For example, certain invasive plants may produce pollen that triggers allergies in sensitive individuals.
• The rise of global trade and travel has facilitated the spread of invasive species, leading to an increase in their prevalence and distribution worldwide. Climate change may also exacerbate the problem by creating new habitats suitable for invasive species.
• Efforts to manage and control invasive species include prevention, early detection and rapid response, eradication, and long-term control measures. These efforts often require collaboration between government agencies, researchers, conservation organisations, and the public.

 

3. How do ‘IAS’ impact native species?

 

Invasive alien species (IAS) can impact native species in various ways, often leading to significant ecological disruption.

The primary ways in which IAS affect native species

•  Invasive species can compete with native species for essential resources such as food, water, space, and sunlight. They may have competitive advantages, such as rapid reproduction rates or lack of natural predators, which allow them to outcompete native species for resources.
•  Invasive species may prey on or consume native species, leading to declines in native populations. For example, invasive predators can decimate native prey populations, while invasive herbivores can overgraze native vegetation, altering habitat structure and reducing food availability for native species.
• Invasive species can modify habitats through activities such as burrowing, nesting, or altering vegetation composition. These habitat alterations can disrupt native species' ability to find suitable nesting sites, forage for food, or carry out other essential behaviours.
• Some invasive species can introduce new diseases or parasites to native populations, which may lack immunity to these pathogens. This can lead to disease outbreaks and population declines in native species. For example, the chytrid fungus, introduced by the global amphibian trade, has caused widespread declines and extinctions among native amphibian species.
• Hybridization between invasive and native species can occur when they come into contact. This can lead to genetic introgression, where genes from the invasive species are incorporated into native populations, potentially altering their genetic diversity and fitness.
• Invasive species can disrupt ecological relationships and food webs by altering species interactions. For example, if an invasive species outcompetes a native species for a shared prey species, it can indirectly impact other species that rely on that prey for food.

 

4. About the Convention on Biological Diversity (CBD)

 

The Convention on Biological Diversity (CBD) is an international treaty aimed at conserving biodiversity, promoting sustainable use of biological resources, and ensuring the fair and equitable sharing of benefits derived from genetic resources. It was opened for signature at the Earth Summit in Rio de Janeiro, Brazil, in 1992, and entered into force on December 29, 1993. The CBD has three main objectives:

1. The CBD aims to conserve biological diversity, including ecosystems, species, and genetic diversity, through the establishment and management of protected areas, the conservation of threatened species, and the restoration of degraded ecosystems.
2. The CBD promotes the sustainable use of biological resources to meet current and future human needs while ensuring the long-term health and resilience of ecosystems. This includes activities such as sustainable forestry, fisheries management, and sustainable agriculture practices.
3. The CBD seeks to ensure the fair and equitable sharing of benefits derived from the utilization of genetic resources, including the sharing of monetary and non-monetary benefits with countries and communities that are the custodians of those resources.

The CBD operates through meetings of the Conference of the Parties (COP), which are held regularly to review progress, negotiate agreements, and make decisions on matters related to the implementation of the convention. The COP has adopted several protocols and agreements to further the objectives of the CBD, including the Cartagena Protocol on Biosafety and the Nagoya Protocol on Access and Benefit-sharing.

 

5. What are invasive species?

 

Invasive species are organisms that are introduced, either intentionally or unintentionally, into a new environment where they are not native. These introduced species can cause harm to the environment, economy, or even human health.

Here's a breakdown of what makes a species invasive:

• Non-native: They come from a different region and weren't originally part of the local ecosystem.
• Harmful: They cause ecological or economic damage in their new environment. This can include things like outcompeting native species for resources, preying on them, or introducing diseases.

Not all introduced species become invasive. Some introduced species can even be beneficial, like honeybees which are crucial for pollinating crops. However, invasive species become problematic because they lack the natural controls (predators, diseases) they faced in their original habitat. This allows them to reproduce rapidly and disrupt the balance of the new ecosystem.

 

6. The Wildlife (Protection) Act, 1972

 

The Wildlife (Protection) Act of 1972 serves as a legal framework aimed at safeguarding various species of wild animals and plants, managing their habitats, and regulating and controlling trade in wildlife and wildlife products. It plays a crucial role in conservation efforts and biodiversity preservation in India.

Key Provisions

• The Act categorizes species into different schedules based on their conservation status, providing varying degrees of protection and monitoring by the government.
• India's accession to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) was facilitated by the Wildlife Act.
• The Act now extends to Jammu and Kashmir following the reorganisation act.

Constitutional Framework

• The 42nd Amendment Act, 1976, transferred Forests and Protection of Wild Animals and Birds from the State to the Concurrent List.
• Article 51 A (g) mandates citizens to protect and improve the natural environment, including forests and wildlife.
• Article 48 A in the Directive Principles of State Policy emphasizes the state's duty to protect and improve the environment, safeguarding forests, and wildlife.

Schedules under the Act

• Schedule I: Encompasses endangered species requiring stringent protection, with severe penalties for violations. Hunting is prohibited except in cases of threat to human life or incurable disease.
• Schedule II: Includes species accorded high protection with trade prohibition.
• Schedule III & IV: Lists non-endangered species with hunting prohibition, but with lesser penalties compared to Schedules I and II.
• Schedule V: Contains vermin species that can be hunted, including Common Crows, Fruit Bats, Rats, and Mice.
• Schedule VI: Regulates the cultivation and trade of specified plants, requiring prior permission for cultivation, possession, sale, and transportation.

