(FREE) UPSC Current Affairs 2024 PDF

Current Affairs for IAS Exams - 25 September 2017

::National ::

Union government is open to entry of private players in railways

The Union government is open to the idea of giving operations of railway lines to private players for enhancing competition, Railway Minister Piyush Goyal said
“It’s an exciting proposition. We will be able to generate competition in the process and improve customer satisfaction,” Mr. Goyal told The Hindu on board the Mahanama Express train, launched between Prime Minister
Narendra Modi’s old constituency in Vadodara and his present one in Varanasi on Friday, ahead of the Gujarat Assembly elections.
The Railways are the largest transportation network in the world, running 12,000 trains a day over 65,000 route km.
Mr. Goyal, who took charge of the Railway Ministry on September 4 after Suresh Prabhu resigned following a string of derailments, said he was studying various models for attracting more private players.
Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe recently laid the foundation stone for India’s first bullet train project on the Ahmedabad-Mumbai sector worth Rs. 1.08 lakh crore.
Mr. Goyal is also re-tuning policy to attract private companies for modernising railway stations. To begin with, the Railways have decided to do away with the ‘Swiss Challenge’ model of awarding railway stations to private players and taken a slew of measures to lease out at least 100 stations.
To begin with, the Railways have decided to do away with the ‘Swiss Challenge’ model of awarding railway stations to private players and taken a slew of measures to lease out at least 100 stations.
The steps include increasing the lease tenure from 45 years to 99 years, allowing private players to sub-lease stations for increasing their investment value and mortgaging assets to allow banks to give low-cost funds, he said.
In July 2015, the Union Cabinet had approved redeveloping 400 railway stations on ‘as is where is’ basis by inviting open bids from private sector developers through the Swiss Challenge model under which any bidder can offer to improve upon a project proposal submitted by another player. However, the project developer, who had originally submitted the plan, is given an opportunity to match the bid amount.
The Railway Ministry has so far invited bids for 23 stations that had seen lukewarm response from the private sector prompting Prime Minister Narendra Modi to call for speeding up the public-private partnership plan in a review meeting held in April this year.
Mr. Goyal, who also holds charge of the Coal Ministry, said the Railways will move from diesel to electric locomotives.
After Mr. Goyal took charge, the Railways decided to shelve plans to set up a diesel locomotive plant in Marhowrah district of Bihar.
The project was part of the Rs. 40,000 crore contracts awarded to General Electric (GE) and Alstom to set up diesel and electric locomotives factories at Marhowrah and Madhepura, respectively, in 2015.

Lingayats movement

The demand for religion status for Lingayat gathered fresh momentum with another large mobilisation of community members in Kalaburagi. It was the fourth rally in the last two-and-a-half months after Bidar, Belagavi and Latur (Maharashtra) pressing for the demand.
Lakhs of community members from different parts of Hyderabad Karnataka region as well as Maharashtra, Andhra Pradesh and Telangana thronged the city in thousands of vehicles and public transport systems.
Holding saffron flags and banners, wearing white Gandhi caps imprinted with social reformer Basaveshwara’s image, playing traditional drums, singing Vachana compositions of Basaveshwara and other Sharanas (reformers) of the 12th century and raising slogans, the community members marched from APMC Market Yard through the Supermarket and Jagat Circle to NutanVidyalay Grounds where a public meeting was held.
Heads and chief administrators of over 20 Lingayat mutts and institutions, including Mate Mahadevi, Sharanabasappa Appa, TontadaSiddalinga Swami, Nijagunanand Swami and ShivamurthyMurughaSharana participated in the rally.
“We have been an independent religion since in 12th century. We are now simply demanding for Constitutional recognition. We will not rest till our demand is met,” the Medical Education Minister [SharanprakashPatil] declared from the dais during his opening remarks. His declaration received an overwhelming response from the crowd. Mr. ShivanandJamdar reasoned how Lingayat was an independent religion. He clarified that the
Lingayatmobilisations in the recent times were not directed against any religion or any religious head, but for Constitutional recognition alone.
“Veerashaiva and Lingyayat are not one and the same. Vedas, Upanishats, Agama and other ancient Vedic literature form the basis for the Veerashaiva sect whereas Vachana literature composed by Basaveshwara and other social reformers of the 12th century is the basis for Lingayat religion. We are an independent religion and Vachana literature is our religious text,” Mr. Jamdar said.
The gigantic stage that accommodated a large number of seers and community leaders was named after renowned scholar late M.M. Kalburgi who, through his in-depth research, had provided ideological justifications to the demand for religion status for Lingayat. A collection of scholarly articles on Lingayat religion authored by Dr. Kalburgi was released by Water Resources Minister M.B. Patil.

