Why India should prefer incremental over big-bang reforms?

Image Source: The Economist

• Political entrepreneurs have three reasons to choose incremental over big bang reforms. 

• First, India is a genuine democracy; it’s clear that, say, Chinese President Xi Jinping would never need to withdraw a GST or land bill. 
• A benevolent dictatorship might seem to be the best form of government but you are more likely to end up with Robert Mugabe rather than Lee Kuan Yew. 
• Indians are not irrational, ignorant or dyslexic — it’s just that our citizens and 30 lakh election winners disagree a lot. 
• Second, big bang reforms imply one solution for all of India, but exports labour markets like Bihar need different interventions than import labour markets like Kerala, whose population is now 9 per cent Bihari. 
• Finally, big bang reforms create an antibiotic reaction. If you propose 100 or zero, you usually get zero. India got more labour reform in the last one year than the 20 years before that because we stopped equating it with hire and fire and tackled inspections, apprentices, provident fund, decentralisation and online compliance. Of course a labour contract that is marriage without divorce must change but, just like the difference between a list of ingredients and a recipe, successful reform needs sequencing, proportioning and prioritising. Improving the ease-of-doing business involves a million negotiations but it would be delusional to believe that a public target to improve India’s global ranking and publishing a state ranking do not help. 
• Big bang reforms are surgery without anesthesia; sustainability for India’s reforms will not come from a regulatory beheading, but with death by a thousand cuts.
• [Ref: Indian Express]

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Who is fighting whom in syria

War on in Syria since five years now

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India’s Intended Nationally Determined Contributions (INDCs)

Reduce emission intensity by 33 to 35 per cent by 2030 compared to 2005 levels

• Introduce new, more efficient and cleaner technologies in thermal power generation
• Reducing emissions from transportation sector
• Promote energy efficiency, mainly in industry, transportation, buildings and appliances
• Develop climate resilient infrastructure
• Pursue Zero Effect, Zero Defect policy under Make in India programme

Produce 40 per cent of electricity from non-fossil fuel based energy resources by 2030, if international community helps with technology transfer and low cost finance.

• Install 175 GW of solar, wind and biomass electricity by 2022, and scale up further in following years
• Aggressively pursue development of hydropower
• Achieve the target of 63 GW of installed nuclear power capacity by 2032

Create an additional carbon sink of 2.5 to 3 billion tonnes of carbon dioxide equivalent by 2030 through additional forest and tree cover.

• Full implementation of Green India Mission and other programmes of afforestation
• Develop 140,000 km long tree line on both sides of national highways

Develop robust adaptation strategies for agriculture, water and health sectors

• Redesign National Water Mission and National Mission on Sustainable Agriculture
• Active implementation of ongoing programmes like National Initiative on Climate Resilient Agriculture (NICRA), setting up of 100 mobile soil-testing laboratories, distribution of soil health cards to farmers.
• Additional impetus on watershed development through Neeranchal scheme
• Effective implementation of National Mission on Clean Ganga
• Early formulation and implementation of National Health Mission
• Complete Integrated Coastal Zone Management plan. Mapping and demarcation of coastal hazard lines 

Money Matters

• At least USD 2.5 trillion (at current prices) required between now and 2030 to implement all planned actions. 
• USD 206 million required for adaptation actions. 
• Much more needed for strengthening resilience and disaster management.
• About USD 834 billion, at 2011 prices, required for mitigation actions till 2030.
• A total of INR 170.84 billion collected through cess on coal production. Being used for funding clean energy projects
• National Adaptation Fund has been created with initial allocation of Rs 3500 million
• Tax free infrastructure bonds of INR 50 billion being introduced for funding renewable energy projects

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Merger of SEBI and FMC | Significance, Challenges

• Why the merger?
• NSEL: A little over two years after Jignesh Shah and Financial Technologies promoted National Spot Exchange Limited (NSEL) suspended trading of all its contracts, resulting in a payments crisis amounting to over Rs 5,600 crore that still remains unresolved, the Forwards Market Commission, the commodities market regulator, was merged with the Securities and Exchange Board of India

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Start-Up India | Significance, Challenges, Solutions

• On the 69th India's Independence day, PM gave slogan to ecnourage entrepreneurship among the youth of India:

"Start-up India, Stand up India". 

