Daily PT Capsule Apr 19

Here is today’s digest of important newspaper articles and quiz!

The case for getting back Kohinoor

The Supreme Court is hearing a petition filed by an NGO, All India Human Rights & Social Justice Front, on whether the government intends to make a bid to get back the Kohinoor.

The diamond was given voluntarily by heirs of Maharaja Ranjit Singh as compensation for the Anglo Sikh wars. There have been many voices from India asking the government to claim the Kohinoor back from UK. During a visit to India, British Prime Minister David Cameron was reported by the media to have ruled out handing back the 105-carat Kohinoor. The diamond is on display at the Tower of London.

The Solicitor General told a bench of the Supreme Court that “if we start claiming the treasures from the museums of other countries, they will claim their treasures from our museums.” However, Chief Justice Thakur stopped short of dismissing the petition, reasoning that a dismissal now would probably harm the ongoing or future efforts by the government to reclaim the diamond.

Analysis

How is the art and antiquities market regulated in India? – The market for art and antiques has more often than not seen imitations of the masters. These are often fine fakes, hard to distinguish from the original. The original works face a far greater threat that of being weaned away from their country into the homes of art collectors across the world. These paintings sell for huge sums. Awakening to the magnitude of the problem, the Central Government enacted the Antiquities and Art Treasures Act in the year 1972. The Act had several objectives, chief among them being to regulate the export trade in antiquities and art treasures; to prevent smuggling and fraudulent dealings in antiquities and to provide a mechanism for compulsory acquisition of antiquities and art treasures for preservation in public places.

The Antiquities and Art Treasures Act, 1972 aims to provide for the protection and preservation of antiquities and art treasures. The definition of an “antiquity” is wide and inclusive. It includes coins, sculptures, paintings and works of art and craftsmanship that are not less than one hundred years old.

The law does not prohibit dealing in antiquities or art treasures; it seeks to regulate the trade in such objects rather than impose a total prohibition on such activity. A person engaged in selling antiquities must obtain a license for the purpose.

It is interesting to note that the Act does not impose any limitations and restrictions on the sale of “art treasures” within the country. Only the export of “art treasures” is regulated by the Act.

Source:TheHindu, ArtNnewsnviews

Surge pricing by cab aggregators suspended

The cab aggregators operating in Delhi suspended surge pricing after Chief Minister Arvind Kejriwal warned of strict action against the companies. The move came after a lot of commuters took to social networking sites to protest against high taxi fares on the first day of Odd-Even scheme.

The suspension will be in effect till the conclusion of the odd-even scheme on April 30.

Analysis

What is surge pricing? – Surge pricing happens when a company raises the price of its service when the demand is high. Prices fall automatically when the demand ebbs.

The cab aggregators claim that surge fares are not controlled by them but are decided on a real-time basis depending on demand and supply.

Source: TheHindu

Indiscriminate use of groundwater in Latur

Latur has been suffering from a major drought like situation with water being sent to the place from outside. Although a poor monsoon can blamed for the problem but it is more of a man made calamity.

Latur lies in the non irrigated belt. The indiscriminate use of groundwater has been the bane of Latur. The number of irrigation bore wells in Latur stood at 34,778 in 2007, only second after Nashik at 37,545. As per the rules, there can be only five borewells per square kilometre. This simply means, in an ideal situation, the 715 sq km of the 10 talukas should have only 3,575 bores. But the unofficial number is 90,000.

Added to it is the agriculture pattern of the area. Water intensive crops like sugarcane, banana, grapes and oranges which are groundwater dependent are being grown.

Latur was never a water sufficient zone, and the sugarcane should have never been grown here without drip irrigation. It is one of the main reasons for the scarcity. The charge against sugarcane is it guzzles over 2,000 mm water in a year, forcing farmers to sink borewells. Initially, factory owners too did not promote drip irrigation.

Soyabean and pulses could be a better alternative for the farmers in the area.

Analysis

How can the cropping pattern be improved? – The present cropping pattern in drought prone areas is based not on the proper land use under the environmental conditions

but the need of every household to somehow produce sufficient foodgrains of the varieties most prevalent in the area. The National Commission on Agriculture has already commented on the result of this urge for basic food, leading to the improper land use and deterioration of the soils.

It is only through a mixed cropping system, suiting the crop to the land and introducing large scale pasture development and horticulture along with forestry that can maximise output from the drought prone areas.

The food crops will be pulses, oilseeds and grains which may not be locally utilised.

Source: TheHindu, Planning Commission

Centre may need Parliamentary approval for PSU stake sale

The Supreme court has directed to put on hold plans to sell  the government’s residual 29 per cent share in Hindustan Zinc Ltd., an erstwhile public sector company and a subsidiary of Vedanta since 2003.

The direction, top officials reckon, could apply to sales of the government’s shares in every public sector company that was created through nationalisation under Parliamentary legislation.

NITI Aayog is set to submit this month two sets of recommendations: First on disinvestment of loss-making public sector companies and then on possible candidates for strategic sales.

Analysis

What is the difference between disinvestment and strategic sale? –    In the strategic sale of a company, the transaction has two elements a) Transfer of a block of shares to a Strategic Partner and b) Transfer of management control to the Strategic Partner

The transfer of shares by Government may not necessarily be such that more than 51% of the total equity goes to the Strategic Partner for the transfer of management to take place. In the case of PSUs, in order that the company no longer has the character of a Government company, the transfer of shares involves bringing down Governments shareholding below 51%.

Disinvestment is the selling of stakes by government in public sector enterprises. This may or may not lead to reduction of majority shareholding of the government.

Source: TheHindu, Department of Disinvestment

Payments bank may not have a viable business model

SBI Chairperson Arundhati Bhattacharya said that neither the payments banks nor small finance banks seem to have as yet devised a business model that can be said as viable.

She also admitted that the entry of other non-banking companies, through their investments in small finance and payments banks, has changed the dynamics of competition in the sector. This could have potential business implications for public sector banks going forward.

Analysis

What are payments banks? – Payments banks are specialised banks to boost financial inclusion.

-They can’t offer loans but can raise deposits of upto Rs. 1 lakh, and pay interest on these balances just like a savings bank account does.

-They can enable transfers and remittances through a mobile phone.

-They can offer services such as automatic payments of bills, and purchases in cashless, chequeless transactions through a phone.

-They can issue debit cards and ATM cards usable on ATM networks of all banks.

-They can transfer money directly to bank accounts at nearly no cost being a part of the gateway that connects banks.

-They can provide forex cards to travellers, usable again as a debit or ATM card all over India.

-They can offer forex services at charges lower than banks.

-They can also offer card acceptance mechanisms to third parties such as the ‘Apple Pay.’

What are small finance banks? – Small finance banks will provide banking products to the unserved and underserved sections of the country, which includes small and marginal farmers, micro and small industries, and other organized sector entities, at an affordable cost.

Small finance banks will be allowed to take deposits from customers. And as against payments banks, small finance banks will also be allowed to lend money to people.

Most of the entities that have received the ‘in-principle’ nod include micro-finance institutions. Which means, most customers of small finance banks will account for small and medium enterprises and small businesses. These banks will now be able to provide secured and legal loans to MSMEs and SMEs, bringing them under the ambit of the financial system.

Small finance banks is another step to bring the unbanked under the ambit of the banking system.
Source: TheHindu, DNA

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