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Current Affairs Analysis

1st June 2016 Current Affairs Analysis

P2P Lending; Equalisation Levy; Indian Wild Orange; Global Environmental Facility; etc.
By IT's Current Affairs Analysis Team
June 01, 2016

Contents

Polity & Governance

  • PM approves retirement age of doctors of Central Health Services to 65 years

Economy

  • P2P players want nodal agency but not NBFC tag
  • Direct tax dispute resolution scheme, equalisation levy from June 1

Environment & Ecology

  • Rare and endemic wild citrus fruit found in Manipur

International Relations

  • India, World Bank sign $9.2mn agreement for efficient bus service

Science & Technology

  • Plastic bottles contaminate medicines, says panel

 

Polity & Governance

PM approves retirement age of doctors of Central Health Services to 65 years

The Prime Minister has approved the proposal of the Ministry of Health and Family Welfare for enhancing the age of superannuation of all doctors of the Central Health Service to 65 years with effect from 31st May 2016. 

Implications of the move:

  • This will enable the Government to retain experienced doctors for a longer period, and to provide better services in its public health facilities, particularly to the poorest, who are entirely dependent on public facilities. 
  • This step will empower the Government to strengthen the healthcare sector in the country. It will help in providing additional doctors in the health pool of the country.
[Ref: PIB]

 

Economy

P2P players want nodal agency but not NBFC tag

Entities in the peer-to-peer (P2P) lending space want a nodal agency to keep track of the money in the system but they do not want to be classified as a non-banking financial company.

  • The companies in the space said they were happy that the Reserve Bank of India (RBI) had decided not to put a blanket ban on this activity and was, instead, looking at regulating the space.

Background:

  • In a draft paper, RBI had said that they planned to treat these crowd-funding platforms as intermediary NBFCs.

What is P2P lending?

  • P2P lending allows an individual to lend or borrow money to or from other unrelated individuals without assistance from any financial intermediary. This is mainly done via an online platform that connects lenders and borrowers.

What are the advantages?

  • People who may not be eligible to get loans from banks or such institutions can get loans. It also allows customers to become lenders and earn interest.

What are the disadvantages?

  • Interest rates are higher than what a bank or non-banking financial company might charge. Currently, it is not regulated so consumers cannot approach any ombudsman in case of distress. 

Demands of the firms engaged in P2P lending:

Nodal Agency:

  • One suggestion that has been made by almost every P2P lending firm was that there should be a nodal agency to keep track of the money being transferred from a lender’s to borrower’s account and vice versa. The central bank had said funds would have to necessarily move directly from the lender’s bank account to the borrower’s bank account to obviate the threat of laundering.

Access to data:

  • Another suggestion made by various players was that they be allowed to report defaulters’ data and also have access to the credit information bureaus. However, experts pointed out this would happen automatically in case these were classified as NBFCs, as suggested by RBI.

Electronic clearing services debit system:

  • The players also asked that the electronic clearing services debit system be allowed for individual accounts. This would ensure that money was debited on a specific date every month. In case of a default, it can be treated as a cheque bounce and reported to the credit bureaus. RBI had also proposed a minimum capital requirement of Rs 2 crore for these firms.

Cross border transactions:

  • Some firms have also requested that non-resident Indias be allowed to lend. In the discussion paper, the central bank had stated that the no-cross border transactions would be allowed.

Multi player:

  • Another player suggested that instead of only one person lending the entire amount to a borrower, several people should be allowed to pool in.
[Ref: BS]

 

Direct tax dispute resolution scheme, equalisation levy from June 1

The Direct Tax Dispute Resolution Scheme for resolving cases including those on retrospective taxation, and equalisation levy on cross border digital transactions, will come into effect from 1st June.

  • In order to provide a stable and predictable taxation regime, Finance Minister Arun Jaitley in Budget 2016-17 came out with this Scheme.

About Direct Tax Dispute Resolution Scheme:

  • The Direct Tax Dispute Resolution Scheme, which seeks to resolve cases pending in various courts, tribunals, arbitrations or are in mediation under the Bilateral Investment Protection Agreement (BIPA), will take effect from June 1, 2016.
  • The scheme provides an opportunity for settlement of cases emanating from retrospective amendment of tax laws, by asking companies to pay the basic tax demand and get waiver on interest and penalty.

Benefits to whom?

  • The Direct Tax Dispute Resolution Scheme can be helpful to companies like Vodafone and Cairn, who are embroiled in retrospective taxation cases. Through this, the companies will have the opportunity of settling the cases by paying only the tax arrears while the interest and penalty will be waived off.

About equalisation levy:

  • As regards Equalisation Levy, it will apply at 6 % on services pertaining to cross border digital transactions.
  • The levy will only apply to business to business transactions.
  • In order to tap tax on income accruing to foreign e-commerce companies from India, the Finance Act 2016 said a person making payment to a non-resident (who does not have a permanent establishment) exceeding in aggregate Rs 1 lakh in a year will withhold tax at 6 % of gross amount paid, as equalisation levy.

At present, equalisation levy is leviable only on payments relating to online advertisements.

