General Awareness - Jan 2016
The Union Ministry of Human Resource Development (MHRD) has constituted a Drafting Committee to frame the New Education Policy (NEP).
The committee will be headed by former Cabinet Secretary T. S. R. Subramanian and will have four members: Shailaja Chandra, former Chief Secretary, NCT of Delhi; Sewaram Sharma, former Home Secretary, NCT of Delhi; Sudhir Mankad, former Chief Secretary of Gujarat, and J. S. Rajput, former Director, NCERT.
The mandate of the committee is to go through the outcomes of wide-ranging consultation process, among others, initiated by the ministry on 26 January 2015 and draft a revision to the NEP 1986 and also submit Framework for Action.
The first Education Policy was introduced in 1968 under the Indira Gandhi government following recommendations of the Kothari Commission.
In 1986, Rajiv Gandhi announced the second policy on education which resulted in Operation Blackboard, a centrally-sponsored programme to supply the bare minimum crucial facilities to all primary schools. In 1992, this policy was modified under Prime Minister P. V. Narasimha Rao.
The Subramanian Panel will assess the status of the present education scenario, review the impact of the 1986 policy and the amended Education Policy of 1992, assimilate the feedback based on grassroot-level consultations and draft a new one keeping in mind the changed social, economic and technological context. The committee will be asked to submit its report by year end. The HRD Ministry, under Smriti Irani, had in early 2015 launched nation-wide consultations, at gram panchayat, block, district and state level, to collect feedback and suggestions for the new policy. This feedback will be provided to the drafting committee.
ICGS Arinjay, the 15th vessel of its class in the series of 20 such Fast Patrol Vessels, was commissioned at Kochi.
The Coast Guard ship, built by Cochin Shipyard Limited is 50 metres long, displaces 317 tons of water and has a maximum designed speed of 33 knots. The ship is capable of undertaking multifarious tasks such as surveillance, interdiction, search and rescue and medical evacuation. Post commissioning, the ship will be based at Okha, under the administrative and operational control of the Commander, Coast Guard Region (NW).
Shipwright School, the Indian Navy’s training establishment for architect officers, shipwright officers, and shipwright sailors, was commissioned as INS Vishwakarma. The commissioning of the seven-decade-old training establishment is meant to enhance the Navy’s in-house design and maintenance capabilities.
“This is a milestone in the long journey of the Shipwright School, which has contributed to transforming the Indian Navy into a designer’s and builder’s Navy,” Chief of Naval Staff Admiral R. K. Dhowan said.
The Shipwrights School has been training officers and sailors of the Indian Navy to keep its fleet fighting fit, he added. “It is a matter of pride that 47 ships and submarines are being built at Indian shipyards. The country has achieved near 100 per cent indigenisation of these new ships. Our aircraft carrier under construction, INS Vikrant, is being built with Indian steel. Such achievements make every Indian proud,” Admiral R. K. Dhowan said.
The Navy chief was all praise for the efforts of the officers and men of the Shipwright School in reviving the facility within a couple of weeks of being devastated by cyclone Hudhud in October 2014. “When I visited then, I felt it might be impossible for the Shipwright School to be restored. But then, I realised the word ‘impossible’ does not exist in the dictionary of the Eastern Naval Command, whose officers and men bounced back from the extensive destruction,” he said.
Iceland tops Global Gender Gap Report
The World Economic Forum (WEF) believes it will take another 118 years – or until 2133 – until the global pay gap between men and women is finally closed.
Women are only now earning the amount that men did in 2006, data from the WEF’s Global Gender Gap report says. It says progress on closing the gap has stalled in recent years at a time when more women are entering the workplace. In fact, nearly a quarter of a billion more women are in the global workforce today than a decade ago.
The Global Gender Gap Index 2015 ranks 145 economies according to how well they are leveraging their female talent pool, based on economic, educational, health-based and political indicators.
In several countries, more women are now going to university than men but – crucially – this is not necessarily translating into more women occupying skilled roles or leadership positions.
The WEF report looks at whether men and women have the same rights and opportunities in each country in four areas: health, education, economic participation and political empowerment.