SC opens door for Colour blind students to pursue medical education

The Supreme Court has opened the doors for colour-blind students to pursue medical education by ordering the admission of two such candidates, who have scored high marks in the entrance examination, for the next academic year.
Terming its action “transcendental importance of justice”, the court said peculiar facts and circumstances of the case required it to invoke special powers under Article 142 of the Constitution.
The two students had secured high marks in the entrance examination conducted by the Tripura government in 2015.
Though there are no statutory provisions barring such students from pursuing the MBBS course, various colleges and the Medical Council of India were arbitrarily denying admissions to candidates suffering from Colour Vision Deficiency, popularly called colour blindness.
“In view of the transcendental importance of justice, we direct that the appellants shall be admitted in the MBBS course in the respondent No.2 College for the academic year 2018-2019,” a Bench headed by Chief Justice Dipak Misra said.

::International ::

Kurds preparing to vote in referendum

Iraqi Kurds were preparing to vote in a referendum set for Monday on independence for their autonomous northern region, despite warnings within the country and from neighbours Iran and Turkey.
Iran upped the pressure on Sunday, announcing it had blocked all flights to and from Kurdistan at Baghdad’s request.
Iraq’s federal government has called the referendum unconstitutional and there are concerns the vote could lead to unrest.
Washington and many Western countries have also called for its postponement or cancellation, saying it will hamper the fight against the Islamic State.
Iran and Turkey have sizeable Kurdish populations of their own and fear the vote will stoke separatist aspirations at home.

Merkel clinched fourth term

Chancellor Angela Merkel clinched a fourth term in Germany’s election on Sunday, but her victory was clouded by the hard-right AfD party winning its first seats in parliament.
Merkel, who after 12 years in power held a double-digit lead for most of the campaign, scored around 33% vote with her conservative Christian Union bloc, according to exit polls.

BUSINESS

‘Flow of financial resources to the commercial sector’

With the banks busy chipping away at their mountain of bad loans and operating on precarious levels of capital, who will fund the credit needs of Indian businesses? Reserve Bank of India’s recently released annual report for 2016-17 shows that many new sources of finance are springing up.
Domestic businesses are increasingly turning to the bond markets, Non-Banking Finance Companies (NBFCs) and foreign direct investors to meet their funding needs.
RBI’s compilation on the ‘Flow of financial resources to the commercial sector’ shows that FY17 marked a watershed year for Indian banks’ share in commercial credit.
In the four years ended FY17, domestic businesses soaked up between Rs. 12.8 lakh crore and Rs. 15.1 lakh crore, per year in credit funding. Until FY16, the banking system met 50% or more of this requirement.
But in FY17, banks’ share in new credit slumped to 35%, while non-bank sources met 65% of the financing requirement. Non-bank sources lent as much as Rs. 9.25 lakh crore to businesses, dwarfing bank credit flow of Rs. 5.02 lakh crore. So, who are these non-bank lenders to enterprises and how are they funding themselves?
For years, market players in India have bemoaned the underdeveloped state of the domestic bond market. But the bond market has seen a remarkable pickup in the last three years.
In FY17, public issues and private placements of corporate bonds (including commercial paper) raised Rs. 3.16 lakh crore for firms, a 56% jump from the Rs. 2.03 lakh crore in FY16. This took care of 22% of the total funding requirements of commercial enterprises.
This number has almost doubled from Rs. 1.65 lakh crore in FY14. This data only includes the bonds directly floated by commercial enterprises, and not the money raised by finance companies for on-lending.
On the borrowing side, firms have taken to bond issues to source more of their requirements because bond markets have transmitted the recent fall in interest rates much more quickly and effectively than banks. In the last couple of years, it has been much cheaper for high-quality corporate borrowers to tap bond markets.
On the lending side, retail savings flooding into mutual funds, insurance firms and pension funds have helped stoke the domestic institutional investors’ demand for bonds.
Non Banking Finance Companies (NBFCs) have emerged as key financiers to businesses, especially MSMEs. RBI data shows that in FY17, NBFCs and housing finance companies extended Rs. 2.59 lakh crore in credit to commercial enterprises, meeting 18% of their total credit needs. NBFC lending jumped 28% over FY16.
In the last three years though, wholesale NBFCs have aggressively stepped into the breach. Leveraging their deep regional reach, closer relationships with customers and alternative credit appraisal systems, NBFCs have driven a manifold expansion in loans against property and unsecured business loans to MSMEs.
A Crisil study in November 2016 noted that NBFCs had gained a 3 percentage point share of overall credit pie from banks in the last three years as a result of their mortgage and MSME lending push, and would continue to gain share over the next three years.
Housing finance NBFCs have emerged as a major source of funds for real estate developers too, with financial institutions such as LIC, SIDBI, National Housing Bank and NABARD playing a complimentary role in funding other businesses.
Two factors have helped NBFCs expand their lending activities at the cost of banks — their comfortable capital adequacy ratios and their ability to borrow at lower costs due to falling interest rates.
In the last couple of years, NBFCs have been even more aggressive than corporates in tapping the bond markets for capital. They have also augmented their resources by borrowing from banks and institutional investors through securitisation deals. Lately though, there is worry the sluggish property market will force NBFCs to tread more cautiously on loans against property.
While domestic non-bank sources such as bond markets and NBFCs have met about 46% of the total credit needs of businesses in FY17, foreign sources have chipped in with about 19% (Rs. 2.75 lakh crore).
Here, the good news is that rather than External Commercial Borrowings or short-term credit, it is the more durable FDI money that is meeting this need.
While it heartening to see these alternative sources filling in for bank credit, it is essential to recognise that these cannot completely substitute for bank lending. In April-June 2017 for instance, bank credit flow to the commercial sector actually shrank by Rs. 1.92 lakh crore. Despite non-bank sources pumping in Rs. 1.65 lakh crore, the aggregate flow of finance to business contracted by Rs. 27,300 crore.
The other useful takeaway from the analysis is that one can no longer assume a one-to-one correlation between bank credit growth and the GDP growth numbers. To really measure credit expansion in the economy, we need data on both bank and non-bank lending.
To extend this logic further, if bank credit growth slumps to a 20-year low as it did in March this year, it needn’t necessarily spell doom for the economy.