• Modi is focussing on "Start-up India" programme 
• 2/3rd Jobs in USA come through Start-ups 
• SIGNIFICANCE:

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Water on Mars

Sub-surface water found of Mars.
Why is it important?

1. Enhances chances of life on mars
2. Water can be used as fuel rocket fuel for return journey or going beyond Mars
1. Oxygen can be seperated form water
3. Jouney to Mars would become logistically easier and significantly cheaper
4. Lighter rockets with more scientific tools can be sent (as wieght of fuel would be lesser)
5. Colonisation by man in future

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MSME Sector | Past, Present and Future

Significance of MSMEs

• MSMEs contribute nearly 8 per cent of the country’s GDP, 45 per cent of the manufacturing output and 40 per cent of the exports. They provide the largest share of employment after agriculture and are nurseries for entrepreneurship and innovation. 
  
• As MSMEs are generally labour-intensive, they have the capability to create more jobs to cater to a young demographic country like India. 
• Employment: 11 crore people through the operation of 5 crore enterprises producing a heterogeneous basket of about 7,000 different products.
• Climate Change --> Unemployment in agriculture --> Absorb in MSME.
• Compensate slowdown in the industrial growth rate, especially manufacturing
• Gross capital formation has been declining over the years, especially households- MSME can help
• The performance of the agriculture sector has also been slower than the previous year because of uncertain rains in the last few months.
• continuing uncertainty in the agriculture sector because of substantial dependence on rain-fed irrigation, an alternative power pack, unutilised, is micro, small and medium enterprises (MSMEs).
• MSME sector in India employs nearly 11 crore people through the operation of 5 crore enterprises producing a heterogeneous basket of about 7,000 different products.
• As MSMEs are generally labour-intensive, they have the capability to create more jobs to cater to a young demographic country like India.
• Further, in view of the continuing implications of climate change, it is necessary that the MSME sector is prepared to absorb millions who may be rendered unemployed in the agriculture sector.

Potential
1. MSMEs contribution to GDP is around 10%. Growth in MSME also supports struggling GDP figures
2. More importantly, MSMEs employ about 10 crore people This contrasts to the big MNCs, where "jobless
growth" takes place
3. MSMEs support women and lower caste population in greater number. Thus, MSMEs can potentially lead to Inclusive Development
4. The small companies of today; the start-ups ; are the future of tomorrow.

5. MSMEs are the leaders in manufacturing as well as in exports. The success of Make in India lies on their shoulders

Issues

• Govt and RBI have done supply side efforts through a series of measures to encourage MSMEs, but more needs to be done now on demand side or in other words we need to nurture entrepreneurs from a young age. 
• If the country has to successfully launch the ‘Make in India’ programme, it needs to train young entrepreneurs, in addition to developing skills at skill development centres.
• Finance
• The government and NGOs seek to finance and allocate resources for MSMEs, but these resources often do not reach the targeted audience. 
• The successful launch of the Jan Dhan Yojana (JDY) could be used to direct financial resources to targeted MSMEs. 
• Still, access to bank finance may be difficult for some MSMEs, and therefore there is a need to consider various alternative sources of finance. In the case of Japan, the government has imposed a cap on interest rates on loans that a money lender extends to MSMEs. As money lenders continue to play an important role in India, it is worth considering whether money lenders could be brought under regulation now, given technological progress, as achieved in the case of Japan, and an interest cap be imposed for lending to MSMEs.
• In India, commercial banks are mandated to lend to MSMEs. 
• In such cases there is also a need to ensure that the public sector does not crowd out the private sector. 
• Further, MSMEs generally suffer from poor conduct by major banks. In some cases, mis-selling of financial products is a general complaint of entrepreneurs. This can take the shape of higher fee or interest rate, failure to explain exit costs, and sometimes threatening them with refusal to extend regular credit. 
• Role of financial education is very important for MSMEs in assessing appropriate start-up finance and in empowering them to use financial products and services to manage risks and other business needs.
• Not all banks can do MSME financing as this is a specialised area and requires specialised skills to assess the institutions that can benefit from bank finance and yield higher production. Therefore, skill development of bankers is also necessary for assessing MSMEs that can be bank-financed. These skills would include standardising simple format for accounting purposes for MSMEs, competent development of human resources, cultivating business ethics and standards, and also imparting training to MSMEs which are being served by the bankers. The initiatives by the RBI in this regard need to be strengthened in instituting similar training programmes in different commercial banks.
• In addition to financing, there is a need for focussed coordination of activities of different government authorities to encourage MSMEs. This coordinating agency could serve in building a database and repository information on a shareable basis, measuring levels of productivity for different product groups, and identifying products in need of research and development.
• MSME can correct the mistake of jumping to services than focussing on manufacturing.
• Lack of institutional credit- MSMEs have to resort to high charging moneylenders
• Economic theory says that smaller firms are often inefficient as they lack access to more expensive yet efficient technologies
  MSMEs are associated with lack of experience, managerial and specialist skills.
  Lack of skilled manpower

