20 March 2023

DAILY CURRENT AFFAIRS ANALYSIS

1 – Places of Worship Act: GS II – Topic Government Policies and Interventions:

Context:

• According to Australia’s High Commissioner to India, Barry O’Farrell, vandalism and assaults on Australian temples are repulsive, and while the police are “vigilant,” there aren’t many ways to deal with them. The ambassador discussed the results of Prime Minister Anthony Albanese’s trip to India last week, noting that both men have forged friendships and are dedicated to finishing the Free Trade Agreement this year.

About:

• This law is referred to as An Act to Prevent Conversion of Any House of Worship and to Provide for the Maintenance of the Religious Character of Any Place of Worship as It Existed on the 15th Day of August 1947, and For Matters Connected Therewith or Incidental Thereto.

Exemption:

• The contentious Ayodhya site was not covered by the Act. Due to this exemption, the Ayodhya case trial went on for a very long time after the law was put into effect.
• The 1958 Act on Ancient Monuments and Archaeological Sites and Remains prohibited any place of worship that is an ancient monument, historical site, or archaeological site, in addition to the Ayodhya controversy.
• a case that has either been successful or unsuccessful.
• any settlement of a dispute between the parties and any property conversion made with their permission before the Act’s start date.

Penalty:

• The Act’s Section 6 states that violating the legislation can result in a fine and a three-year jail term.

Criticism:

• According to some, the law imposes a “arbitrary unjustified retrospective cutoff date,” breaches the fundamental right to judicial review guaranteed by the Constitution, and restricts the freedom of religion of Sikhs, Jains, Hindus, and Buddhists.
• It violates the secularism principle by prohibiting the right to judicial review, which is a fundamental component of the Constitution and hence outside the purview of Parliament’s legislative authority.
• Hindu devotees won’t be able to resolve their disputes through a civil case or by using the Hon. High Court’s authority under Article 226 of the Indian Constitution because of the extreme prevalence of ultras. If hoodlums had encroached upon such property prior to August 15, 1947, they would likewise be impossible to retrieve the religious character of such things from them, and such an unlawful and inhumane crime would remain.

What rules is the Places of Worship Act made up of?

• Section 3: This prohibits the conversion of any house of worship into a place of worship for a different religion, or even a different branch of the same faith, whether completely or in part.
• Article 4(1): According to the law, a place of worship “must stay to be the same as it existed” on August 15, 1947.
• Section 4 provides that any litigation or legal action relating to the conversion of a place of worship existing on August 15, 1947, and before a court, shall be dismissed, and no new litigation or legal action shall be brought (2).
• Cases that are still pending on the day the Act goes into effect and entail the conversion of a house of worship’s religious character after the cutoff date fall under the exemption to this clause.
• Section 5 of the Act provides that the Ramjanmabhoomi-Babri Mosque case and any litigation, appeal, or other procedure related to it are exempt from the applicability of the Act.

What stance did the Supreme Court take when deciding the Ayodhya case?

• Because of this, the Act is a mechanism created by the legislature to defend secular components of Indian politics, which are one of the Constitution’s guiding principles.

How to Proceed:

• Considering the Act’s flaws, we cannot downplay the significance of the Places of Worship Act. The non-retrogression principle remains a cornerstone of our secular principles thanks to this excellent piece of law.

 Source  The Hindu

2 – GIFT City: GS III – Topic Indian Economy:

Context:

• Singapore’s RBB Ship Chartering Ltd. became the first maritime company to launch a ship-leasing business at the International Financial Services Centre (IFSC) at GIFT City in Gandhinagar, Gujarat, in February of this year.
• The IFSC regulator (IFSCA) granted RSCPL (IFSC) Limited, a 100% subsidiary of RBB Singapore, a provisional licence to start doing business this month.

What is GIFT City?

• GIFT is based in Gandhinagar, Gujarat (Gujarat International Financial Tec-City).
• It is made up of an exclusive Domestic Tariff Area and a Special Economic Zone (SEZ) with a variety of services, where India’s first IFSC is located (DTA).
• GIFT City (Gujarat International Financial Tec-City) wants to expand beyond India to become a hub for integrated financial and technological services.
• The International Financial Services Centers (IFSCs) in India have a single regulator, known as IFSCA, who oversees the development and regulation of financial products, financial services, and financial institutions.
• The social infrastructure of the city includes a school, medical facilities, a proposed hospital, and the GIFT City business club with indoor and outdoor sports facilities. Because of its integrated, well-planned residential housing towers, GIFT City is essentially a “Walk to Work” City.