GSTN tweaked features, handled robust return filing’

GST Network (GSTN) has tweaked some of the features on its portal over the past month to make the system more robust and allow glitch-free tax payment facility to almost 35 lakh assessees, CEO Prakash Kumar said Of the total 87.33 lakh registered businesses on the GSTN, which manages the IT infrastructure of the new tax regime, 68 lakh were eligible to pay taxes in August.
Of the total registered taxpayers, 24.56 lakh are new registrations, while 62.77 lakh have migrated from the earlier excise, service tax and VAT regime.
Mr. Kumar said the GSTN portal had handled a humongous load of 1.3 lakh tax return filings and payments per hour on September 20 — the last day of filing of August tax returns.
A lot of businesses file returns even after the end of due date as the [GST] Council has done away with late payment fee. This delayed filing of returns used to happen at the time of VAT payment as well in States
The Ministerial panel under Bihar Deputy Chief Minister Sushil Modi to look into glitches in GST Network will meet on October 4 to assess improvement in functioning of the portal.
The group of ministers will meet just two days before the full GST Council meeting on October 6 and would update the Council on its findings.
GST Network (GSTN) had faced glitches during the GSTR-3B filing for July, which had forced the government to extend the due date for filing of returns.
As many as 49.68 lakh returns in GSTR-3B were filed for July. This compares with 59.6 lakh businesses who are required to file returns. Taxes of more than Rs. 95,000 crore were collected in the maiden month of roll-out.
The GST Council had constituted the group of ministers to sort out the issues faced by businesses while filing returns and paying taxes on GSTN portal.