[Ref: Hindu]

 

Environment & Ecology

Rare and endemic wild citrus fruit found in Manipur

A rare, endemic and endangered species of wild citrus fruit having medicinal properties which was so far reported only from Meghalaya, has now been found in a remote village of Manipur.

  • A team of field biologists and researchers reported the species ‘citrus indica’ commonly known as Indian Wild Orange from Dailong village in Tamenglong district earlier this month.

Key facts:

  • The species is considered to be the most primitive and ancestors of all cultivated citrus fruits in the world and endemic to north-east India.
  • It is blessed with an extraordinary living laboratory, some of the last and healthiest tropical forest left in the entire region of north-east India.
  • Earlier the species was reported only from Nokrek Biosphere Reserve in the Garo Hills of Meghalaya.
  • The species is known to local villagers as ‘Biurengthai‘ and is known to have medicinal properties.
  • After a biodiversity assessment and research programme, the team of experts have asked Manipur Biodiversity Board for declaring Dailong village as one of the key biodiversity heritage site of Manipur.
  • Rongmei tribes of Dailong and other villages of Tamenglong district were conserving forest in the form of sacred groves known as ‘Raengan‘, which is a precursor to all conservation activities of all the tribes in the hill districts of Manipur.
[Ref: ToI]

 

International Relations

India, World Bank sign $9.2mn agreement for efficient bus service

An agreement for Global Environmental Facility (GEF) Grant of USD 9.20 Million with the World Bank for “Efficient and Sustainable City Bus Service Project” was signed between the Government of India and World Bank.

  • World Bank (India) sign the agreement on behalf of IBRD, acting as an Implementing Agency of the Global Environment Facility.
  • The total program cost is USD 113.0 million, with USD 9.20 million as grant from the GEF and USD 103.07 million from Government of India and state & city governments for funding of buses and ancillary infrastructure.
  • The project’s development objective is to improve the efficiency and attractiveness of city bus transport and reduce greenhouse gas emissions in the demonstration cities.
  • It comprises: (i) a national capacity building component to be implemented by Ministry of Urban Development (MoUD); and (ii) city demonstration projects in the cities of Bhopal, Chandigarh, Jaipur and Mira Bhayandar. 

About Global Environment Facility (GEF):

The Global Environment Facility (GEF) was established in October 1991 as a $1 billion pilot program in the World Bank to assist in the protection of the global environment and to promote environmental sustainable development.

  • Since then, the GEF has provided $14.5 billion in grants and mobilized $75.4 billion in additional financing for almost 4,000 projects.
  • The GEF has become an international partnership of 183 countries, international institutions, civil society organizations, and private sector to address global environmental issues.
  • The GEF directly support actions to combat major environmental issues such as climate change, loss of biodiversity, polluted international waters, land degradation and desertification, and persistent organic pollutants, as well as stimulate green growth.
  • In 1994, at the Rio Earth Summit, the GEF was restructured and moved out of the World Bank system to become a permanent, separate institution.
  • The decision to make the GEF an independent organization enhanced the involvement of developing countries in the decision-making process and in implementation of the projects.
  • Since 1994, however, the World Bank has served as the Trustee of the GEF Trust Fund and provided administrative services.
[Ref: PIB, thegef.org]

 

Science & Technology

Plastic bottles contaminate medicines, says panel

The laboratory tests now concluded that the Plastic or PET (polyethylene terephthalate) bottles contaminated the medicines stored in these.

  • The laboratory tests were ordered by the health ministry and endorsed by the country’s top statutory authority on standards for medicines, the Drugs Technical Advisory Board (DTAB).
  • The study, undertaken on the instructions of the health ministry, was conducted by the government’s All India Institute of Hygiene and Public Health (AIIH&PH).
  • Based on the result of the lab tests, the board has recommended banning the bottling of medicines in plastics and PET meant for vulnerable groups, such as children and pregnant women.

Background:

  • Reacting to the preliminary report of the All India Institute of Hygiene and Public Health (AIIH&PH) in August 2015, the health ministry had formed a temporary high level committee under a former secretary, M K Bhan. The committee had found faults with the institute’s lab results.
  • The committee also admitted that there were no standards in India for safe plastic packaging, unlike in countries such as the US.

What does study find?

  • The study found that four heavy metals – lead, antimony, Di-(2-ethylhexyl) phthalate (known as DEHP) and chromium – had leached into the five liquid medicine formulations that were tested. The leaching occurred even at ambient room temperatures.
  • In the five brands it tested, the research institute found that the leaching of antimony, Di-(2-ethylhexyl) phthalate (known as DEHP) and chromium increased with a rise in room temperature.
  • The leaching of lead increased in just three brands as the room temperature rose. On lead, the World Health Organisation (WHO) had concluded that there was no known level of safe exposure.

Opposition of the move:

  • The pharma industry as well as the plastic packaging industry argued against the ban. They argued that the lab test results, confirming leaching, have been endorsed by the DTAB but have not been presented before the National Green Tribunal, which is seized of the matter.
[Ref: BS]

 

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