Currents Affairs & GK – Jul 24, 2017

General Studies-III
Indian Economy
Monetary Policy Committee

The Monetary Policy Committee (MPC) is a committee of the Reserve Bank of India that is responsible for fixing the benchmark interest rate in India. The meetings of the Monetary Policy Committee are held at least 4 times a year and it publishes its decisions after each such meeting.

The committee comprises of six members – three officials of the Reserve Bank of India and three external members nominated by the Government of India. They need to observe a “silent period” seven days before and after the rate decision for “utmost confidentiality”. The Governor of Reserve Bank of India is the chairperson ex officio of the committee. Decisions are taken by majority with the Governor having the casting vote in case of a tie.

The committee was created in 2016 to bring transparency and accountability in fixing India’s Monetary Policy. Minutes are published after every meeting with each member explaining his/her opinions. The committee is answerable to the Government of India if the inflation exceeds the range prescribed for three consecutive months.

The MPC, which has the responsibility of achieving a set inflation target, should submit a report to the government in case of failure to achieve the required target. In such instances, the report shall be sent to the central government within one month from the date on which the bank has failed to meet the inflation target.

Payments bank: for the informal sector

How is a payments bank different from a commercial bank?

There are two kinds of banking licences that are granted by the Reserve Bank of India – universal bank licence and differentiated bank licence. Payments bank comes under a differentiated bank licence since it cannot offer all the services that a commercial bank offers. In particular, a payments bank cannot lend. It can take deposits upto Rs.1 lakh per account and it can issue debit cards but not credit cards. Commercial banks in India like State Bank of India or ICICI Bank, do not have any such restrictions.

What is the objective of a payments bank?

The main objective is to further financial inclusion by providing small savings accounts and payments/remittance services to migrant labour workforce, low income households, small businesses and other unorganised sector entities.

Besides remittance, can payments bank undertake any other activity?

A payments bank can work as a business correspondent (BC) of another bank. They can also distribute simple financial products like mutual fund units and insurance products.

How many payments banks have commenced operations?

Out of the 11 entities that received in-principle licence for opening payments bank, 7 entities received the final licence. Four payments banks have started operations — Airtel Payments Bank, India Post Payments Bank, Paytm Payments Bank and Fino Payments Bank.

What is the minimum capital requirement for a payments bank?

RBI has mandated the minimum paid-up equity capital for payments bank at Rs.100 crore.

Where can a payments bank deploy its deposits?

Apart from maintaining Cash Reserve Ratio (CRR), these entities have to invest a minimum 75% of demand deposit balances in Statutory Liquidity Ratio (SLR)-eligible government securities or treasury bills with maturity of up to one year and hold a maximum of 25% in current and time/fixed deposits with other commercial banks for operational purposes and liquidity management.

Who all are eligible to set up a payments bank?

RBI permits non-bank Prepaid Payment Instrument (PPI) issuers, individuals and professionals, non-banking finance companies (NBFCs), corporate business correspondents (BCs), mobile telephone companies, super market chains, companies, real sector cooperatives that are owned and controlled by residents and public sector entities to apply for a payments bank licence. Setting up of a joint venture by a promoter with an existing commercial bank is also allowed.

Bio-diversity; Environment
Tiger reserves: Economic and environmental win-win

A detailed report of 2015 titled: “Economic Evaluation of Tiger Reserves in India: A VALUE+ Approach” (available free on the net as ) and the recent research publication: “Making the Hidden Visible: Economic Valuation of Tiger Reserves in India” point out that an economic analysis helps in determining the quantity of goods such as fuel wood, and fodder that can be allowed for extraction by local communities, based on trade-offs with other services. Such economic analysis also highlights why such “large” areas are reserved for preserving fierce animals like the tiger, when we need more land for human use.

What is the total amount of land set apart for the 18 ranges as tiger reserves?

It is 68,000 square km, which is about 2% of the area of India – set apart for the nation’s pride animal. A tiger reserve is not just for the tiger. The six reserves (Corbett, Kanha, Kaziranga, Periyar, Ranthambore, Sunderbans) that the team has studied house many other animals such as the elephant, rhino, langur, barasingha, mongoose, river dolphin, olive ridley turtle, crocodile — not to speak of the millions of herbs, plants and trees.

What is the point in saving tigers? Why save this ferocious animal at all?

Tigers are what conservationists call “umbrella” species. By saving them, we save everything beneath their ecological umbrella – everything connected to them – including the world’s last great forests, whose carbon storage mitigates climate change.

What all does a tiger reserve offer?

The 2017 paper above lists the following: (1) employment generation, (2) agriculture (incidentally the famous IR-8 rice was discovered from the wild rice plants found in one such reserve), (3) fishing, (4) fuel wood, (5) fodder and grazing, (6) timber, (7) pollination of plants, (8) kendu leaves, (9) carbon storage and sequestration (vital for climate protection against global warming), (10) water and its purification by filtering organic wastes, (11) soil conservation, (12) nutrient cycling, (13) moderation of extreme events such as cyclone storms, flash floods, and (14) tourism, education, research and development, and spiritual ones (like visiting temples within some of them).

The approach, termed VALUE+, that the group uses has two components. The VALUE part indicates that the annual cost of putting together and maintaining the above six tiger reserves is about Rs.23 crores. But then, what about the “flow benefits”? Take the Periyar Tiger Reserve as an example. VALUE estimates that this Reserve generates Rs.17.6 billion (or Rs.1.9 lakhs per hectare) per year. How? For example it helps provide water to Tamilnadu districts, amount to Rs.4.05 billions/year. Or, take the famous Corbett Park (which is supposed to have the “maneaters of Kumaon”). Its flow benefit per year is Rs.14.7 billion (Rs.1.14 lakhs per hectare). And it provides water to some parts of Uttar Pradesh (at Rs.1.61 billion per year) and Delhi (Rs.530 million per year). In effect, the ratio of benefits to management costs is anywhere from 200 to 530. It is worth investing and managing reserves! And the + sign part in the study highlights benefits for which a monetary number is currently not possible (such as the “umbrella” mentioned above).

Science & Technology developments; Space
Long Baseline Neutrino Facility

The Deep Underground Neutrino Experiment (DUNE), formerly the Long Baseline Neutrino Experiment (LBNE) is a proposed neutrino experiment with a near detector at Fermilab and a far detector at the Sanford Underground Research Facility which will observe neutrinos produced at Fermilab. It will fire an intense beam of trillions of neutrinos from a production facility near Fermilab (in Illinois) over a distance of 1,300 kilometres (810 mi) to an instrumented multi-kiloton volume of liquid argon located at the Sanford Lab in South Dakota.

The primary science objectives of DUNE are:

  • A comprehensive investigation of neutrino oscillations to test CP violation in the lepton sector
  • Determine the ordering of the neutrino masses
  • Search for neutrinos beyond the currently known three (electron neutrinos, muon neutrinos, tau neutrinos)

Neutrinos created by the LBNF beamline will lead straight through the earth’s mantle as they can pass easily through soil and rock — or kilometres of solid lead — as they rarely interact with the matter. No tunnel is needed for these ghostly particles.

Neutrinos are among the most abundant particles in the universe, a billion times more abundant than the particles that make up stars, planets and people. Each second, a trillion neutrinos from the sun and other celestial objects pass harmlessly and unnoticed through your body — and everything else. Although neutrinos are all around us, they interact so rarely with other matter that they are very difficult to observe, and consequently, they are completely harmless.

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