GST set to enhance competitiveness of MSMEs

The Goods and Services Tax (GST) is all set to enhance the competitiveness of the almost five crore Micro, Small and Medium Enterprises (MSMEs) that account for 25% of employment, 40% of industrial output and 45% of exports of the country. This, by making them a part of organised commerce and offering them a level-playing field.
A simplified tax structure and a unified market are the two great promises of GST but the key benefits for MSMEs, a majority of whom are getting into the indirect tax net for the first time, include lower freight costs, which is estimated to come down by 1.5-2%.
Significant benefits will be seen in lower cost of raw materials (in the past 2% CST was applied to raw materials imported from other states), and a lower tax burden. These benefits will have a more significant effect on boosting the cost competitiveness of MSMEs — a sector comprising tens of thousands of self-funded proprietary firms, private self-help groups, private cooperatives, khadi, village and coir industries.
The market base for MSMEs will grow as tax complexities of interstate sales disappear. Original equipment manufacturers and corporates will come forward to procure components, semi-finished and finished products from MSMEs irrespective of location.
Since there is no burden of tax on interstate sales, MSMEs will also have no issues in accepting orders from other States. They can also compete with low-cost imports, as the tax is the same for both locally manufactured as well as imported products — especially those coming from overseas low-cost producers.
MSMEs will also enjoy ease of doing business as there will be no complexities in registration.
There will be no, or minimal, physical interface of bureaucracy as registration, payments, input tax credit and tax liability adjustment, returns, and refunds will now happen electronically. This will bring transparency in compliance and will also reduce the compliance cost.
However, the impact of GST on MSMEs will not be the same for all segments — electrical equipment, for instance, is expected to benefit from lower freight costs and tax rates, while there may be no big positive impact for leather and footwear sectors that are facing stiff foreign competition.
On the other side, the cost of compliance is a big issue for MSMEs that do not have enough specialised manpower, managerial bandwidth, access to facilitation services. GST-registered organisations will have to file returns more often and regularly.
There is a view that availing input credit only for tax paid by the supplier shifts the onus on to the customer and this could affect the trust between supplier and customer, especially for one-time transactions.
On the other hand, there will be a new situation where the customer and supplier relationship will be based on compliance.
That is, customers will prefer to do business only with suppliers who are compliant. MSMEs will have to get used to regularising the filings of their returns, as compliance will become a business imperative.
GST is a massive reform and some hiccups in the initial months are unavoidable. The advantages of having a unified tax system and easy input credits will outweigh the teething troubles the industry may experience in the short term.
MSMEs can hope that most of the current challenges will be a story of the past soon. If the government can take corrective measures in a proactive manner, the GST system will prove to be a boon for industry in general, and MSMEs in particular.

Graded Surveillance Measure

SEBI introduced the measure to keep a tab on securities that witness an abnormal price rise that is not commensurate with financial health and fundamentals of the company such as earnings, book value, price to earnings ratio among others.
The underlying principle behind the graded surveillance framework is to alert and protect investors trading in a security, which is seeing abnormal price movements.
SEBI may put shares of companies under the measure for suspected price rigging or under the ambit of ‘shell companies’. The measure would provide a heads up to market participants that they need to be extra cautious and diligent while dealing in such securities put under surveillance.
Once a firm is identified for surveillance it goes through six stages with corresponding surveillance actions and the restrictions on trading in those securities gets higher progressively.
In the first stage the securities are put in the trade-to-trade segment (meaning no speculative trading is allowed and delivery of shares and payment of consideration amount are mandatory). A maximum of 5% movement in share price is allowed.
In the second stage, in addition to the trade-to-trade segment, the buyer of the security has to put 100% of trade value as additional surveillance deposit. The deposit would be retained by the exchanges for a period of five months and refunded in a phased manner.
In the third stage, trading is permitted only once a week ie every Monday, apart from the buyer putting 100% of the trade value as additional surveillance deposit.
In the fourth stage, trading would be allowed once a week and the surveillance deposit increases to 200% of the trade value.
In the fifth stage, trading would be permitted only once a month (first Monday of the month) with additional deposit of 200%.
In the sixth and final stage, there are maximum restrictions.
Trading is permitted only once a month at this stage, with no upward movement allowed in price. Also, the additional surveillance deposit would be 200%.
There would a quarterly review of securities. Based on criteria, the securities would be moved from a higher stage to a lower stage in a sequential manner.
As and when a security is shifted to various levels of surveillance, it is publicly announced on a daily basis on BSE and NSE websites as well as through circulars to the stock brokers. Moreover, the exchanges can also appoint independent auditors to audit the books of accounts of these companies and do forensic audit, wherever needed.
This indirectly may also be an indication that the sudden rise in either the volumes traded or the price increase are not commensurate with the fundamentals of the said companies and hence small / retail investors are protected from getting stuck in such stocks inadvertently on some wrong advice.
The only challenge for the small investors is that these announcements are often made at very short notice and implemented from the next day itself thus giving those who have already entered the stock less than adequate time to exit it.
Of course, there is also potentially another risk. For example, even if time is given, the stock might crash next day on the news, triggering the lower price circuit and leaving no exit opportunity.