Suggestions

• Therefore, government needs to prepare a roadmap for the MSME sector in addition to various ad hoc initiatives undertaken regularly. 
• It needs to delineate proper objectives, vision and a mission, as it did in the case of JDY. 
• Then, it needs to consider appropriate funding mechanisms for MSMEs. 
• The government could also consider an appropriate guarantee system to be offered to the MSMEs availing loans under various government schemes. 
• To inspire confidence, the government needs to strengthen the legal structure and establish a credible redressal mechanism. 
• To prepare a vision document and an achievable roadmap that can place the Indian MSMEs to compete with those in China, Japan and Germany, there would be a need to engage researchers, industry groups and stakeholders. Therefore, there is much to be accomplished before the MSME sector can take off. India needs to make a start now.
• The successful launch of the Jan Dhan Yojana (JDY) could be used to direct financial resources to targeted MSMEs.
• In the case of Japan, the government has imposed a cap on interest rates on loans that a money lender extends to MSMEs. As money lenders continue to play an important role in India, it is worth considering
• In India, commercial banks are mandated to lend to MSMEs. In such cases there is also a need to ensure that the public sector does not crowd out the private sector.
• Further, MSMEs generally suffer from poor conduct by major banks. In some cases, mis-selling of financial products is a general complaint of entrepreneurs. This can take the shape of higher fee or interest rate, failure to explain exit costs, and sometimes threatening them with refusal to extend regular credit. Illustratively, weighted average lending rate of commercial banks, as reported in the RBI’s latest AR, is the highest for MSMEs when compared with loans extended to agriculture, large industry and infrastructure.
  1. Therefore, the role of financial education is very important for MSMEs in assessing appropriate start-up finance and in empowering them to use financial products and services to manage risks and other business needs.
• Not all banks can do MSME financing as this is a specialised area and requires specialised skills to assess the institutions that can benefit from bank finance and yield higher production. Therefore, skill development of bankers is also necessary for assessing MSMEs that can be bank-financed. These skills would include standardising simple format for accounting purposes for MSMEs, competent development of human resources, cultivating business ethics and standards, and also imparting training to MSMEs which are being served by the bankers. The initiatives by the RBI in this regard need to be strengthened in instituting similar training programmes in different commercial banks.
• In addition to financing, there is a need for focussed coordination of activities of different government authorities to encourage MSMEs. This coordinating agency could serve in building a database and repository information on a shareable basis, measuring levels of productivity for different product groups, and identifying products in need of research and development.
• government needs to prepare a roadmap for the MSME sector in addition to various ad hoc initiatives undertaken regularly.
• It needs to delineate proper objectives, vision and a mission, as it did in the case of JDY.
• Then, it needs to consider appropriate funding mechanisms for MSMEs.
• The government could also consider an appropriate guarantee system to be offered to the MSMEs availing loans under various government schemes.
• To inspire confidence, the government needs to strengthen the legal structure and establish a credible redressal mechanism.
• To prepare a vision document and an achievable roadmap that can place the Indian MSMEs to compete with those in China, Japan and Germany, there would be a need to engage researchers, industry groups and stakeholders.