Nordic countries are still doing the most to close the gender gap overall, just as they were ten years ago. They may not have achieved total equality, but Iceland (1), Norway (2), Finland (3) and Sweden (4) occupy the top four rankings out of 145 countries. “They have the best policies in the world for families,” says the report’s lead author, Saadia Zahidi. “Their childcare systems are the best and they have the best laws on paternity, maternity and family leave.”
Not far behind, though, is Rwanda (6) which sits above the U.S. and the UK in the index. Its high score is down to the number of female politicians active in the country. After the genocide there, a special effort was made to bring more women into politics; currently 64% of its parliamentarians are women. The country also has more women in its labour force than men.
Over the last decade one of the most dramatic changes has been in education. In fact, the report shows that a reverse gender gap is emerging in higher education, with more women in university than men in 98 countries.
India is ranked 108, thus moving up six positions in the Global Gender Gap Index 2015 compared to last year. This is mainly due to improvements in the Health and Survival and Political Empowerment categories of focus or pillars. In a year, India has more than doubled the percentage of women in ministerial positions (from 9 per cent to 22 per cent). It now ranks second in the region on the Political Empowerment pillar (it used to rank third last year on that pillar). Another positive element is that India’s performance on the Healthy life expectancy indicator slightly improved. One of the larger challenges that Indian women face, compared to other countries, is the disproportionate amount of time spent per day in unpaid work compared to men.
The rankings of the BRICS nations in the Global Gender Gap Index 2015 are as follows: Brazil – rank 85; Russia – 75; India – 108; China – 91, and South Africa – 17.
Global Gender Gap Index: Ten Best & Worst Countries
Top 10 countries Bottom 10 countries
1 Iceland 145 Yemen
2 Norway 144 Pakistan
3 Finland 143 Syria
4 Sweden 142 Chad
5 Ireland 141 Iran
6 Rwanda 140 Jordan
7 Philippines 139 Morocco
8 Switzerland 138 Lebanon
9 Slovenia 137 Mali
10 New Zealand 136 Egypt
Forbes ranks Vladimir Putin as the World’s Most Powerful Person
Forbes magazine released its annual list of the World’s Most Powerful People. The list comprises Who’s Who, whose actions move the planet.
Russian President Vladimir Putin was ranked as the world’s most powerful leader by Forbes after Russia managed to put the U.S. threat of an attack on Syria at bay. Russia also gave asylum to former NSA contractor Edward Snowden. The 63-year-old Russian president has, unsurprisingly, retained his position as the world’s most powerful person.
German Chancellor Angela Merkel ranked second followed by the U.S. President Barack Obama, Pope Francis, the head of the Roman Catholic Church, and Chinese President Xi Jinping.
Of the 73 listed, 28 are billionaires. Thirty of the individuals are Americans. And only nine are women – the same number as last year.
Forbes says the decision is made on the amount of money they control; the number of people they impact; their total spheres of influence; and how actively they wield their power.
The Indian Prime Minister Narendra Modi has been ranked the ninth most powerful person in the world and the second most powerful person in Asia, behind Xi Jinping.
Ranking Name Designation/Country/Organisation
1 Vladimir Putin President, Russia
2 Angela Merkel Chancellor, Germany
3 Barack Obama President, United States
4 Pope Francis Head, Roman Catholic Church
5 Xi Jinping President, China
6 Bill Gates Co-Chairman, Bill & Melinda Gates Foundation
7 Janet Yellen Governor, U.S. Federal Reserve
8 David Cameron Prime Minister, United Kingdom
9 Narendra Modi Prime Minister, India
10 Larry Page Co-founder, Google
ISRO launches GSAT-15
GSAT-15, India’s communication satellite, was launched successfully by the European Ariane 5 VA-227 launch Vehicle in the second week of November 2015. The 3164 kg GSAT-15 carries communication transponders in Ku-band as well as a GPS Aided GEO Augmented Navigation (GAGAN) payload operating in L1 and L5 bands.
The GSAT-15 satellite weighs 3164 kilograms and has been made at a cost of 278 crore. It carries a suite of 24 transponders which will help in Direct-to-Home (DTH) broadcasting. It also carries a GPS-Aided GEO Augmented Navigation (GAGAN) payload operating in L1 and L5 bands, which will help in aircraft navigation.
