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For the banking sector, the thrust to digital economy will
help banks expand their digital footprint as well as to
meet the additional 10 lakh new point-ofsale terminals
target by March 2017. The agriculture lending target has
been substantially revised to Rs 10 lakh crore supported
by further provisions for agriculture insurance.
_____________________________ This can done by supporting
infrastructure creation in rural areas, which the Budget
aims at doing.
(a)It is important to create credit absorption capacity
rather than to just enhance lending targets.
(b) The abolishing of the Foreign Investment Promotion
Board is a welcome move as it removes another hurdle
in movement of inward FDI.
(c) This will boost the foreign investors’ confidence to
invest in India.
(d)The Budget has chalked a clear fiscal path for the
years ahead and with the proposed changes in personal
income tax at the lowest slab, the target of 3.
(e)2% of the GDP may be achieved if new reforms like
GST kick in within the stipulated date.
What echoed with me was the more realistic assessment
of growth and its correct identification on potential drag
on future growth –the Twin Balance Sheet problems of
stressed corporate and banks’ balance sheets. Today,
some corporate are heavily leveraged and reflect as
stressed assets on banks’ balance sheets.
_____________________________The Survey rightly argues that
economic growth will not solve the problems of stressed
firms: banks’ non-performing assets (NPAs) are
estimated to be as high as 16.6% of total loans, and 8.4%
of GDP. Can diversion of windfall gains from
remonetisation to an Asset Reconstruction Company
(ARC), as recommended by the survey, help resolve the
Twin Balance Sheet problem?
(a)Will the combination of challenges and uncertain
global economic conditions become a serious dampener
for Indian growth prospects? Not necessarily.
(b)Most of these are on public sector banks’ books,
which account for nearly 70% of total bank credit to
(c) There may be other ways that the government, banks
and the corporate sector could bring about a revival in
GDP growth even in the context of the above constraints.
(d) For one thing, listed public sector undertakings
(PSUs) could deploy approximately Rs 3 lakh crore of
cash and cash equivalents sitting in their balance sheets.
(e)This amount could be leveraged to approximately Rs
9 lakh crore (assuming debt to equity of 2:1).
Fourth, the present situation does not augur well for
NPAs. _____________________________ This would tend to
increase in the rest of the year as the cash crunch has
hurt employment at the lower income levels, thus
impacting their repayment capacity. The same holds for
SMEs which will be affected negatively due to the
slowdown in the economy. Therefore, higher NPAs are
bound to be the result of the economic impact these 50
days. The issue was to have gotten sorted out by March
2017, but it looks likely that it would last for a longer
period of time.
(a)This has meant that these deposits have moved over
as investment in government securities (G-Sec)and after
a turbulent phase of regulatory fine tuning, which also
involved imposition of 100% incremental CRR at one
point of time that was reversed, have moved towards a
return of around 6% on the MSS bonds.
(b)Avenues for deployment of these funds have been
limited, with credit growth witnessing a minor setback
due to the non-fructification of the busy season impetus.
(c)There has already been an increase in the level of
NPAs for personal loans, especially for education, auto
and consumer durables.
(d)Hence, the spread is quite low on these exogenous
deposits which have come in – some have also been
converted to fixed deposits at higher rates which would
lower the same.
(e) This in turn could seed an increase in the investment
to GDP ratio back to 35%, which would require roughly
Rs 13 lakh crore.
The second most important challenge is to ensure that
the IPL, India’s signature cricket tournament, is held on
schedule. Nothing in terms of planning has happened yet
and the franchise owners are yet to be notified about the
auction date. _____________________________Not a single IPL
contract has been awarded and a tournament of this
scale requires months of planning, which the
administrators will now have to do on a war footing.
(a)And if the buzz within the BCCI is anything to go by,
the administrators will have to do so forcibly.
(b)As the dust finally settles on the SC direction
appointing Vinod Rai, Ram Guha, Diana Edulji and
Vikram Limaye as interim administrators of the BCCI, it
is essential we turn our attention to the challenges they
are likely to face.
(c)What is the primary task at hand? Clearly it will be to
implement the Lodha reforms in totality.
(d) The auction, which was initially planned for 4
February, had to be rescheduled and it is now likely that
it will be held towards the end of the month.
(e) Ousted office bearers and men who now stand
disqualified will do everything to put a spanner in the
An ecosystem that supports financial inclusion must also
be developed, to begin with increasing the reach of
digital payments. Disbursal of government benefits in
bank account is just the first step.
_____________________________ Ubiquitous acceptance of
digital payments is essential in transforming India from
a cash to a cash-less society.
(a)It is important that such funds also be used digitally
instead of being withdrawn in the form of cash.
(b)Transaction fee needs to be minimised especially on
(c)Also, an institution similar to Deposit Insurance and
Credit Guarantee Corporation (DICGC) can be set up to
insure credits up to a fixed amount, so that small loans
can be disbursed with minimum hassles.