Banking and MSMEs:

• Considering that big corporates are over-leveraged, banks need to explore new avenues for profitable lending to spruce up their balance sheets.
•  Over the last two years, both the government and the central bank have consistently nudged banks to redouble efforts to bring smaller players — individuals and industry — into the fold of the formal banking system. New institutions such as the MUDRA Ltd are likely to propose innovative new ways of channelling flows to small producers. The RBI has revamped priority sector guidelines so as to reemphasise lending to excluded or nationally important sectors in a changing economy. In particular, it set new targets of 8 per cent of adjusted net bank credit to small and marginal farmers and 7.5 per cent for micro enterprises, while allowing medium-sized firms, social infrastructure such as toilets, and renewable energy investments to qualify for priority sector credit.
• Adding to this diversification effort, the RBI has focussed on the MSME sector, which has the potential to foster strong growth by creating local demand and driving consumption. Currently, 
•  To specifically address the issue of delayed payments to the MSME sector, Trade Receivables Discounting System (TReDS) has been conceptualised as an authorised electronic platform to facilitate discounting of invoices and bills of exchange of MSMEs.

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Small and Payment Banks

Why in news?
Six months after giving in-principle licences to two entities for setting up commercial banks, the RBI issued licences for newly-licensed full-service banks and set the ball rolling on eleven payments banks and ten small banks, which could open up the lower-end of the country’s banking sector. A third category, wholesale banks, are said to be on the anvil. In this context, lending to smaller, unbanked people or entities falls well into the NDA government’s strategy of pushing funds to the unbanked, through its Jan-Dhan programme and other financial inclusion programmes — all of which are expected to touch a certain momentum once the opened accounts see direct fund transfers from the Centre in the due course, including food, fuel and fertiliser subsidies.

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Disaster Management | Issues, Solutions

• According to the Government of India, at least 38 cities lie in high-risk seismic zones and 
• almost 60 % of the landmass of the subcontinent is immensely vulnerable to earthquakes or other natural disasters. 
• The fact that a large section of the population is poor and lives in houses and cities that are hastily built and are not earthquake resistance raises the risk of human impact, in case of any disaster. Also, the lack of government’s preparedness to deal with such situations may add to the woes.

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Deflation in Rural Areas

Reasons:

• One major reason for higher inflation could be the sharp fall in agricultural activities in most of the states, especially in eastern and southern parts of the country, which are staring at drought-like conditions. 
• While the supply-side impact of a bad monsoon could show up in price levels with a lag, the higher price volatility in rural areas might explain why rural demand has already fallen. 
• Second, undermining of some rural development programmes (such as the MGNREGA) in the recent past, which used to act like automatic stabilisers at the state level, could explain such divergence. 

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Climate Change and Refugees

Issue

• by 2050 about 20 cr people will be climate exiles

• United Nations Refugee Convention, which offers protection only for those who have been forced to leave their country owing to “well-grounded fear of being persecuted for reasons of race, religion, nationality, membership in a particular social group or political opinion.”

Examples

• People of atoll nations in the Pacific such as Tuvalu or the Maldives in the Indian Ocean; With an elevation of only a few metres above sea level, will suffer the worst effects of storms and flooding and may be partly or entirely submerged by even a couple of metres of SLR. 
• Poor nations will suffer most though their own contributions to GHG concentrations in the atmosphere are relatively trivial
• It is no surprise then that Alliance of Small Island States (AOSIS) has called for global action to limit warming to 1.5°C, as opposed to the general focus on a 2°C limit. 
• In a grim reminder of reality, however, the World Bank in its report “Turn Down the Heat” says that without action, we could be seeing warming by 4°C above pre-industrial levels.
• Low-lying delta regions of the world such as those of the Irrawaddy and the Ganges-Brahmaputra are also vulnerable to the effects of SLR. 
• More than a tenth of humanity resides in vulnerable regions of the world that are within 10 metres of today’s sea level, also known as Low Elevation Coastal Zones (LECZ). Close to half of Bangladesh lies in the LECZ and these areas will be severely affected by rising seas.