The Ariane-5 rocket has been hired at a cost of approximately 581 crore. An Arabsat communications satellite also accompanied the GSAT-15 on the same launch. The GSAT-15 was launched into a Geosynchronous Transfer Orbit (GTO) after its co-passenger Arabsat-6B (BADR-7) was injected into space.
India currently has a shortage of transponders in space, with the Indian satellite system being able to handle just a third of the required capacity; the rest being leased from foreign satellite owners.
If India wants to benefit from the economic reforms announced yesterday, which allows foreign direct investment in non-news channels through auto route, Teleports, DTH and Cable Networks, ISRO needs have many more transponders in space.
Norway tops, India ranks 99th in Prosperity Index
India has been ranked 99th in Legatum Prosperity Index 2015 out of 142 countries in overall prosperity index. India has finally managed to come within top 100 prosperous countries for the first time as per the report and also, climbed three places above in comparison to previous year. In 2014 it was ranked at number 102. But still the country is way below its neighbouring country China (52) and Sri Lanka (61), Thailand (48) Nepal (89) however, it has managed to rise above Bangladesh (103) by four points this year.
Legatum Institute is a UK-based think tank. The report findings have been generated based on the results of 89 variables under eight sub-indexes – economy, entrepreneurship and opportunity, governance, education, health, safety and security, personal freedom, social capital.
Out of all the eight indices, India’s governance has been ranked best with 53rd rank; however, social capital (129th), safety and security (114th) and health (107th) still remains a huge reason of worry for the government.
The report has raised major concern in security and safety of people across the globe. It reads out that since 2009 the world has become more dangerous place because in last seven years there have been dramatic decline in the safety and security sub-index in African and the Middle East and all other regions, except Europe, which has witnessed ‘some’ decline. This has been driven by increased tension, violence, and displacement of people as per the report.
As per the report, Norway has been ranked number one in the Prosperity Index, followed by Switzerland and Denmark. Singapore ranks first in the economy sub-index, up from 2nd last year, displacing Switzerland.
Surprisingly, as per the report United States is an increasing dangerous place with it going out from the list of top 30 countries in the sub-indices of safety and security.
On the other hand, UK visa norms are going stringent with each passing day; however, it has managed to be at number one in Europe for ease in entrepreneurship and opportunity indices.
The five nations of Canada, Norway, New Zealand, Iceland and Ireland have been ranked as the best five countries for being tolerant towards immigrants.
G20 leaders pledge to eliminate terrorism
The leaders of the Group of 20 (G20) nations pledged to redouble efforts to strike at the lifeblood of terrorist organizations by targeting how they are financed and the movement of foreign extremists across borders in the wake of the attack in Paris.
In a statement dedicated to tackling the global terrorist threat, the G20 leaders meeting in the Turkish resort of Antalya called for better coordination and exchange of information to cut off funding and a more comprehensive approach on addressing the conditions conducive to terrorism. They also looked at tightening borders to detect travel and bolstering aviation safety.
“We are concerned over the acute and growing flow of foreign terrorist fighters and the threat it poses for all states, including countries of origin, transit and destination,” the G-20 said.
The two-day summit in Antalya took place in the shadow of the killing of at least 128 people in Paris by terrorists linked to Islamic State. The attack has raised pressure on the U.S. President Barack Obama, Russia’s Vladimir Putin and other G-20 leaders to increase cooperation on battling the threat from militants.
Traditionally the G-20 has been a forum for economic discussion, but “the skies have been darkened by the horrific attacks that took place in Paris,” Mr Obama said. “The killing of innocent people based on a twisted ideology is an attack not just on France” but “on the civilized world,” he said, pledging to help hunt down the perpetrators.
Mr Putin said that, “We have all seen the horror that took place recently in Paris and we sympathize with the affected people. Russia is always in favour of joining efforts to deal effectively with the terrorist threat.”
The G-20 first addressed terrorism after the September 11 attacks on the U.S. in 2001 with efforts to clamp down on terrorist financing. The Paris attacks follow a deadly bombing recently in the Turkish capital Ankara and the downing of a Russian passenger jet over Egypt that the Islamic State has claimed.