::Economy ::

‘Flow of financial resources to the commercial sector’

With the banks busy chipping away at their mountain of bad loans and operating on precarious levels of capital, who will fund the credit needs of Indian businesses? Reserve Bank of India’s recently released annual report for 2016-17 shows that many new sources of finance are springing up.
Domestic businesses are increasingly turning to the bond markets, Non-Banking Finance Companies (NBFCs) and foreign direct investors to meet their funding needs.
RBI’s compilation on the ‘Flow of financial resources to the commercial sector’ shows that FY17 marked a watershed year for Indian banks’ share in commercial credit.
In the four years ended FY17, domestic businesses soaked up between Rs. 12.8 lakh crore and Rs. 15.1 lakh crore, per year in credit funding. Until FY16, the banking system met 50% or more of this requirement.
But in FY17, banks’ share in new credit slumped to 35%, while non-bank sources met 65% of the financing requirement. Non-bank sources lent as much as Rs. 9.25 lakh crore to businesses, dwarfing bank credit flow of Rs. 5.02 lakh crore. So, who are these non-bank lenders to enterprises and how are they funding themselves?
For years, market players in India have bemoaned the underdeveloped state of the domestic bond market. But the bond market has seen a remarkable pickup in the last three years.
In FY17, public issues and private placements of corporate bonds (including commercial paper) raised Rs. 3.16 lakh crore for firms, a 56% jump from the Rs. 2.03 lakh crore in FY16. This took care of 22% of the total funding requirements of commercial enterprises.
This number has almost doubled from Rs. 1.65 lakh crore in FY14. This data only includes the bonds directly floated by commercial enterprises, and not the money raised by finance companies for on-lending.
On the borrowing side, firms have taken to bond issues to source more of their requirements because bond markets have transmitted the recent fall in interest rates much more quickly and effectively than banks. In the last couple of years, it has been much cheaper for high-quality corporate borrowers to tap bond markets.
On the lending side, retail savings flooding into mutual funds, insurance firms and pension funds have helped stoke the domestic institutional investors’ demand for bonds.
Non Banking Finance Companies (NBFCs) have emerged as key financiers to businesses, especially MSMEs. RBI data shows that in FY17, NBFCs and housing finance companies extended Rs. 2.59 lakh crore in credit to commercial enterprises, meeting 18% of their total credit needs. NBFC lending jumped 28% over FY16.
In the last three years though, wholesale NBFCs have aggressively stepped into the breach. Leveraging their deep regional reach, closer relationships with customers and alternative credit appraisal systems, NBFCs have driven a manifold expansion in loans against property and unsecured business loans to MSMEs.
A Crisil study in November 2016 noted that NBFCs had gained a 3 percentage point share of overall credit pie from banks in the last three years as a result of their mortgage and MSME lending push, and would continue to gain share over the next three years.
Housing finance NBFCs have emerged as a major source of funds for real estate developers too, with financial institutions such as LIC, SIDBI, National Housing Bank and NABARD playing a complimentary role in funding other businesses.
Two factors have helped NBFCs expand their lending activities at the cost of banks — their comfortable capital adequacy ratios and their ability to borrow at lower costs due to falling interest rates.
In the last couple of years, NBFCs have been even more aggressive than corporates in tapping the bond markets for capital. They have also augmented their resources by borrowing from banks and institutional investors through securitisation deals. Lately though, there is worry the sluggish property market will force NBFCs to tread more cautiously on loans against property.
While domestic non-bank sources such as bond markets and NBFCs have met about 46% of the total credit needs of businesses in FY17, foreign sources have chipped in with about 19% (Rs. 2.75 lakh crore).
Here, the good news is that rather than External Commercial Borrowings or short-term credit, it is the more durable FDI money that is meeting this need.
While it heartening to see these alternative sources filling in for bank credit, it is essential to recognise that these cannot completely substitute for bank lending. In April-June 2017 for instance, bank credit flow to the commercial sector actually shrank by Rs. 1.92 lakh crore. Despite non-bank sources pumping in Rs. 1.65 lakh crore, the aggregate flow of finance to business contracted by Rs. 27,300 crore.
The other useful takeaway from the analysis is that one can no longer assume a one-to-one correlation between bank credit growth and the GDP growth numbers. To really measure credit expansion in the economy, we need data on both bank and non-bank lending.
To extend this logic further, if bank credit growth slumps to a 20-year low as it did in March this year, it needn’t necessarily spell doom for the economy.

