06, April 2017

Graphene sieve turns seawater into drinking water

Researchers, including one of Indian origin, have developed a graphene-based sieve capable of removing salt from seawater, an advance that may provide clean drinking water for millions of people.

Water molecules are able to pass through the membrane barrier and flow anomalously fast which is ideal for application of these membranes for desalination.

1.Cabinet approves closure of Mahatma Gandhi Pravasi Suraksha Yojana – (Ministry of Overseas Indian Affairs)

Source: PIB

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved closure of the Mahatma Gandhi Pravasi Suraksha Yojana (MGPSY) which was set up in 2012 to address the social security-related issues of the Emigration Check Required (ECR)-category workers going abroad for employment to ECR countries.

The subscription under the MGPSY was very low and no new subscription was received for more than a year. Closure of the scheme will, therefore, obviate the avoidable recurring administrative and record-keeping expenditure.

Mahatma Gandhi Pravasi Suraksha Yojana (MGPSY)

  • The Ministry has introduced a Pension and Life Insurance fund scheme called Mahatma Gandhi Pravasi Suraksha Yojana (MGPSY) for the Overseas Indian workers having Emigration Check Required (ECR) passports.

The objective of MGPSY is to encourage and enable the overseas Indian workers by giving government contribution to:

  • Save for their Return and Resettlement (R&R)
  • Save for their old age,
  • Obtain a Life Insurance cover against natural death during the period of coverage.
  • The government contribution available under the MGPSY is for a period of five years or till the return of subscribed worker back to India, whichever is earlier.

Key attractions of MGPSY:

  • Government contribution of Rs.1,000 per annum in line with Swavalamban platform for all MGPSY subscriber who save between Rs.1,000 and Rs.12,000 per year in NPS-Lite.
  • An additional government contribution of Rs.1,000 per annum by MOIA for the overseas Indian women workers who save between Rs.1,000 to Rs.12,000 per year in NPS-Lite.
  • A special government contribution of Rs.900 by MOIA towards Return and Resettlement (R&R) of the overseas Indian workers who save Rs.4,000 or more per annum.

2.Cabinet approves Collaboration Agreement to support the Belmont Forum Secretariat

Source: PIB

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for signing of the Collaborative Agreement with French National Research Agency (ANR), France for supporting the Belmont Forum Secretariat from January, 2015 to December, 2017 at a total estimated expenditure of Euro 40,000.

The Cabinet also approved continued financial support to Belmont Forum Secretariat beyond 2017.

BELMONT FORUM:

  • The Belmont Forum, created in 2009, is a high level group of the world’s major and emerging funders of global environmental change research and international science councils.
  • It provides an opportunity to identify study and deliver international environmental research priorities, for the society, in an accelerated way through trans­national research collaboration between natural and social scientists and alignment of international resources
  • India is a member of Belmont Forum, besides Australia, Brazil, Canada, European Commission, France, Germany, Japan, Netherland, South Africa, UK and USA Ministry of Earth Science (MoES), represents India in the Belmont Forum since 2012.
  • In order to coordinate the activities of the Belmont, a Secretariat is hosted by one of the Belmont forum member on rotational basis. ANR, France is hosting the Secretariat from January, 2015 to December, 2017. Expenditure for hosting the Secretariat will be borne by Belmont Forum member countries in kind or cash contribution.

Impact:

  • The Agreement will help to maintain a certain degree of continuity in the operations of the Forum and also help in smooth coordination of the activities of Belmont Forum.
  • As India is already participating in 4 Collaborative Research Actions (CRAs) and Secretariat will be coordinating the activities of Belmont Forum, Indian scientific community will ultimately benefit from this agreement.

3.Cabinet approves extension of implementation of Crime and Criminal Tracking Network and Systems Project by one year

Source: PIB

The Cabinet Committee on Economic Affairs, chaired by the Prime has approved the proposal of the Ministry of Home Affairs for extension of the implementation phase of the Crime and Criminals Tracking Network and Systems (CCTNS) Project.

CCTNS Project:

  • The Inter-operable Criminal Justice System (ICJS) aims to integrate the CCTNS project with the e-courts and e-prisons databases in the first instance and with the other pillars of the criminal justice system – Forensics, Prosecution, Juvenile homes and a nationwide Fingerprint data base of criminals in a phased manner.
  • The integration will be achieved by providing access to the Judiciary, Police and Prisons through a desktop dashboard to facilitate expeditious and informed decisions and aid investigations.