Examples of Protected Species

• Schedule I: Black Buck, Snow Leopard, Himalayan Bear, Asiatic Cheetah.
• Schedule II: Assamese Macaque, Himalayan Black Bear, Indian Cobra.
• Schedule III & IV: Chital (spotted deer), Bharal (blue sheep), Hyena, Sambhar (deer).
• Schedule V: Common Crows, Fruit Bats, Rats, Mice.
• Schedule VI: Beddomes’ cycad, Blue Vanda, Red Vanda, Kuth, Slipper orchids, Pitcher plant.

 

 7. Netaji Subhas Chandra Bose Island

 

 

8. What is IPBES?

The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) is an independent intergovernmental body established to assess the state of biodiversity, ecosystems, and the contributions they provide to human well-being. IPBES was established in 2012 and is headquartered in Bonn, Germany.

Key functions and objectives of IPBES include

• IPBES conducts regular assessments of the state of biodiversity and ecosystem services at the global, regional, and national levels. These assessments involve synthesizing scientific knowledge from experts around the world and providing policymakers with information to support decision-making.
• IPBES provides policymakers with evidence-based assessments, tools, and policy recommendations to promote the conservation and sustainable use of biodiversity and ecosystems. This includes identifying policy options and best practices for addressing the drivers of biodiversity loss and ecosystem degradation.
• IPBES supports capacity-building efforts to enhance the ability of countries and stakeholders to assess, manage, and conserve biodiversity and ecosystem services effectively. This includes providing training, technical support, and guidance on assessment methodologies and tools.
• IPBES facilitates knowledge exchange and collaboration among scientists, policymakers, practitioners, indigenous and local communities, and other stakeholders involved in biodiversity and ecosystem management. This includes organizing workshops, conferences, and other events to share information and best practices.
• IPBES promotes policy-relevant research on biodiversity and ecosystem services to address knowledge gaps and support informed decision-making. This includes identifying research priorities and coordinating research efforts across disciplines and sectors.

IPBES operates through a multistakeholder governance structure involving governments, scientists, indigenous and local communities, non-governmental organisations, and other stakeholders. It conducts its work through a series of plenary sessions, expert groups, and technical support units focused on specific thematic areas and regions.

 

9. The Way Forward

By taking a proactive and collaborative approach to managing invasive species like chital on Ross Island, it's possible to mitigate their negative impacts on native biodiversity and ecosystems while promoting sustainable conservation practices.

 

For Prelims: Ross Island, Invasive Alien Species, Wild Life Protection Act, IPBES, Convention on Biological Diversity, Netaji Subhash Chandra Bose Island, Spotted deer   For Mains:  1. The growing problem of invasive alien species poses a significant threat to global biodiversity and ecosystem health. Discuss the various factors contributing to the spread of Invasive alien species and critically evaluate different approaches for their control and management. (250 Words)

 

Previous Year Questions 1. If a particular plant species is placed under Schedule VI of the Wildlife Protection Act, 1972, what is the implication? (UPSC 2020) (a) A licence is required to cultivate that plant. (b) Such a plant cannot be cultivated under any circumstances. (c) It is a Genetically Modified crop plant. (d) Such a plant is invasive and harmful to the ecosystem.   2. Ross Island in the Andaman and Nicobar group of islands has been recently renamed as? (CMAT 2021) A. Shaheed dweep  B. Swaraj dweep   C. Netaji Subhas Chandra Bose Island   D. Atal Island  3. Which of the following pairs of old names and new names of islands in India is/are correctly matched? (NDA 2019)  1. Ross Island : Shaheed Dweep 2. Neil Island : Netaji Subhas Chandra Bose Dweep 3. Havelock Island : Swaraj Dweep Select the correct answer using the code given below: A. 1, 2 and 3      B. 2 and 3 only      C. 1 and 2 only         D. 3 only   4. 'Invasive Species Specialist Group' (that develops Global Invasive Species Database) belongs to which one of the following organizations? (UPSC 2023) A. The International Union for Conservation of Nature B. The United Nations Environment Programme C. The United Nations World Commission for Environment and Development D. The World Wide Fund for Nature 5. With reference to the International Union for Conservation of Nature and Natural Resources (IUCN) and the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), which of the following statements is/are correct? (UPSC 2015) 1. IUCN is an organ of the United Nations and CITES is an international agreement between governments. 2. IUCN runs thousands of field projects around the world to better manage natural environments. 3. CITES is legally binding on the States that have joined it, but this Convention does not take the place of national laws. Select the correct answer using the code given below: (a) 1 only        (b) 2 and 3 only             (c) 1 and 3 only                (d) 1, 2 and 3   6. Which of the following are the most likely places to find the musk deer in its natural habitat? (UPSC 2020)  1. Askot Wildlife Sanctuary 2. Gangotri National Park 3. Kishanpur Wildlife Sanctuary 4. Manas National Park Select the correct answer using the code given below:  A. 1 and 2 only         B. 2 and 3 only       C. 3 and 4 only        D. 1 and 4 only Answers: 1-A, 2-C, 3-D, 4-A, 5-B, 6-A

Source: The Indian Express.