11
Current Affairs Analysis

11th June 2016 Current Affairs Analysis

‘Chill’ Lending; Green Bonds; Data Exclusivity; EFTA; CarbFix project; Banks Board Bureau; Cruise Tourism; etc.
By IT's Current Affairs Analysis Team
June 11, 2016

Contents

Economy

  • ‘The Central Port Authorities Act’ 2016’ to replace the ‘Major Port Trust Act, 1963’
  • Rai, RBI to hold parleys over bad loan probes
  • Centre plans boost to cruise tourism
  • Power looms running on solar energy likely to get subsidy from Centre
  • Axis Bank launches India’s first certified green bond at London Stock Exchange
  • Renewable energy capacities at 42.8 GW pip hydro generation

International Relations

  • India, EFTA agree to address issues to resume FTA talks

Science & Technology

  • Patent Office issues norms for start-ups
  • Scientists turn CO2 into rock to combat climate change

 

Economy

‘The Central Port Authorities Act’ 2016’ to replace the ‘Major Port Trust Act, 1963’

The Ministry of Shipping has prepared a draft bill ‘The Central Port Authorities Act’ 2016’ to replace the ‘Major Port Trust Act, 1963’.

  • This step is being taken keeping in view the need to give more autonomy and flexibility to the Major Ports and to bring in a professional approach in their governance. 

Salient Feature of the ‘The Central Port Authorities Act’ 2016:

Composition of Board:

  • Composition of board has been simplified. The board will consist of 9 members including 3 to 4 independent members instead of 17-19 under the Port Trust Model.

Procedure:

  • The disqualification of the appointment of the Members of the Board, duties of the Members and provision of the meetings of the Board through video conferencing and other visual means have been introduced on the lines of Companies Act, 2013.

Approval of leases:

  • Port related and non-port related use of land has been defined in terms of approval of leases. The Port Authorities are empowered to lease land for Port related use for upto 40 years and for non-port related use upto 20 years beyond which the approval of the Central Government is required.

Relinquish government approvals:

  • The Board of Port Authority have been delegated power to raise loans and issue security for the purpose of capital expenditure and working capital requirement and the need for Government approvals in these matters have been dispensed with.

Internal audit:

  • Concept of internal audit of the functions and activities of the Central Ports has been introduced on the lines of Companies Act, 2015. 

Others:

  • The Board of the Port Authority has been delegated the power to fix the scale of rates for service and assets.
  • An independent Review Board has been proposed to be created to carry out the residual function of the erstwhile TAMP for Major Ports, to look into disputes between ports and PPP concessionaries. At present, there is no independent body to look into these aspects and the Review Board will reduce the extent of litigation between PPP Operators and Ports.
  • Power of Central Govt. to take over the control of the Port Authority is limited to the event of grave emergency or in case of persistent default by Port Authority in performance of their duties.
  • Provisions of CSR & development of infrastructure by Port Authority have been introduced.
  • The status of Port Authority will be deemed as ‘local authority’ under the provisions of the General Clauses Act, 1887.
[Ref: PIB]

 

Rai, RBI to hold parleys over bad loan probes

With lenders facing the heat from investigative agencies due to an increase in bad loans the Banks Board Bureau (BBB) has decided to discuss the issue with the Reserve Bank of India in the presence of bankers.

Background:

  • The move comes at a time when the Centre has asked banks to speed up their recovery efforts by using all the available tools including one-time settlement.
  • However, more often than not, as part of the one-time settlement, the bank has to be prepared to forego a sizeable portion of the dues. And banks are wary that the investigative agencies will hound them if their decisions go wrong.
  • Public sector banks, which come under the purview of the investigative agencies, have been facing the heat amid sharp rise in non-performing assets.
  • RBI governor Raghuram Rajan has also cautioned against a growing trend of probing loan defaults, saying it could ‘chill’ lending.

What is ‘chill’ lending?

  • The ‘chill’ lending simply means the situations when probes against non performing assets (NPA) results in “chilling” bank lending.
  • The ‘chill’ lending stops all risk-taking by entrepreneurs, which would adversely affect the economy.

About the Banks Board Bureau:

  • With a view to improve the Governance of Public Sector Banks (PSBs), the Government had decided to set up an autonomous Banks Board Bureau in August last year.
  • The bureau was announced as part of the seven-point Indradhanush plan to revamp PSBs.
  • BBB is an autonomous body.
  • The bureau will have three ex-officio members and three expert members, in addition to the Chairman. All the Members and Chairman will be part time.

Its functions:

  • The Bureau is mandated to play a critical role in reforming the troubled public sector banks by recommending appointments to leadership positions and boards in those banks and advise them on ways to raise funds and how to go ahead with mergers and acquisitions.
  • It will constantly engage with the boards of all 22 public sector banks to formulate appropriate strategies for their growth and development.
  • They will also constantly engage with the Board of Directors of all the public sector banks to formulate appropriate strategies for their growth and development.
  • The bureau will search and select heads of public sector banks and help them develop differentiated strategies of capital raising plans to innovative financial methods and instruments.
  • It would also be responsible for selection of non-executive chairman and non-official directors on the boards.
[Ref: Hindu]

 

Centre plans boost to cruise tourism

The Centre is working to chalk out a road map for promoting cruise tourism with state-of-the-art infrastructural facilities across the country.