Solution

• Anticipating these changes with rising temperature, it is important that we prepare to address these issues instead of building fortress-like nations. Regional agreements, joint action, training and skills, sharing of knowledge, technologies, lessons from successes and failures to adapt should all be part of a regional focus in preparing for SLR. Labour agreements are especially important and should be combined with skill building and training in advance of migration.
• Loss and damage (L&D)
• L&D tries to capture these types of inability to cope with the effects of warming. 
• This is distinct from mitigation, or reducing greenhouse gas emissions, and adaptation, or finding ways to live in a warmer world. 
• At COP19 of the UNFCCC, held in Warsaw in 2013, all parties agreed to set up a new mechanism on L&D. 
• The issue is important because even after GHG emissions are reduced and communities adapt to climate change, there would still be loss and damage to people, livelihoods and infrastructure as a result of their inability to cope with climate change. Loss generally refers to the complete forfeiture of items like land, ecosystems, or of human lives, while damage refers to the harm to infrastructure and property that could be repaired. The term includes both economic and non-economic losses.
• Developing countries “are fighting tooth and nail to ensure L&D figures in the core agreement at Paris
• The text of the recently concluded meeting of Like Minded Developing Countries in Delhi states that the issues for the Paris COP are “mitigation, adaptation, finance, capacity building, technology development and transfer, transparency of action and support as well as loss and damage.” Acknowledging and acting on these issues would help prevent the kind of crisis we are now seeing in Europe in future as a result of climate change.

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Trade Talks, Commercial Diplomacy | Issues, Problems, Solutions

•  Why in news?
• Last month, the department of commerce (DoC) suspended negotiations with the European Union on the proposed Broad-based Trade and Investment Agreement. 
• WHY: This came on the heels of EU regulators banning the sale of some generic drugs on grounds of data manipulation. 
• CRTICISM:

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Industry Issues and Answers by Raghuram Rajan

Background of this news

• On September 8th 2015, many industry captains who met the Prime Minister ended up pitching demands for their own industry

What are the demands?

• Single agency for multiple taxes
• Multiplicity of permissions, delays and complex regulatory mechanism even as it urged the government to provide pre-existing regulatory mechanism, on a priority basis, to sectors such as agriculture and food, machinery manufacturing, electronics product and IT manufacturing, which have low environmental impact. Risk profiling of industry needs to be done. 
• “We already have examples of these. For instance, in Punjab, a set of 131 industries have been identified as low risk and are therefore exempted from obtaining Pollution Control Board approvals,” Chandrajit Banerjee, Director General, CII, told The Indian Express. He said that the government should use technology for improving efficiency and bringing in transparency.
• Dispute resolution
• e-enablement of all courts to make commercial dispute resolutions quicker and more efficient
• Environment related
• Prune EIA process, time taken for public hearing for environmental clearances
• relaxing the compulsory maintenance of 33% green belt by asking the district administration to identify land for green zone, 
• rationalising guidelines for compulsory afforestation, 
• notification of eco-sensitive zones on an urgent basis
• Rationalising certification of settlements of forest rights which requires resolution of the Gram Sabha even in cases of no settlements of forest dwellers.
• Taxation and Companies Act
• Bringing a single direct tax levy, similar to the goods and proposed tax in indirect taxes, to subsume income tax, DDT, MAT and capital gains tax among others.
• Raising the threshold for appointing independent directors as following the new Companies Act, with the rise in demand for them, there is a dearth of good independent directors with appropriate skill sets.
• Foreign investment
• a simplified regulatory regime for facilitating foreign investment and creating an environment of trust in the industry by promoting self-regulation after laying down a framework which will signify the minimum threshold for the industry to follow.
• Concessions and answer to them by Raghuram Rajan (Very important point)
• Special interest pleas for targeted stimulus, additional tax breaks and protections, directed credit, subventions and subsidies but all of these as per Raghuram Rajan have historically rendered industry uncompetitive, government over-extended, and the country incapable of regaining its rightful position amongst nations
• As per Raghuram Rajan Following should be taken care of
• Discipline to stick to our strategy of building the necessary institutions and creating a new path of sustainable growth where jugaad is no longer needed and for this we need the understanding and cooperation of business, not impatience and pressure. 
• Problem with Jugaad --> Great way of coping (through entrepreneurial ability)but it is result of difficult business environment --> We should focus on changing environment for business. 
• Industries want special tax benefits or interest subventions But License Permit Raj persisted precisely because some industries were favoured over others in the so-called national interest --> Solution is focus on creating an enabling environment, and let the core competencies emerge from the fillip given by the environment. e.g. IT sector emerged as a result of the investment the country made in technical education (i.e. core competency, but without specific encouragement by the government. (Very good example)