GSTN tweaked features, handled robust return filing’

GST Network (GSTN) has tweaked some of the features on its portal over the past month to make the system more robust and allow glitch-free tax payment facility to almost 35 lakh assessees, CEO Prakash Kumar said Of the total 87.33 lakh registered businesses on the GSTN, which manages the IT infrastructure of the new tax regime, 68 lakh were eligible to pay taxes in August.
Of the total registered taxpayers, 24.56 lakh are new registrations, while 62.77 lakh have migrated from the earlier excise, service tax and VAT regime.
Mr. Kumar said the GSTN portal had handled a humongous load of 1.3 lakh tax return filings and payments per hour on September 20 — the last day of filing of August tax returns.
A lot of businesses file returns even after the end of due date as the [GST] Council has done away with late payment fee. This delayed filing of returns used to happen at the time of VAT payment as well in States
The Ministerial panel under Bihar Deputy Chief Minister Sushil Modi to look into glitches in GST Network will meet on October 4 to assess improvement in functioning of the portal.
The group of ministers will meet just two days before the full GST Council meeting on October 6 and would update the Council on its findings.
GST Network (GSTN) had faced glitches during the GSTR-3B filing for July, which had forced the government to extend the due date for filing of returns.
As many as 49.68 lakh returns in GSTR-3B were filed for July. This compares with 59.6 lakh businesses who are required to file returns. Taxes of more than Rs. 95,000 crore were collected in the maiden month of roll-out.
The GST Council had constituted the group of ministers to sort out the issues faced by businesses while filing returns and paying taxes on GSTN portal.

GST set to enhance competitiveness of MSMEs

The Goods and Services Tax (GST) is all set to enhance the competitiveness of the almost five crore Micro, Small and Medium Enterprises (MSMEs) that account for 25% of employment, 40% of industrial output and 45% of exports of the country. This, by making them a part of organised commerce and offering them a level-playing field.
A simplified tax structure and a unified market are the two great promises of GST but the key benefits for MSMEs, a majority of whom are getting into the indirect tax net for the first time, include lower freight costs, which is estimated to come down by 1.5-2%.
Significant benefits will be seen in lower cost of raw materials (in the past 2% CST was applied to raw materials imported from other states), and a lower tax burden. These benefits will have a more significant effect on boosting the cost competitiveness of MSMEs — a sector comprising tens of thousands of self-funded proprietary firms, private self-help groups, private cooperatives, khadi, village and coir industries.
The market base for MSMEs will grow as tax complexities of interstate sales disappear. Original equipment manufacturers and corporates will come forward to procure components, semi-finished and finished products from MSMEs irrespective of location.
Since there is no burden of tax on interstate sales, MSMEs will also have no issues in accepting orders from other States. They can also compete with low-cost imports, as the tax is the same for both locally manufactured as well as imported products — especially those coming from overseas low-cost producers.
MSMEs will also enjoy ease of doing business as there will be no complexities in registration.
There will be no, or minimal, physical interface of bureaucracy as registration, payments, input tax credit and tax liability adjustment, returns, and refunds will now happen electronically. This will bring transparency in compliance and will also reduce the compliance cost.
However, the impact of GST on MSMEs will not be the same for all segments — electrical equipment, for instance, is expected to benefit from lower freight costs and tax rates, while there may be no big positive impact for leather and footwear sectors that are facing stiff foreign competition.
On the other side, the cost of compliance is a big issue for MSMEs that do not have enough specialised manpower, managerial bandwidth, access to facilitation services. GST-registered organisations will have to file returns more often and regularly.
There is a view that availing input credit only for tax paid by the supplier shifts the onus on to the customer and this could affect the trust between supplier and customer, especially for one-time transactions.
On the other hand, there will be a new situation where the customer and supplier relationship will be based on compliance.
That is, customers will prefer to do business only with suppliers who are compliant. MSMEs will have to get used to regularising the filings of their returns, as compliance will become a business imperative.
GST is a massive reform and some hiccups in the initial months are unavoidable. The advantages of having a unified tax system and easy input credits will outweigh the teething troubles the industry may experience in the short term.
MSMEs can hope that most of the current challenges will be a story of the past soon. If the government can take corrective measures in a proactive manner, the GST system will prove to be a boon for industry in general, and MSMEs in particular.