Impact of the CCTNS Project will lead to

  • Citizen portals in all states and Centre that will facilitate transparency and speed in police service delivery, online registration of complaints and reporting and search of missing persons and stolen goods in self-service mode.
  • Pan-India search on complete National Crime and Criminal database that is accessible to the Investigating Officers throughout the country.
  • Search facility will be available to Police in regional languages for improved inter-state tracking of criminal movement.
  • Reliable network connectivity to all Police Stations in the country.
  • National level crime analytics that will be published at, increased frequency to help policy and law makers in taking data backed timely actions and in making appropriate policy interventions.
  • Integration with various e-Governance projects such as Aadhaar, National Population Register, Vaahan Project of the Ministry of Surface Transport, Passport Seva and National Emergency Response System Project thus increasing the synergies and benefit accrued from these individual systems. It will expedite various kinds of police verification requests and investigation.
  • Advanced features such as biometric based identification, trend and pattern analytics etc. that will be incorporated to enhance hi-tech investigation capability.
  • ICJS that will be available to all pillars of the criminal justice system helping improve its service delivery.

Background:

Originally approved in 2009, the Project aims to:

  • Deliver various web based police related services to citizens.
  • Facilitate a pan-India search of crime and criminal records of individuals through a national database.
  • Generate crime and criminal reports at the state and central level to inform policy interventions and
  • Computerize police processes.

In 2015, an additional objective of establishing a basic platform for an Inter-operable Criminal Justice System (ICJS) was added to the Project.

4.India and the UK announce joint UK-India Fund, namely a Green Growth Equity Fund

Source: PIB

India and the UK announced the launch of an Early Market Engagement for the joint UK-India Fund, namely a Green Growth Equity Fund which aims to leverage private sector investment from the City of London to invest in green infrastructure projects in India.

UK-India fund

  • The Governments of UK and India have agreed in principle to anchor a private equity fund (the “Fund”) which will increase the flow of funds to India’s infrastructure sector and provide global, including UK investors, with an investment opportunity that matches their risk-return preferences.
  • The GoI (through NIIF) and the UK government will anchor-invest up to £120 million each in the Fund which will target around £500 million initially, with the potential to unlock much more in future.
  • The purpose is to help India enhance inclusive growth by boosting investment into green infrastructure on commercial terms. The success of the Fund will crowd in private investment that will have a transformational impact on India’s development

Proposed concept: Green Growth Equity Fund (GGEF) The GoI (through NIIF) and the UK government will anchor-invest up to £120 million each into the Green Growth Equity Fund (GGEF) which will aim to raise around £500 million initially, and more in the future. The Fund will invest in mid to large-sized companies in the green infrastructure space in India.

Background

  • The Green Growth Equity Fund, promoted jointly by India and the UK, aims to leverage private sector investment to finance investments in the green infrastructure space in India.
  • The Fund will invest in mid to large-sized companies in the green infrastructure space in India. It will pursue a strategy of acquiring a mix of minority and majority stakes.

Sectors The Fund will target gross returns in the 14-16% INR range, investing primarily in the following sectors:

  1. Renewable energy
  2. Energy distribution/transmission
  3. Clean transportation, Water treatment, Waste management,
  4. Any other fledgling sub-sectors/ themes in the clean energy/environment space like energy storage/ fuel cells/ etc.

UK-India fund promoted under the NIIF framework- NIIF as a quasi-sovereign wealth fund.

  • The National Investment and Infrastructure Fund (NIIF) has been created by the Government of India (GoI) to catalyze capital from international and domestic investors into infrastructure and allied sectors in India.
  • The GoI has committed INR 20,000 crores (~USD 3 billion) to be managed by NIIF Limited, the manager of NIIF, through one or more funds to be set up in partnership with non-GoI investors.
  • A component of NIIF’s investment strategy will be to anchor equity, quasi-equity and debt funds in partnership with investors targeting investments in the relevant sectors in India.
  • NIIF will operate on the basis of three principles in implementing this strategy: commercial, additional and in partnership with others.
  • NIIF will raise third party capital for the remaining Rs. 20,000 crore (US$ 3 billion), from long term international investors, such as a Sovereign Wealth Funds, Insurance and Pension Funds, endowments etc.
  • National Investment and Infrastructure Fund (NIIF) is formed as a trust (set up under the provisions of Indian Trusts Act 1882) created by the Government of India. NIIF is registered with Securities and Exchange Board of India (“SEBI”) as a Category II Alternate Investment Fund (“AIF”) under the SEBI (Alternative Investments Funds) Regulations, 2012 (“AIF Regulations”).

5.PMGKY: Centre collects only Rs 2,300 crore as tax penalty

Source: Indian Express

Rs 12,700 cr collected in two instalments of tax and penalties in FY17 under IDS-I

The government has managed to garner only Rs 2,300 crore through its second tax compliance window, Pradhan Mantri Garib Kalyan Yojana (PMGKY), provided for people to come clean with their unaccounted cash and deposits after demonetisation.