The G-20 urged a quicker implementation of the Financial Action Task Force, which involves stopping individuals sending money to groups such as Islamic State, known as Daesh in Arabic, and tackling the black market for oil that’s key to its funding. Leaders also called for plans to prevent terrorists from exploiting technology, communications and resources to incite terrorist acts, including through the Internet. “It should be our aim to coordinate our action against Daesh,” European Union President Donald Tusk said in Antalya. “Co-operation between us and Russia is a crucial one.”
India and Bangladesh agreed to step up security co-operation
India and Bangladesh agreed to share information on militants as home secretaries of the two neighbours reviewed internal security and other cross-border issues.
“India assured us of providing information immediately if they get any information on militancy. We can eliminate terrorism and insurgency through bilateral understanding and intelligence sharing,” Bangladeshi home secretary Mozammel Haque Khan said after talks with his Indian counterpart Rajiv Mehrishi.
Mr Khan said the issue of Bangladeshi nationals being detained by Indian border forces was a major issue of the talks while “both the countries have agreed to reduce such incidents to zero”.
“For this both Bangladesh and India need to educate our people so that they do not cross the borders and abide by all international regulations in this regard. This would also ease the task of BGB and BSF and stop such killings,” Mr Haque said. He said cross-border drug smuggling was another major issue of the talks and “being a non-narcotics producing country Bangladesh sought Indian cooperation in this regard”.
“Indian authorities have assured us of whole hearted cooperation in this regard,” Mr Khan said.
India also raised the issues of the influx of fake Indian currency, cattle smuggling, and illegal infiltration and sought Bangladesh’s cooperation to completely stop these. Official talks between the two home ministries came within days of the extradition of separatist United Liberation Front of Assam (ULFA) leader Anup Chetia from Bangladesh and subsequent deportation of one of Bangladesh’s most wanted criminals, Nur Hossain, from India. India thanked Bangladesh for deporting Anup Chetia and asked for extradition of other Indian criminals from the country.
Anup Chetia, the ULFA’s founder general secretary, was arrested in Bangladesh in 1997 and was under detention on completion of his seven-year jail term for cross-border intrusion, carrying fake passports and illegally keeping foreign currencies.
IMF inducts China’s Yuan as reserve currency
The International Monetary Fund (IMF) approved China’s Yuan into its elite reserve currency by including the Chinese currency in its Special Drawing Rights (SDR) uniting the U.S. dollar, euro, British Pound and the Japanese Yen.
The IMF decision has been described as “an important milestone” for China, the world’s second largest economy. Adding the Yuan as a reserve currency will allow central banks to buy more of the Chinese currency, and boost investment in the Chinese stock market. International banking experts believe that within five years market players will invest at least U.S.$1 trillion in Chinese assets.
The historic decision has come after years of negotiations between Beijing and the IMF. The main obstacle was China’s monetary policy, which has kept the Yuan artificially low to boost domestic exports.
Beijing had to initiate a whole raft of reforms to secure admission, including easier access to Chinese money markets for foreigners, more frequent bond issues, and longer trading hours for the Yuan.
The list of currencies in the basket hasn’t been updated by the IMF since 2000, when the euro superseded the Franc and Deutsch Mark. The main opponents of including the Yuan as reserve currency have been Japan and the U.S..
With the decision, the Yuan, also known as the Renminbi, will join the U.S. dollar, euro, Japanese yen and British pound next year in the list of currencies the IMF uses as an international reserve asset.
Christine Lagarde, IMF managing director, called the decision “an important milestone in the integration of the Chinese economy into the global financial system. It is also recognition of the progress that the Chinese authorities have made in the past years in reforming China’s monetary and financial systems,” she said.
The decision by the IMF executive board solidifies China’s ambition to see the government-controlled Yuan achieve global status as one of the world’s top currencies alongside the U.S., Europe and Japan.
In 2014, China asked the IMF for the Yuan to be added to the Fund’s Special Drawing Rights list. As recently as August, the IMF considered the currency too tightly controlled to qualify. However, IMF staff experts in early November said that China had taken the steps necessary for the Yuan to be called “freely usable”, opening the way for the landmark decision.