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Global Investors Meet | How successful?

• BACKGROUND:
• Gujarat started
• States such as Madhya Pradesh, Chhattisgarh and West Bengal have taken a cue from Gujarat in staging their own investor summits, stirring up a bit of competition. 
• Also, those such as Karnataka, Telangana and Andhra Pradesh came across as being more proactive in seeking hi-tech industries. Tamil Nadu has always underplayed itself.
• latest - Tamil Nadu

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PDS Reforms | Rajasthan

Reforms:

• Currently ration shops in Rajasthan stock only three items (wheat, sugar and kerosene), are open only one week a month, treat citizens poorly, and have high subsidy leakage because we lack the online infrastructure to cross reference inventory, consumption and eligibility. 
• Over the next year the state government will rebrand 5,000 of our 25,542 ration shops in a public private partnership as Annapurna Bhandars: They will stay open all month, sell more than 150 products at prices regulated by the government, start home delivery and join an online platform.
• In parallel, all families with state government issued Bhamashah cards will have the option to choose between direct cash credit of subsidies to bank accounts or getting non-cash subsidised goods that trigger an SMS to their cellphone when their eligibility amount is issued by any ration shop
• De-duplicated Bhamashah database will issue a card to every family that will be linked to a bank account in the name of the lady of the house. 
• Bhamashah’s Aadhaar authenticated database makes it an effective platform for financial inclusion, health insurance, ration shops, education scholarships, Mgnrega payments, and much else – because all families will receive an SMS for all cash or non-cash transactions linked to their card.

Rationale:

• spending that doesn’t reach the needy is not only wasteful but represents stealing from future generations.
• Much of the Rs 80,000 crore outstanding debt of the Rajasthan State Electricity Board represents wasteful subsidies that could have been spent on roads, education or skills. A former prime minister once said that only 15% of government expenditure reaches the poor; clearly his realisation was not shared by the last central government which bafflingly cancelled the implementation of Aadhaar verification for gas cylinder subsidy just before the last Lok Sabha election.

Conclusion:
 

The wisdom of balance in governance is hardly new; the magnificent ruins at Hampi of the Vijaynagara Empire have a horizontal band of three animal sculptures at the bottom of every building; tigers (for courage), horses (for speed) and elephants (for stability). This grouping has an important message for state governments that often choose the status quo over boldness, innovation and experimentation.

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The Artificial Leave

Source: The Indian Express

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National Lab Policy | Renewable Energy

Why in news?

• Union Minister of State (IC) for Coal, Power and New and Renewable Energy said that a National Lab Policy is needed to address the testing, standardization and certification renewable energy projects in the country. 
• Biogas needs to be given more attention to make it a well-organized industry.  
• workshop was organized in view of the MNRE’s ambitious programme of 175 GW Renewable Energy Deployment Programme.

Need:

• indigenous technology development and standardization is essential for the growth of renewable energy in the country  
• need to pay more attention on ensuring quality and reliability of renewable energy systems for effective promotion of renewable energy
• maintaining consistency in manufacturing and confidence in reliability of these technologies/systems to ensure that systems installed function properly.  
• proper standardization will facilitate financing options for deployment. 
• better systems ----> ensuring effective utilization of renewable energy. 