  • The amount garnered in the over three-month long PMGKY scheme has been dismal compared with the tax department’s informal target of Rs 1 lakh crore.
  • The tax department, however, had not announced any official target for the PMGKY scheme, popularly known as IDS-II or the second version of the Income Declaration Scheme (IDS).
  • Under the Income Declaration Scheme, which was the government’s first tax compliance window from June 1-September 30 last year, Rs 12,700 crore has been collected through two instalments of tax and penalties in 2016-17, officials.

PMGKY:

  • The IDS, which was announced in Budget for 2016-17, had a tax rate of 30 per cent plus a Krishi Kalyan Cess of 25 per cent on the tax and a penalty at the rate of 25 per cent of the tax, thereby taking the total tax to 45 per cent of the income declared under the scheme.
  • Following demonetisation of high-denomination currency notes of Rs 500 and Rs 1,000, the government in December offered a second chance for those depositing any unaccounted funds through the PMGKY scheme, which was open from December 17-March 31, 2017.
  • Under the PMGKY scheme, a 30 per cent tax plus 33 per cent surcharge on the tax and a 10 per cent penalty was proposed to be levied on the undisclosed income in the form of cash and deposits. Along with the tax, penalty and surcharge, the declarant had to deposit 25 per cent of the undisclosed income in an interest-free deposit scheme for four years.
  • If the undisclosed cash or deposits were not declared under the PMGKY scheme, it will attract tax, surcharge and cess totalling 77.25 per cent of the income if it is declared in the income tax returns.
  • In case the disclosure is not made either under the scheme or in the income tax returns, then it will attract additional penalty of 10 per cent. For those who do not declare under the PMGKY and are raided, they will face 107.25 per cent tax and penalty, if they surrender their undisclosed income during the search. Those who do not surrender such hidden income even during searches will stand to face the highest level of penalty and tax at 137.25 per cent.

Income Declaration Scheme:

  • The Budget 2016-17 has proposed to provide a limited period ‘Tax Compliance Window‘ for domestic taxpayers to disclose undeclared income of previous year
  • The IDS, which was announced in Budget for 2016-17, had a tax rate of 30 per cent plus a Krishi Kalyan Cess of 25 per cent on the tax and a penalty at the rate of 25 per cent of the tax, thereby taking the total tax to 45 per cent of the income declared under the scheme.

What can be declared under TIDS?

  • The scheme shall apply to undisclosed income whether in the form of investment in assets or otherwise, pertaining to Financial Year 2015-16 or previous years.
  • However, foreign assets or income to which the Black Money Act 2015 applies are not eligible for declaration under this scheme.
  • If one has failed to furnish Income Tax Return of previous years under section 139 of the Income-tax Act, such income can now be declared under this new scheme.

6.Cabinet approves setting up rail regulator

Source: The Hindu

The Union government on Wednesday approved setting up Rail Development Authority (RDA), an independent regulator to recommend passenger and freight fares and set service level benchmarks.

  • Union Cabinet has approved a major policy reform in Railway sector. The RDA will be set up as an independent regulatory body in New Delhi.

Key facts:

  • The Authority, with an initial corpus of Rs. 50 crore, will have a Chairman along with three members with a fixed term of five years and it can engage experts from relevant areas.
  • The Chairman of the Authority can be from the private sector and will be selected by a committee chaired by the Cabinet Secretary, a Railway Ministry official said. The Authority will soon be set up through an executive order.
  • It will act within parameters of Railway Act, 1989 and undertake the following broad functions: tariff determination, ensuring fair play and level playing field for stakeholder investment in Railways, setting efficiency and performance standards, dissemination of information.
  • A top Railway Ministry official said the RDA will only be a recommendatory body and the final decisions on setting fares will be made by the Railway Ministry.
  • The authority will set tariff based on cost recovery principle and “what the traffic can bear.” All the direct and indirect costs such as pension liabilities, debt servicing, replacements and renewals along with productivity parameters, market driven demand and supply forces and future investments will be considered by the regulator before setting tariffs.

Background

The need for a separate regulator was emphasised by various committees, including the Dr. Bibek Debroy Committee on Mobilisation of Resources for Major Railway Projects and Restructuring of Railway Ministry (2015), National Transport Development Policy Committee (2014) and Expert Group under the Chairmanship of Dr. Rakesh Mohan (2001).