What is NSE IFSC-SGX Connect?

• In the GIFT International Financial Services Centre (IFSC), NSE’s subsidiary and Singapore Exchange Limited have a contract (SGX).
• All orders placed by Singapore Exchange members for NIFTY futures will be received and processed by the NSE-IFSC order matching and trading platform under Connect.
• Many broker-dealers from India and other nations are expected to use Connect to trade derivatives.
• It will improve the liquidity of the derivative market at GIFT-IFSC, bringing in more foreign investors and improving the local financial ecosystem.
• What do you mean by the International Financial Services Centers Authority?

Establishment:

• It was established in April of that year in accordance with the International Financial Services Centers Authority Act of 2019.
• Its headquarters are in Gandhinagar, Gujarat, also referred to as GIFT City.

Functions:

• The Authority has the authority to regulate all of these financial services, financial products, and financial institutions located within an IFSC. The Central Government may also receive suggestions from it regarding any additional financial institutions, products, or services that might be permitted in the IFSCs.

Powers:

• The Authority in the IFSCs shall exercise all powers that may be exercised by the relevant financial sector regulatory (i.e., Reserve Bank of India, Securities and Exchange Board of India, IRDAI, Pension Fund and Regulatory Development Authority, etc.) under the relevant Acts as it relates to the regulation of financial products, financial services, and FIs that are permitted in the IFSC.

Techniques & Methods:

• The Authority’s practises and procedures must adhere to the provisions of the pertinent Indian Parliamentary Acts that apply to such financial products, services, or institutions, as the case may be.

Donations from the central government:

• The Central Government may provide the Authority any sums of money it deems acceptable to be used for the Authority’s purposes after adequate appropriation approved by Parliament through relevant legislation.

Foreign currency exchanges:

• Transactions involving financial services must be made in the foreign currency decided by the Authority after discussing with the Central Government in IFSCs.

 Source The Hindu

3 – MSP: GS III – Topic Indian Economy:

Context:

• Due to a record crop and the Center’s decision to sell up to 45 lakh tonnes (lt) of grain from the Food Corporation of India’s stocks in the open market, farmers in Madhya Pradesh (MP) are selling wheat below the statutory minimum support price (MSP) of Rs 2,125 per quintal.

About:

• The rate at which the government buys crops from farmers is known as the MSP, and it is calculated as being at least 1.5 times the farmers’ production expenses.
• MSP is a “minimum price” for any item that the government considers “supportable,” as it provides farmers with a decent wage.

MSP-covered crops include:

• Together with MSPs for 22 obligatory crops, the Council for Agricultural Costs & Prices (CACP) also suggests the fair and remunerative price (FRP) for sugarcane.
• CACP is the name of a division within the Ministry of Agriculture and Farmers Welfare.
• The list of necessary crops consists of 14 crops for the kharif season, 6 crops for the rabi season, and 2 more commercial crops.
• Moreover, the MSPs for copra and de-husked coconut are based on the MSPs for toria and rapeseed/mustard, respectively.

Motives for Supporting the MSP:

•  The CACP considers a number of factors, including the cost of cultivation, before determining the MSP for a commodity.
• The dynamics of supply and demand for the commodity, price trends on both the domestic and global markets, parity with respect to other crops, consumer effects (inflation), environmental effects (soil and water consumption), and trade agreements between the agricultural and non-agricultural sectors are all taken into account.

Three various types of production costs:

• The CACP forecasts three types of production costs for each crop, both at a state- and India-wide average level.
• A2 plus FL is defined as A2 plus the cost of imputed unpaid family labour.
• “C2”: This cost is more thorough and includes fixed capital assets, interest forgone on owned land, and rentals in addition to A2+FL.
• CACP considers both A2+FL and C2 costs when advising MSP.
• The return cost is simply estimated by CACP as A2+FL.
• However, C2 costs are primarily used by CACP as benchmark reference costs (opportunity costs) to assess whether the MSPs they recommend at least cover these costs in some of the major producing States.
• The Cabinet Committee on Economic Affairs (CCEA) of the Union government makes the ultimate decision on the MSP level and other recommendations made by CACP.

Why is MSP necessary?