  • Cruise tourism attracts the segment of overseas and foreign tourists who prefer this type of leisure travel.

Scope for cruise tourism in India:

  • The Indian peninsula, with a coastline of more than 7,500 km long, with a marine waterfront stretching from the Arabian Sea in the west to the Indian Ocean in the south and Bay of Bengal in the east will offer ample avenues for such a tourism.

Indian ports for the promotion of cruise tourism:

  • Indian ports will also play a major role in the initiative and the Centre plans to extend financial assistance to ports for development of infrastructure.
  • The Shipping Ministry feels that there are four key areas where interventions are needed. These are infrastructure and facility creation, process simplification, technology enablement and fiscal incentives to investors.
  • Facility development includes creation of proper terminals. These terminals would be developed at four major ports — Goa, Cochin, Mumbai and Chennai.
[Ref: Hindu]

 

Power looms running on solar energy likely to get subsidy from Centre

The Centre is considering granting subsidy to power looms operating on solar energy as part of its clean energy initiatives.

  • The government is planning to provide 50 % subsidy to them.
  • From August 15, power looms in the country will utilise solar energy for running their operations.

About Amended Technology Upgradation Fund Scheme:

Amended Technology Upgradation Fund Scheme (ATUFS) was rolled out in January 2016 for technology upgradation of the textiles industry.

  • The ATUFS replaces existing Revised Restructured Technology Upgradation Fund Scheme (RR-TUFS). [The Technology Upgradation Fund Scheme was introduced by the Government in 1999 to facilitate new and appropriate technology for making the textile industry globally competitive and to reduce the capital cost for the textile industry.]
  • The amended scheme would give a boost to “Make in India” in the textiles sector; it is expected to attract investment to the tune of one lakh crore rupees, and create over 30 lakh jobs.
  • Under the new scheme, there will be two broad categories:
  1. Apparel, Garment and Technical Textiles, where 15 percent subsidy would be provided on capital investment, subject to a ceiling of 30 crore rupees for entrepreneurs over a period of five years.
  2. Remaining sub-sectors would be eligible for subsidy at a rate of 10 percent, subject to a ceiling of Rs.20 crore on similar lines.

About Integrated Processing Development Scheme (IPDS):

The Centre launched a new Integrated Processing Development Scheme (IPDS) with a total cost of Rs. 500 crore during the 12th Five Year Plan.

  • The scheme aimed to establish four to six brown field projects and three to five green field projects addressing the environmental issues faced by Textile Processing Units. 
  • This scheme would support the upgradation of existing processing clusters/centres specifically in the area of water and waste water management and also encourage research and development work in the textiles processing sector. 
  • It also aimed to provide up to 50 % assistance for Common Effluent Treatment Plants with Zero Liquid Discharge system.

 [Ref: Hindu, PIB]

 

Axis Bank launches India’s first certified green bond at London Stock Exchange

Axis Bank today raised $500 million at the London Stock Exchange after it launched India’s first internationally-listed certified green bond to finance climate change solutions around the world.

  • The proceeds of the bond will be invested in green energy, transportation and infrastructure projects, reinforcing India’s commitment to produce 175,000 MW of renewable power by 2022.
  • London Stock Exchange is a world leader in green bond listings, home to international green finance from India and China.

What is green bond?

A green bond is a tax-exempt bond which is issued by federally qualified organizations and/or municipalities for the development of brownfield sites. [Brownfield sites are areas of land that are under-utilized, have abandoned buildings, or are under developed. They often contain low levels of industrial pollution.]

  • A green bond is very similar to ordinary bond. The only difference is that the issuer of a green bond publicly states that capital is being raised to fund ‘green’ projects, which typically include those relating to renewable energy, emission reductions and so on.
  • Green bonds are issued by multilateral agencies such as the World Bank, corporations, government agencies and municipalities. Institutional investors and pension funds also have appetite for such bonds.

Green bonds in India:

  • In the past, Indian firms like Indian Renewable Energy Development Agency Ltd and Greenko have issued bonds that have been used for financing renewable energy, however, without the tag of green bonds.
[Ref: BS, Investopedia]

 

Renewable energy capacities at 42.8 GW pip hydro generation

The renewable energy sector has for the first time surpassed hydro power generation.

Key facts:

  • The renewable energy investments in solar and wind have benefited from a strong central policy and several years of early-stage private sector investment, respectively.
  • In contrast, hydro power suffered from multiple challenges, including non-availability of long-term financing; the cost imposed by royalty power (from 12 per cent to 36 per cent) to be offered free to the state government; and limited opportunities for the private sector.
  • However, the central government has proposed to give policy attention to hydro power too. Further, the government’s bilateral efforts with Bangladesh to implement cross-border transmission means that hydro-power from the north-eastern states can be delivered to the load centres cheaper than before.
  • The government has ambitious plans for deployment of 175 GW renewable power capacities by 2022, including 100 GW of solar and 60 GW of wind, which may require investment of around $150 billion in the next seven years.
[Ref: Hindu]

 

International Relations

India, EFTA agree to address issues to resume FTA talks

India and the European Free Trade Association (EFTA), a bloc of four European countries, have agreed to resolve the outstanding issues for resumption of long-stalled negotiations for a proposed free trade agreement.