Ms Lagarde said the Yuan’s inclusion in the basket was expected to help China to open up further to the world economy. The unexpected devaluation of the Yuan last August received good marks from the IMF as it expanded the currency’s movements based on market forces.
In addition, China announced recently that an initial group of foreign central banks had been allowed to enter the Chinese currency market, which was likely to promote further internationalisation of the Yuan in global trading.
IMF members can use the Special Drawing Rights list to obtain currencies to meet balance-of-payments needs. The Fund also issues its crisis loans – crucial to struggling economies such as Greece – valued in SDRs.
The Yuan’s entry into the IMF list takes effect on October 1, 2016. The decision puts the Bank of China under pressure to provide more transparency in line with its peers, such as the Federal Reserve and the European Central Bank.
Switzerland is world’s top offshore haven
Singapore and Hong Kong have increased their ranking for financial secrecy, with the Chinese territory rising to number two, behind only Switzerland in a 2015 index of the world’s offshore havens, compiled by the Tax Justice Network (TJN).
Both the Asian financial hubs have made insufficient reforms to their corporate secrecy regimes, according to the London-based TJN, which campaigns for greater transparency in finance. Singapore’s ranking moved to fourth from the fifth place it held in the organisation’s previous index in 2013, when Hong Kong placed third.
“Singapore, in fourth place, poses many of the same threats that Hong Kong does: a lack of serious reforms to its corporate secrecy regime; a lack of interest in creating country-by-country reporting or in creating public registries of beneficial ownership,” the TJN said.
The two cities each account for about 4 per cent of the global market for offshore financial services, the organisation said. The hubs are well exposed to offshore flows because of rising assets under management and their status as regional financial hubs, according to the TJN.
The U.S. was ranked third for its refusal to take part in a global system for exchanging bank data created by the Organisation for Economic Cooperation and Development (OECD).
Shockwaves were sent through the offshore industry two years ago when U.S. laws came into force compelling banks and other financial companies to hand over details of overseas assets belonging to American citizens. If they refused, under the Foreign Account Tax Compliance Act (FATCA), firms faced punishing U.S. taxes.
The aggressive unilateral approach—loathed by tax havens—was quickly seen as setting a new gold standard for cross-border information sharing in the battle against tax evasion and money laundering. The OECD quickly drew up copycat measures, but their effectiveness still depends on agreement from major financial centres.
So far the U.S. appears not to be cooperating with the creation of a common standard for information sharing between countries, as drawn up by the OECD. Without its support, TJN argues, several other countries have felt they too can afford to offer only partial support for the project. ”Washington’s independent-minded approach risks tearing a giant hole in international efforts to crack down on tax evasion, money laundering and financial crime,” the TJN report said.
As long ago as 2009, the U.S. President Barack Obama set out his determination to take on the offshore industry, making it a campaigning issue in his first presidential race. He highlighted the case of Ugland House, the Cayman Islands head office of the law firm Maples & Calder, where he said 12,000 U.S.-based corporations were housed. “That’s either the biggest building in the world or the biggest tax scam in the world,” he said. But critics quickly pointed to similar examples in the U.S., such as 1209 North Orange Street, Delaware, used as an address by more than 6,500 companies.
Like the U.S., Britain too remains a central player in the vast financial secrecy industry despite championing corporate transparency on the international stage, the TJN report found. It came 15th in the 2015 index.
New laws to create a public register of ownership for every UK company, and free online searches for company accounts, have helped Britain’s standing. But the TJN study is highly critical of the UK’s failure to force its global network of affiliated offshore tax havens – including Jersey, the British Virgin Islands, Bermuda and the Cayman Islands – to produce similar ownership registers.
Britain has also played an important role in preventing transparency initiatives from extending to offshore trusts, TJN said. “Though the UK isn’t in our top 10, it supports a network of secrecy jurisdictions around the world … whose trusts and shell companies hold many trillions of dollars’ worth of assets,” the report said. “Had we treated the UK and its dependent territories as a single unit it would easily top the 2015 index, above Switzerland.”
The TJN’s financial secrecy index measures a range of secrecy criteria with the result for each jurisdiction then weighted according to the size of financial services offered to non-residents. The index has been used by asset tracing specialists and parliamentary inquiries, and has appeared in peer-reviewed academic journals.