(d) Schools, colleges and NGOs can be given incentives to
conduct training programmes for consumers and
merchants to encourage them to avail digital services.
(e) Financial institutions can be mandated to disburse a
certain portion of loans only to merchants who have
embraced digital payments beyond a certain threshold.
Research of money laundering in the US indicates a
majority of the money laundered is through undervalued
exports. This is the preferred option for two reasons.
One, most governments don’t adequately monitor their
export transactions. Two, it allows the launderer to
avoid the use of financial institutions that may be
monitored by government agencies.
_____________________________ This is because the local tax
official may be aware of the nature of this business and
may turn a blind eye in return for a sizeable bribe. The
money launderer converts his illegal money into
products by purchasing products for cash at the
product’s market price.
(a)These products are then exported to a foreign
colluding importer at below market prices.
(b)Detecting such transactions requires careful and
systematic analysis of data.
(c) The importer receives the undervalued exports and
resells them in the market at the real prices that reflect
their true value.
(d) To detect such transactions, import-export data at a
daily frequency need to be carefully assembled.
(e) The quality of the data needs to be checked by
undertaking statistical and econometric tests for
missing fields, intentional fabrication and modification
of data, etc.
A study by BCG in 2014 showed that only about 13 per
cent of India’s banked population was using digital
payments of any type. This was just about 23 per cent of
the people with Internet access.
_____________________________But the banks were not able to
convince customers to move banking online at the same
pace. In the post demonetisation world, we predict that
by 2020, the number of people using online banking
could be anywhere in the 50-70 per cent range,
depending upon how zealously banks build upon the
(a)E-commerce players have deep pockets of private
equity to fund the losses arising through such trial
(b)Ask the e-commerce players who invest millions of
dollars in the form of huge discounts and promotions to
get customers to try them once, in the hope of getting the
customer hooked after the first trial.
(c)BCG had predicted then that this number would go up
only to 25 per cent by 2020, as a large number of people
would start using the Internet, thanks to rapidly falling
telecom and device costs.
(d) Indian banks have been making steady but a very
slow progress on digital adoption by customers.
(e) The common man was not really bothered with
The revised date of implementation is now July 1, 2017.
This is good news for industry as it gives it much-needed
time to prepare for the huge reform. This postponement
also means that the govt of India will work with fewer
assumptions for the Budget for estimating the indirect
tax collections for the next year.
_____________________________ While some see that the
service tax rate could be increased by 1-2 per cent, the
government may now want to maintain a status quo,
particularly because any increase in service tax would
typically be effective after the Budget is passed and
receives the presidential assent —as opposed to excise
and customs, which are generally effective from the
midnight after the Budget.
(a)First, there was a reaffirmation that businesses
should be administered only by one set of authorities:
either the Centre or the state.
(b)Not many would have thought that the Goods and
Services Tax (GST) Council would achieve a rather
sudden consensus on the issue of ‘dual control’ in its
January 16 meeting.
(c) It’s a great political accomplishment for both Centre
(d)It also means that there may not be many changes in
the tax rates, as GST would be in place by the second
quarter of the fiscal year.
(e) Further, while the demand of the services sector to
be administered by the Centre was not accepted, it has
been mentioned that in case there are complex
interpretation issues involved, it would go to the Centre.
Within a few decades, millions of seals were killed and
entire islands were wiped clean. Then followed a mad
rush for whales. The Antarctic Ocean in summer
generated vast amounts of plankton that provided food
for billions of krill, a shrimp-like creature.
(a)Whales are mammals, not fish, and yield red meat
that is compared in some countries to fine steak.
(b)Commercial whaling was highly profitable in the 19th
century, since oil from whale blubber fetched high
(c) Whales stripped of blubber were mostly dumped into
the sea in the 19th century.
(d) But gradually, countries like Japan and Norway
developed a taste for whale meat.
(e) These, in turn, were eaten by huge populations of
whales, seals and penguins.
By the early 20th century, more than a dozen countries
had established whaling and sealing stations and made
territorial claims on enormous chunks of Antarctica and
its outlying islands. A few scientific stations came up too.
But in the main, it was an imperial race for territory and
resources. The main claimants were Britain, the US, the
Soviet Union, Japan, Norway, Argentina, Australia and
France. _____________________________ Since Antarctica was
unpopulated, anybody could establish a station and
claim millions of square miles of territory around it. The
earliest plunder was done by the fur trade. Seal fur was
of high quality and fetched high prices. Hunters could
just walk up to unsuspecting seals and bludgeon them to
(a)But several smaller countries made claims too.
(b)Antarctic whales were decimated from the mid-19th
century onwards, and many species became scarce and
(c) Meanwhile, the technological progress of the oil
industry threw up possibilities of finding vast reserves in
the white continent.
(d)Given the sorry history of human plunder, we could
have expected an imperial rush for land and natural
resources in Antarctica as bloody and widespread as
those that occurred when Europeans discovered the
(e) The race for Antarctic territory was already a
political fact by the early 20th century.
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