Problems with Indian Railways

  • At present, the rail tariffs were set by the Union government and were mostly based on political considerations especially in passenger segment.
  • As per provisional estimate, Railways losses had touched over Rs 30,000 crore in 2015-16 in the passenger segment due to sharp increases in input costs and no proportionate increase in fares over the same period. Moreover, keeping rail fares within affordable limits has led to cross-subsidisation as the goods fares have increased considerably more than the passenger fares in the past.
  • The fare structure had distorted in the Railways network as the passenger fares are subsidised by goods fares which has led to increase in the freight tariffs, resulting in diversion to road sector.

Conclusion:

  • RDA will improve the services offered to passengers, provide comfort to investors in the rail sector and enhance transparency and accountability.
  • It will help the Indian Railways to take decisions on pricing of services commensurate with costs, protect consumer interests, suggest measures for enhancement of non-fare revenue, create positive environment for investment, promote competition and encourage market development, promote efficient resource allocation and benchmarking of service standards, and suggest measures for absorption of new technologies and human resource development.

7. Brexit’s shadow: India vows to deepen ties

Source: The Hindu

Finance Minister and U.K. Chancellor of the Exchequer discussed the post-Brexit scenario  issued a joint statement reiterating the two countries’ commitment to strengthen economic cooperation and collaborate on cross-border tax evasion and avoidance.

‘Masala,’ ‘green’ bonds

  • The two Finance Ministers also welcomed the National Highways Authority of India’s proposal to issue a masala bond in London in the next few months, and also welcomed IREDA’s plans to issue a green bond in London and list their masala bonds on the London Stock Exchange within six months.
  • This follows the successful issuances by HDFC (₹3,000 crore or £366 million) and NTPC (₹2,000 crore or £244 million), which were the first ever masala bonds to be issued by Indian entities.

The two countries agreed to work together swiftly to encourage sustainable bilateral investment that benefits both countries, including through the Joint Working Group. They also welcomed the recent introduction of a fast-track investment promotion mechanism, which provides a single window for U.K. companies that are looking to either establish or expand their business in India.

What is Masala Bond?

  1. Masala bonds are rupee denominated overseas bonds.
  2. Masala bonds will help to internationalise the Indian rupee and also deepen the Indian financial system. By issuing bonds in rupees, an Indian company is shielded against the risk of currency fluctuation, typically associated with borrowing in foreign currency.

Besides helping diversify funding sources, the cost of borrowing could also turn out to be lower than domestic markets.

  1. In 2013, the first masala bonds were issued by the International Finance Corporation (IFC), an arm of the World Bank. IFC then named them Masala bonds to give a local flavour by calling to mind Indian culture and cuisine.

Tax evasion

  • “The U.K. and India share a common commitment to addressing cross-border tax evasion and avoidance and agree to collaborate in determining the status of wealth deposited in foreign financial accounts by nationals of both countries.”
  • The two ministers said they encourage the timely implementation of the G20/OECD Base Erosion and Profit Shifting Project outputs and called on other nations to meet their commitments.
  • The exchange of information between the U.K. and India under the Common Reporting Standards on Automatic Exchange of Tax Information will begin this calendar year.

8.‘Excess liquidity may be a concern’

Source: The Hindu

With the central bank widely expected to keep interest rates unchanged in the new fiscal year’s first bimonthly monetary policy review, markets are keenly waiting to see what steps the RBI may take to tackle surplus liquidity in the banking system.

Post Demonetisation:

  • Post demonetisation, deposits increased by ₹4.27 lakh crore.
  • Deposits grew 13% year-on-year till March 17. Credit growth was 4.4%. Foreign investors have invested close to ₹45,000 crore in equities since February.
  • According to an estimate by State Bank of India, average cash withdrawals declined in March as compared with January and there has been a permanent liquidity injection of ₹1.7 lakh crore in the system. The surplus liquidity in the system is estimated to be about ₹4 lakh crore.

Excess liquidity:

  • If the rupee continues to appreciate, there could be added pressure as the RBI will start buying dollars to cap gains in the currency. Hence, it is highly likely that the RBI will implement measures to soak up excess liquidity
  • One way to drain the excess liquidity is to raise the cash reserve ratio (CRR) which is at 4%. CRR is the proportion of deposits that banks have to keep with RBI.
  • The proposed standing deposit facility (SDF) could be a useful tool to tackle liquidity.
  • SDF is a mechanism to drain surplus cash at a rate lower than the repo rate without the need for any collateral. The implementation of SDF requires an amendment to the RBI Act. Hence, it is felt that the RBI could start draining liquidity from banks at a lower rate so that it would bring interest rates down.
  • The RBI is constantly absorbing excess liquidity at around repo rate of 6.25%, which is also the LAF (liquidity adjustment facility) rate. Is there a thought process within the RBI to gradually trend LAF rates towards the reverse repo rate, which is 5.75%.



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