• Due to the twin droughts of 2014 and 2015, farmers have been forced to deal with declining commodity prices since 2014.
• The rural economy was hurt by the simultaneous shocks of demonetization and the implementation of the GST, especially the non-farm sector but also agriculture.
• Due to the epidemic, the decline in the economy after 2016–17, and other issues, the majority of farmers still live in insecure situations.
• Cost increases for fuel, energy, and fertilisers have only gotten worse.
• What Issues Concern India’s MSP Regime?
• limited scope Despite the official release of MSPs for 23 different crops, only two commodities—rice and wheat—are purchased because they are distributed through NFSA (National Food Security Act). The rest is mostly incidental and unimportant.
• Ineffectively Implemented: According to the 2015 Shanta Kumar Committee study, just 6% of the MSP could be received by farmers, meaning that 94% of farmers nationwide did not benefit from the MSP.
• More of a Purchase Price The current MSP policy has no impact on domestic market prices. It serves as a procurement price rather than an MSP because its primary function is to satisfy NFSA requirements.
• creates Paddy and Wheat Farming’s dominant sector: Farmers are prevented from producing other crops and horticulture goods because of the overproduction of rice and wheat brought on by the unbalanced MSP system, which may increase farmers’ revenue.
• Middlemen-Dependent: In addition, the MSP-based procurement system relies on commission brokers, intermediaries, and APMC representatives, all of whom are inconvenient for smaller farmers to work with.

How to Proceed:

• Real MSPs demand that the government step in if market prices fall below a predetermined level, usually when there is an excess of production and supply or when external factors have caused a price collapse.
• MSP can also be a motivating price for many of the products that are desirable for nutritional security, such as coarse cereals, as well as for pulses and edible oils for which India is dependent on imports.
• Spending more money on nutrient-dense foods like fruits and vegetables, together with fisheries and animal husbandry, is the way to wisdom.
• The best way to invest is to give companies financial incentives to build valuable value chains based on cluster strategies.
• A transitional plan for agricultural pricing must be developed by the government, in which some agricultural pricing should be supported by the government and some should be decided by the market.
• One method to accomplish this would be to create a shortfall payment plan modelled after the Bhavantar Bhugtan Yojana (BBY) of Madhya Pradesh.

 Source The Hindu

4 – Forex Reserves: GS III – Topic Indian Economy:

Context:

• India’s foreign exchange reserves declined to $560 billion as of the week ended March 10 according to the Reserve Bank of India’s (RBI) statistics supplement, the lowest level since early December.
• On the seven days leading up to March 3, the reserves were $562.40 billion.

Foreign exchange reserves:

• A central bank may hold assets in foreign currencies as reserves, such as bonds, treasury bills, and other government securities.
• It should be emphasised that the majority of foreign exchange reserves are held in US dollars.
• With the International Monetary Fund serving as reserves, unique drawing rights (IMF).

Objectives for Maintaining Foreign Exchange Reserves:

• fostering and maintaining confidence in monetary and exchange rate management strategies.
• permits taking action to protect the national or union currency.
• reduces external vulnerability by maintaining foreign currency liquidity to absorb shocks during times of crisis or when access to borrowing is restricted.

The significance of increasing foreign reserves:

• The government and the RBI are in a good position as they manage the nation’s external and domestic financial challenges thanks to rising foreign reserves.
• Crisis management serves as a safety net in the event of a balance-of-payments (BoP) crisis in the economy.
• The rupee has appreciated versus the dollar as a result of increasing reserves.
• Market Confidence: Reserves will provide some reassurance to markets and investors that a government can uphold its international commitments.

Foreign currency assets:

• FCAs are assets that are valued using a different currency than the country’s primary currency.
• The majority of the FX reserve is made up by the FCA. It is expressed in terms of money.
• The FCAs account for the effects of increases or decreases in the value of non-US currencies held in foreign exchange reserves, such as the euro, pound, and yen.

About SDR:

• The IMF created the SDR in 1969 as an additional form of international reserve asset to go along with the official reserves of its member countries.
• The SDR is not a method of exchange or an IMF claim. It may instead be a claim against the freely usable currencies of IMF members. SDRs can be exchanged for these currencies.
• The value of the SDR is based on a weighted basket of significant currencies, including the US dollar, the euro, the Japanese yen, the Chinese yuan, and the British pound.
• The SDR interest rate, or SDR rate, is the interest paid to members on their holdings of SDRs (SDRi).
• India recently received funding from the IMF totaling SDR 12.57 billion, or approximately USD 17.86 billion. India now holds 13.66 billion SDR, which is the value of its holdings.

Source The Hindu