Graded Surveillance Measure

SEBI introduced the measure to keep a tab on securities that witness an abnormal price rise that is not commensurate with financial health and fundamentals of the company such as earnings, book value, price to earnings ratio among others.
The underlying principle behind the graded surveillance framework is to alert and protect investors trading in a security, which is seeing abnormal price movements.
SEBI may put shares of companies under the measure for suspected price rigging or under the ambit of ‘shell companies’. The measure would provide a heads up to market participants that they need to be extra cautious and diligent while dealing in such securities put under surveillance.
Once a firm is identified for surveillance it goes through six stages with corresponding surveillance actions and the restrictions on trading in those securities gets higher progressively.
In the first stage the securities are put in the trade-to-trade segment (meaning no speculative trading is allowed and delivery of shares and payment of consideration amount are mandatory). A maximum of 5% movement in share price is allowed.
In the second stage, in addition to the trade-to-trade segment, the buyer of the security has to put 100% of trade value as additional surveillance deposit. The deposit would be retained by the exchanges for a period of five months and refunded in a phased manner.
In the third stage, trading is permitted only once a week ie every Monday, apart from the buyer putting 100% of the trade value as additional surveillance deposit.
In the fourth stage, trading would be allowed once a week and the surveillance deposit increases to 200% of the trade value.
In the fifth stage, trading would be permitted only once a month (first Monday of the month) with additional deposit of 200%.
In the sixth and final stage, there are maximum restrictions.
Trading is permitted only once a month at this stage, with no upward movement allowed in price. Also, the additional surveillance deposit would be 200%.
There would a quarterly review of securities. Based on criteria, the securities would be moved from a higher stage to a lower stage in a sequential manner.
As and when a security is shifted to various levels of surveillance, it is publicly announced on a daily basis on BSE and NSE websites as well as through circulars to the stock brokers. Moreover, the exchanges can also appoint independent auditors to audit the books of accounts of these companies and do forensic audit, wherever needed.
This indirectly may also be an indication that the sudden rise in either the volumes traded or the price increase are not commensurate with the fundamentals of the said companies and hence small / retail investors are protected from getting stuck in such stocks inadvertently on some wrong advice.
The only challenge for the small investors is that these announcements are often made at very short notice and implemented from the next day itself thus giving those who have already entered the stock less than adequate time to exit it.
Of course, there is also potentially another risk. For example, even if time is given, the stock might crash next day on the news, triggering the lower price circuit and leaving no exit opportunity.

::SCIENCE AND TECHNOLOGY ::

Faulty ammunition caused M777 accident

A preliminary investigation has found faulty ammunition to be the cause of the accident involving an M777 ultralight Howitzer during firing trials early this month.
“A preliminary inquiry has found that the explosion took place due to faulty ammunition supplied by the Ordnance Factory Board (OFB), and a further probe into the matter is on,” an official source said.
On September 2, the gun manufactured by BAE Systems of the U.S. was undergoing field firing for compilation of range tables when the accident occurred. The ammunition exiting the barrel broke into multiple pieces damaging it.
“Any such failure is attributable to a complex phenomenon pertaining to internal ballistics as the shell moves at a very high speed inside the barrel,” he said.
Last November, India signed a deal with the U.S. government under the Foreign Military Sales Program for 145 M777 guns at a cost of $737 million. As part of the agreement, two guns arrived in India in April for calibrating range tables and three more would arrive in September 2018 for training.
Deliveries were slated to commence from March 2019 to be completed by mid-2021.

Govt. preparing road map for Made-in-India body armour for soldiers

The Prime Minister’s Office has asked the NITI Aayog to set up an inter-ministerial committee to prepare a road map to encourage domestic manufacturing of lightweight body armour for the Army and paramilitary forces.
The committee, says a senior government official, will be headed by NITI Aayog member V.K. Saraswat and will have representatives from the Defence Research and Development Organisation, the Department of Industrial Policy and Promotion, the Ministries of Defence and Home.
Earlier this year, the PMO asked NITI Aayog to prepare a draft note on the possibility of encouraging production of home-made lightweight body armour.
Though India is a major producer and exporter of body armour, its own security forces are often deprived of such equipment, particularly the lightweight ones.
As per an estimate, there is a requirement of over 50,000 bulletproof kits for the police force in the country.
Indian companies such as the Kanpur-based MKU and Tata Advanced Materials export body armour to armed forces around the world. Making lightweight armour in India will ensure low-cost supplies.

After main back up lost ISRO working on substitute spacecraft

Work has begun in Bengaluru to assemble the alternative substitute navigation spacecraft, which became essential after the main back-up was lost in a failed launch on August 31.
IRNSS-1I was earlier approved as a ground spare, to be sent to space in an emergency.
The Indian Space Research Organisation (ISRO) has been training a team from an industry consortium to assemble this spacecraft and its lost fellow satellite, 1H.
M. Annadurai, Director of ISRO Satellite Centre (ISAC), Bengaluru, said the current approval is for seven navigation spacecraft (all of which are in orbit) and two spares — 1H and 1I. Should a new back-up be sought and approved, it may be part of another model of outsourcing of its satellites to Indian industry.
ISRO has just begun identifying a set of external partners who would assemble its future satellites, he noted. Until now all Indian spacecraft have been assembled at ISAC by its engineers.