Reasons:

  • Negotiations were stuck on some issues related with intellectual property rights. EFTA wants India to commit more in IPR. They were also demanding for data exclusivity, which India is completely opposed to.

What is Data exclusivity?

  • Data exclusivity provides protection to the technical data generated by innovator companies to prove the usefulness of their products.
  • In pharmaceutical sector, drug companies generate the data through expensive global clinical trials to prove the efficacy and safety of their new medicine. Switzerland has huge interest in this sector.
  • By gaining exclusive rights over this data, innovator companies can prevent their competitors from obtaining marketing licence for low-cost versions during the tenure of this exclusivity.

Background:

  • The trade pact talks had started in October 2008. So far, 13 rounds of negotiations have been held at the level of chief negotiators.
  • The last round of negotiations was held in November 2013 and thereafter the negotiations have remained suspended.

About proposed Free Trade Agreement (FTA):

  • The proposed pact covers trade in goods and services, market access for investments, protection of intellectual property and public procurement.

About EFTA:

The European Free Trade Association (EFTA) is an intergovernmental trade organisation and free trade area consisting of four European states: Iceland, Liechtenstein, Norway, and Switzerland.

  • The organisation operates in parallel with the European Union (EU), and all four member states participate in the EU’s single market.
  • While the EFTA is not a customs union, it does have a co-ordinated trade policy. As a result, its member states have jointly concluded free trade agreements with a number of other countries.
[Ref: ToI]

 

Science & Technology

Patent Office issues norms for start-ups

Indian Patent Office has issued guidelines for facilitators and start-ups with respect to filling and processing of applications for patent, designs and trademarks aiming to encourage budding entrepreneurs and boost innovation.

  • The move is aimed at promoting awareness and adoption of intellectual property rights by start-ups and facilitate them in protecting and commercialising those rights. 

Key points of the guidelines:

  • As per the guidelines, a start-up willing to file a patent application for an invention will have to select a facilitator who would help in preparing the request and also assess the patentability of the invention as per acts and rules, the Controller General Patents, Designs and Trade Marks.
  • If the start-up is unable to select a facilitator, it should contact the head office of the respective Patent Office as per jurisdiction, who shall provide 3 names of the facilitator and the start-up will finalise the name.
  • It said the fee for filing the application and other statutory fees would have to be borne by the start-up.
  • The facilitator shall also have to monitor and perform further steps of proceedings of start-ups patent application, prepare the reply to any query from patent office. The office has also released a list of about 280 facilitators in such regard.
  • Further, it said for filing and processing applications for designs, the patent facilitators would provide their services.
  • In the action plan announced for the budding entrepreneurs the government has decided to bear the entire cost of facilitation for filing of patents, trademarks or designs.
[Ref: Hindu]

 

Scientists turn CO2 into rock to combat climate change

Researchers have developed a way to capture and store carbon dioxide by turning it into stone.

  • The technique could provide a safer, faster way to sequester CO2 and limit global warming.
  • The study has shown for the first time that the greenhouse gas carbon dioxide can be permanently and rapidly locked away from the atmosphere, by injecting it into volcanic bedrock.
  • The carbon dioxide reacts with the surrounding rock, forming environmentally benign minerals. The approach aims to reduce this risk by dissolving CO2 with water and pumping the mixture into volcanic rocks called basalts. Once that happens, the CO2 turns into a solid mineral (calcite), which can then be stored.

Previous efforts to sequester CO2:

  • Previous efforts to store CO2 emissions underground have made little progress. Most experiments involve pumping CO2 into sandstone or deep aquifers, though there are concerns that the gas could eventually escape and re-enter the atmosphere — whether through human error or seismic activity.

Background:

  • Researchers tested this approach as part of a pilot program called the CarbFix project, which launched in 2012 at the Hellisheidi power plant in Iceland — the world’s largest geothermal facility.
  • Previous studies suggested that it would take hundreds or even thousands of years for the calcite to form, but the researchers’ technique worked much faster. In 2012, they injected 250 tons of CO2 (mixed with water and hydrogen sulfide) into basalt about 1,500 feet below ground. Within two years, 95 percent of the carbon injected into the basalt below the plant had solidified into stone.

Significance of the research:

  • By this technique, we can pump down large amounts of CO2 and store it in a very safe way over a very short period of time.
  • According to experts this new method might be a new hope for an effective weapon to help fight man-made global warming.

Apprehensions:

  • It’s not yet clear whether this approach could be viable on a large scale. The process requires a significant amount of water — 25 tons for every ton of CO2 — and some question whether it could be easily applied to other parts of the world.
  • Carbon capture, however, can be expensive – especially the capturing part. Once the gas is grabbed from the air storing it is another issue.
  • It can be stored underground and is sometimes injected to depleted oil wells, but there are concerns about monitoring it and preventing it from escaping.
[Ref: Hindu]

 

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