Govt launches three gold schemes to reduce rising demand
In a move to reduce the demand for physical gold, Prime Minister Narendra Modi launched three gold related schemes, including ‘India gold coin’ bearing Ashok Chakra, gold monetisation and sovereign gold bond schemes.
The gold monetisation schemes (GMS) aims to tap household gold stocks of around 22,000 tonnes, the sovereign bond scheme would help shift part of the estimated 300 tonnes of physical gold bars and coins purchased every year in the country for investment into the demat gold bonds.
Gold coins
o The coins will be available in denominations of 5 and 10 gram. A 20 gram bar or bullion will also be available. About 15,000 coins of 5 gm, 20,000 coins of 10 gm and 3,750 gold bullions will be made available through MMTC outlets.
o The Indian Gold coin is unique in many aspects and will carry advanced anti-counterfeit features and tamper proof packaging that will aid easy recycling.
o These coins will be distributed through designated and recognised MMTC outlets.
Gold Monetisation Scheme
Resident Indians (individuals, HUF, trusts, including mutual funds/exchange traded funds registered under SEBI norms) can make deposits under the scheme. The minimum deposit at any one time will be raw gold (bars, coins, jewellery excluding stones and other metals) equivalent to 30 grams of the precious metal of 995 fineness. There is no maximum limit for deposit under the scheme and the metal will be accepted at the Collection and Purity Testing Centres (CPTC), certified by the Bureau of Indian Standards.
Few things to know about the scheme:
v Gold Monetisation Scheme can earn up to 2.50 per cent interest rate on their idle gold.
v Interest rate on Medium and Long Term Government Deposit (MLTGD) are 2.25 per cent and 2.20 per cent, respectively.
v The tenor of medium term would be between 5-7 years while long term would for 12-15 years tenure.
v The deposit under MLTGD category will be accepted by the designated banks on behalf of the central government.
v Interest on deposits under the scheme will start accruing from the date of conversion of gold deposited into tradable gold bars after refinement or 30 days after the receipt of gold at the Collection and Purity Testing Centres (CPTC) or the bank’s designated branch, as the case may be and whichever is earlier.
v The principal and interest of the deposit under the scheme will be denominated in gold.
v The gold received under MLTGD will be auctioned by the agencies notified by the government and the sale proceeds will be credited to government’s account held with the RBI.
v The RBI will maintain the Gold Deposit Accounts denominated in gold in the name of the designated banks that will in turn hold sub-accounts of individual depositors
Sovereign Gold Bond
Instead of buying gold in physical form investors can park their money in bonds which are backed by gold. The bonds will be available both in demat and paper form. Sovereign Gold Bond has more or equal advantage against the physical gold. The bond will be issued by the RBI on behalf of the Government of India. The bond would be restricted for sale to resident Indian entities and the maximum allowable limit is 500 grams per person per year.
Few things to know about the scheme:
Ø The RBI has fixed the public issue price of sovereign gold bonds at 2,684 per gram.
Ø These bonds will be issued in denominations of 5, 10, 50 and 100 grams of gold or other denominations.
Ø Applications for the bond will be accepted from November 5-20. The Bonds will be issued on November 26.
Ø The Bonds will be sold through banks and designated post offices as may be notified.
Ø The borrowing through issuance of Bond will form part of market borrowing programme of Government.
Ø Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.
Ø Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar Card/PAN or TAN/Passport
will be required.
will be required.
Ø The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961) and the capital gains tax shall also remain same as in the case of physical gold. Bonds will be tradable on exchanges/NDS-OM from a date to be notified by RBI.
Ø The Bonds will be eligible for Statutory Liquidity Ratio (SLR). Commission for distribution shall be paid at the rate of 1% of the subscription amount.
Cabinet gives nod to Uday Scheme of Power Ministry
The Union Cabinet gave its approval to a new scheme moved by the Ministry of Power – Ujwal DISCOM Assurance Yojna or UDAY. UDAY provides for the financial turnaround and revival of Power Distribution companies (DISCOMs), and importantly also ensures a sustainable permanent solution to the problem.