Technology to assist in testing soil quality

The government’s massive scheme to analyse the soil quality of farms across the country may get a technology boost. The Department of Science and Technology (DST) is looking to link the programme with a research project at the Indian Institute of Technology Bombay that uses sophisticated imaging techniques and can picture the nutrient balance of a patch of land without necessarily collecting soil sample.
Hyper spectral imaging, as D. Ramakrishnan, Professor, IIT Bombay’s Earth Sciences Department explains, means analysing extremely detailed images of an object — frequently to the scale of nanometres — and then reconstructing its constituent elements.
Using custom-developed algorithms, satellite-images, or those taken from low flying planes or drones, can be used to calculate the proportion of nitrogen, potassium and phosphorous — the three most vital nutrients — as well as other minerals in the soil and be used to gauge its health.
“This kind of spectroscopy can be used to analyse soil health…though it has wider applications in geology, characteristics of air pollution etc,” Mr. Ramakrishnan, who leads the project told.
He, however, is aiming to build this technology to the extent it can be transferred to a private company and it then uses it for schemes such as soil health analysis. So far the researchers have figured out ways to measuring organic carbon and phosphorous in a soil sample via images.
The DST said that it was in talks with the Ministry of Agriculture and State departments to evolve a programme and apply this technology for the government’s mission.

::INDIA AND WORLD::

Japan has begun its outreach for the northeastern region

Days after the visit of Prime Minister Shinzo Abe, Japan has begun its outreach for the northeastern region. At the fourth Northeast Connectivity Summit in Kohima from September 22 to 23, a representative of the Embassy of Japan said Tokyo would invest in the region’s infrastructure, education and people-to-people sectors.
The next edition of the summit will be held in Tawang, Arunachal Pradesh, which borders China.
“Kenko Sone, Minister, Economic Affairs, Embassy of Japan, speaking at the summit, said the northeastern region is located at a strategically and economically important juncture between India and Southeast Asia as well as within the Bimstec (Bay of Bengal) community. Therefore, Japan has placed a particular importance on the cooperation in the northeastern region,”
The press release noted that for the northeast, Japan had undertaken works on road connectivity, energy projects, water supply and sanitation, forest resources management, Japanese language education and post-war reconciliation, which aimed to build a deeper understanding of the actions of Japanese forces in the region during the Second World War.
Mr. Sone announced that Tokyo would invite 25 young people from Manipur and Nagaland to Japan this year.
During the latest visit of Prime Minister Abe to Ahmedabad, Japanese officials said Tokyo was committed to undertaking two major road and infrastructure building projects in Mizoram and Meghalaya. But the event in Kohima provided a broader portrait of Japan’s interest in the northeast.
It was noteworthy that during Mr. Abe’s visit, Japanese officials had declined to spell out if Tokyo would be interested in acquiring projects in Arunachal Pradesh.
The summit also indicated Myanmar’s interest in the potential of the region. Speaking at the event, Myanmar’s Minister of Cultural Affairs SaiKyawZaw urged people from Arunachal Pradesh, Nagaland, Mizoram and Manipur to forge closer ties with Myanmar as the country shared long borders with all four States.
Nagaland’s Chief Secretary Pankaj Kumar also urged improved connectivity with Myanmar for unlocking the regional trade potential. The summit included diplomatic participation from Bhutan, Russia, Bangladesh, Laos and Thailand.

::SPORTS::

India grabs No. 1 spot

All-rounder HardikPandya rose to the occasion yet again with a fluent 78-run knock as India registered a comfortable five-wicket win over Australia in the third ODI to grab the number one spot.
Chasing 294 for a win, India reached the target with 13 balls to spare, to take a series-clinching 3-0 lead.

PERSONS

Abdul Majid- Assamese film iconpasses away

Abdul Majid, an icon of the Assamese film industry, died in a hospital official said. He was 86.
Majid, a veteran actor, director and playwright, was admitted to the hospital on September 23. He died following a heart attack at GNRC hospital
Popularly known as Majidka, he was a prolific dramatist who performed a kaleidoscope of roles in over 200 plays and worked for promoting new talent.
He directed the landmark film ChameliMemsaab in the 1970s. Some of the other titles that he helmed were Banahansa , Banjui , Ponakan and Uttarkaal , through which he gave a new dimension to Assamese cinema and showcases his sense of social responsibility.