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Coal Sector | Issues and Solutions

Why in news?
Recently, World Bank has stated that with few exceptional circumstances, it will no longer fund coal projects in developing countries.

Issues in coal sector:

• Supply side:
• Pollution
• High ash content
• Low coking quality

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Mission Indradhanush for Public Sector Banks (PSBs)

Indradhanush, a major step after the nationalisation of banks in 1970s, is a brainchild of PJ Nayak committee.

OBJECTIVES:
1) Appointments: Separating the post of MD and CEO of PSBs and bring a new post of a "non- executive chairman" which is a measure to bring accountability

2) Bank boards Bureau: The top posts of PSBs will be appointed by Bank boards bureau which will replace the existing mechanism.It will have members,1 chairman,3 officials and 3 experts(2 experts should be in the field of banking sector).

3) Capitalization: Capitalisation of 70,000 crores in the next 4 years for meeting Basel -III and RBI norms.

4) De-stressing banks: Presently there is a huge amount of NPAs.An institutional mechanism will be brought to manage NPAs.

5) Empowerment: Indradhanush has stressed on empowerment of banks.This includes more autonomy for PSBs and less interference from govt side in day to day functioning of banks.

6) Framework of accountibility: For bringing in accountability of banks, govt have decided to bring a new vector to measure the performance of PSBs, KPI (Key performance indicators).

7) Governance: There will be a CRO(Chief risk officer) to make accountability of the risks in PSBs.Less interfrence from govt: and appointments of top officials by bank boards bureau are some of the administrative changes the govt brought.

Issues Indradhanush could not answer:

1)Disinvestment of PSBs: Disinvestment which is a necessary tool of growth of this time, is not mentioned in Indradhanush.

2)About 80,000 employees are expected to retire in coming two years. And some more are expected to retire in coming years. So , there is an opportunity for govt: to restructure banks, but such a measure is not mentioned.

3)Even though issue of govt: interference is mentioned in the policy, how exactly it would be implemented is not mentioned.

4)Regarding capital infusion, whether the govt: will infuse money to the PSBs according to their performance is not mentioned. Rather than giving capital to all the PSBs, govt should have given it according to the performance of the PSBs in a year.

5) How efficiently the Bank Board Bureau performs that remains to be seen. If it acts just as a proxy for government end result might come out to be the same. Moreover it's accoutability needs to be fixed and government interference must be kept at the minimal level.
Not addressed - 2) Merger of the small banks inefficient banks with the larger ones.
3) Tackling the human resource problems from mid-higher levels.


REASONS FOR WEAK STATE OF PSBs:

• PSBs face three stark realities and their weak governance is the underlying cause. 
• Goernment owns PSBs so social welfare, Financial inclusion has to be there --> although they are largely uncompensated for pursuing such goals — it’s difficult to argue that the government’s style of running its banks has served either itself or the banks well.
• High leverage of PSBs, politically connected wilful defaulters, the burgeoning stress in the balance sheets and the consequent deterioration in the supporting capital, declining profitability and productivity ratios and the dwindling market share of PSBs, are debilitating these banks and making them unequal competitors vis-a-vis their private-sector counterparts. 
• Third, as the major share of financial savings is intermediated through PSBs that are also the dominant purveyors of loan finance for infrastructure-creation and manufacturing, continuous weakening of their balance sheets is a cause for concern that is far too serious for complacency. One would like to presume that these concerns are acknowledged by the political system and bureaucracy, although that doesn’t become eminently apparent from Indradhanush.

Against this bleak backdrop, the plan’s seven elements appear to fall short and are sketchy.

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Fall in Oil Prices | Reasons, Impacts, Benefits to India

Prices are down to levels not seen since 2010. There will be a bottom and prices will no doubt push up again, but the fundamentals of demand and supply suggest this may not be for some time

Reasons:

•  Low demand:

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