UDAY, if implemented effectively, will be a path breaking reform for realizing the Government of India’s vision of affordable and accessible 24x7 Power for All. It is another decisive step furthering the landmark strides made in the power sector over the past one and a half years, with the sector witnessing a series of historic improvements across the entire value chain, from fuel supply (highest coal production growth in over two decades), to generation (highest ever capacity addition), transmission (highest ever increase in transmission lines) and consumption (over 2.3 crore LED bulbs distributed).
The weakest link in the value chain is distribution, wherein DISCOMs in the country have accumulated losses of approximately 3.8 lakh crore and outstanding debt of approximately 4.3 lakh crore (as on March 2015). Financially stressed DISCOMs are not able to supply adequate power at affordable rates, which hampers quality of life and overall economic growth and development. In fact, efforts towards 100% village electrification, 24X7 power supply and clean energy cannot be achieved without performing DISCOMs. Power outages also adversely affect national priorities like “Make in India” and “Digital India”. In addition, default on bank loans by financially stressed DISCOMs has the potential to seriously impact the banking sector and the economy at large.
Due to legacy issues, DISCOMs are trapped in a vicious cycle with operational losses being funded by debt. Outstanding debt of DISCOMs has increased from about 2.4 lakh crore in 2011–12 to about 4.3 lakh crore in 2014–15, with interest rates upto14-15%.
UDAY assures the rise of vibrant and efficient DISCOMs through a permanent resolution of past as well as potential future issues of the sector. It empowers DISCOMs with the opportunity to break even in the next 2–3 years. This is through four initiatives (i) Improving operational efficiencies of DISCOMs; (ii) Reduction of cost of power; (iii) Reduction in interest cost of DISCOMs; (iv) Enforcing financial discipline on DISCOMs through alignment with State finances.
The Central Government says that operational efficiency improvements like compulsory smart metering, upgradation of transformers and meters, energy efficiency measures like efficient LED bulbs, agricultural pumps, fans and air-conditioners will reduce the average AT&C loss from around 22% to 15% and eliminate the gap between Average Revenue Realized (ARR) & Average Cost of Supply (ACS) by 2018–19.
The Power Ministry believes that UDAY is a shining example of the utilization of the best principles of cooperative and competitive federalism and has been evolved through discussions at the highest levels with multiple states. Adopting UDAY is optional for states, but provides the fastest, most efficient and financially most feasible way for providing 24X7 Power for All. It will be operationalized through a tri-partite agreement amongst the Ministry of Power, State Government and the DISCOM. It will also accelerate the process of reform across the entire power sector and will ensure that power is accessible, affordable and available for all. UDAY truly heralds the uday (rise), of a ‘Power’ful India, as the Power Ministry says.
Salient Features of UDAY
· States shall take over 75% of DISCOM debt as on 30 September 2015 over two years – 50% of DISCOM debt shall be taken over in 2015–16 and 25% in 2016–17.
· Government of India will not include the debt taken over by the states as per the above scheme in the calculation of fiscal deficit of respective states in the financial years 2015–16 and 2016–17.
· States will issue non-SLR including SDL bonds in the market or directly to the respective banks/financial institutions (FIs) holding the DISCOM debt to the appropriate extent.
· DISCOM debt not taken over by the state shall be converted by the banks/FIs into loans or bonds with interest rate not more than the bank’s base rate plus 0.1%Alternately, this debt may be fully or partly issued by the DISCOM as state guaranteed DISCOM bonds at the prevailing market rates which shall be equal to or less than bank base rate plus 0.1%.
· State DISCOMs will comply with the Renewable Purchase Obligation (RPO) outstanding since 1st April, 2012, within a period to be decided in consultation with Ministry of Power.
· States accepting UDAY and performing as per operational milestones will be given additional/priority funding through Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY), Integrated Power Development Scheme (IPDS), Power Sector Development Fund (PSDF) or other such schemes of Ministry of Power and Ministry of New and Renewable Energy.
· Such states shall also be supported with additional coal at notified prices and, in case of availability through higher capacity utilization, low cost power from NTPC and other Central Public Sector Undertakings (CPSUs).
· States not meeting operational milestones will be liable to forfeit their claim on IPDS and DDUGJY grants.
· UDAY is optional for all states. However, states are encouraged to take the benefit at the earliest as benefits are dependent on the performance.