Editorial Simplified : 19th day of May 2016
This Series of posts covers the essential Editorial from prominent newspapers. The Editorial from the newspapers are compiled by the Subject Teachers form the Academy and provided in notes format so that the aspirants does not waste their precious time in sifting through the newspapers.
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Click on the tab below to read the Editorial Simplified for each newspaper
[accordion_content accordion_label=”Business Standard”]
Editorial : Moving forward on mergers
Bank consolidation needs supportive reform
What is the news?
SBI’s proposed merger of 5 associate banks and the Bharatiya Mahila Bank
What is the significance?
First step towards creating India’s first banking behemoth, which will be ranked 44th in the list of the world’s largest banks.
What is the positive outcome?
- Combined entity will have a balance sheet size of Rs 37 lakh crore, more than 5 times that of India’s 2nd and 3rd largest lenders.
- Cost of funds for the merged entity will come down by 100 basis points, because the deposits with the associate banks are taken at a lower rate.
- Associate banks have Rs 4,000 crore fixed assets which will add to the capital of the merged entity.
What does this prove?
India’s banking system is much too fragmented, and that policy emphasis should be on stronger banks which can support the investment needs of corporations and economic growth.
Why was the merger delayed?
Merger was not a priority as there were far more important challenges ahead and that efficiency could be brought even without merging. That was the reason perhaps why the SBI itself went slow on a merger process suggested almost a decade back.
What is the need?
Merger process should be initiated by banks themselves keeping in view the economies of scale that would accrue
What should be kept in mind?
- Process will take time and should not be rushed through given the sensitivities involved.
- Bigger challenge is consolidating rest of banking system.
- Since mergers are also about people, a huge amount of planning would be required to make the consolidation process smoother.
- Integrated approach from all stakeholders including the government. For example, the government should stick to its earlier promise of performance-based capital infusion so that the weaker banks are forced to shrink their size and focus on niche areas, or what is technically known as narrow banking.
How to decide of a bank needs consolidation?
Parameters that can be taken into consideration could be stressed assets, capital adequacy ratio, return on equity and return on assets.
Other issues in banking system that needs to be addressed
- Bad loan problem that has plunged many public sector banks in an unprecedented crisis.
- Reduced government ownership in public sector banks .
Consolidation among state-owned banks is not a new idea; previous such initiatives had led to mixed outcomes. It will need other, supportive reform this time.
Editorial : Meeting halfway
New intellectual property rights policy a step forward
What is the news?
National intellectual property rights (IPR) policy approved by Cabinet addresses some – albeit not all – of the major concerns of the global innovation-based industry and India’s large trading partners like the US.
What is the need?
- To revamp and expand the institutional framework to protect IPRs, speed up approvals of patents and trademarks .
- An IPR system on a par with global standards .
What is the reaction of the stakeholders?
- Pharmaceutical companies and other intellectual property stakeholders do not seem to be fully satisfied with the policy.
- Though they have welcomed stress laid on better administration and enforcement.
What are the issues?
- Provision for compulsory licensing for local production of unaffordable pharmaceutical products to meet health emergencies and serve the national interests.
- Strict definition of patentability in clause 3(d) of the amended Indian patent law that disallows evergreening of patents on grounds such as “insignificant” incremental innovation or minor tweaking of the formula. India argues that these are fully compliant with the TRIPs agreement.
Significance of the policy (international angle)
- Policy, has come when India, along with some other developing countries like China are under considerable pressure to reform their IPR systems.
- This engagement has duly been acknowledged by the US Trade Representative in its report called Special 301 – but the US has retained India on a trade watch list anyhow. The situation may change now.
- Government expects World Bank to enhance India’s ranking in its Ease of Doing Business index.
Positives of the policy
- Promote indigenous R&D and commercialisation of research outcomes.
- Average time for the clearance of patent applications is intended to be brought down to 18 months.
- Time for registering trademarks is to be slashed to 1 month .
- Policy moots specific incentives for innovations and a loan guarantee scheme for start-ups.
- Scope of the copyright law is also sought to be expanded with the inclusion of music, cinema and industrial designs in it.
- Proposal to amend the cinematography Act to make duplication of films a penal offence, may help curb film and music piracy.
IPR policy seems fairly comprehensive and should, if implemented well, lead to perceptible improvements in the country’s IPR regime.
[accordion_content accordion_label=”Indian Express”]
Editorial : Discipline yourself
As promised in budget, Central Govt has set up a 5 member Committee (NK Singh Committee) to review working of Financial Responsibility and Budget Management (FRBM) Act.
Other functions of committee
- Examine the feasibility of having a fiscal deficit range rather than a fixed number as a percentage of the GDP
- Aligning fiscal expansion or contraction with credit expansion or contraction in the economy
Frbm- a success
- it has led to fiscal prudence at centre and state level
- but real success is measured at times when in financial slowdown govt is tempted to spend
- limiting fiscal spending to 3 % of GDP is suitable for developed countries, where economic growth has tapered
- however, assigning a range rather than a fixed target to fiscal spending (ex 3% of GDP) can backfire in election year when govt is keen on spending more
- as suggested by 14th Finance Commission, a strong compliance mechanism as well as an independent council is needed to assess FRBM
Editorial : At a low point
Madhesi agitation in Nepal has again erupted after PM of Nepal KP Oli managed to save his job after recent moves by Nepali Congress
Resumption of protests
- Madhesis are asking for a re-demarcation of the new seven-province federal model as well as constitutional inclusiveness
- Proportional representation for ethnic minorities and marginalised sections in all state bodies
India’s course of action
- Public sentiment in Nepal is still against India
- Best course of action for India will be to wait and watch without giving an opportunity for outsiders to blame India for meddling with internal affairs of a neighbouring state
[accordion_content accordion_label=”The Hindu”]
Editorial : Tamil Nadu’s direct cash transfers
The editorial deals with the recent postponement of voting in two constituencies in Tamil Nadu on allegations of voter bribery.
- From two constituencies in Tamil Nadu Aravakurichi and Thanjavur large amounts of cash was recovered by the Election Commission from persons linked with political parties.
- The cash was carried around in ambulances for distribution.
- In response to the alleged malpractice the Election Commission has ordered a 7 day postponement of voting.
- But given the situation on the ground coupled with the possibility of a widespread malpractice the week delay seems a grossly inadequate response.
- Tamil Nadu has in the recent past acquired the reputation for having a well oiled cash economy for electioneering with every vote seen to be on auction.
- Even the party manifestos in Tamil Nadu are full of freebie promises and the candidates seem to tremble at the prospect of meeting voters empty handed.
- The Election Commission has used its enormous powers to effectively end most malpractices across the country. eg access of polling booths to all sections is now evident.
- However it has clearly failed to contain money power especially in Tamil Nadu.
- The Election Commission cannot wage this war alone, a wider effort including cleaning of account books of political parties is needed.
- Not just money power but also corruption in administration and use of funds such local area development fund are opaque.
- The only cause for cheer in this grim scenario is that voters do not necessarily vote for highest bidder
Editorial : Rebooting ties with Iran
The editorial talks about India and Iran relations and the need to reboot them.
Iran’s return to mainstream diplomacy
- Following the nuclear deal most of the internationally imposed sanctions on Iran have been removed.
- Iran has thus now returned to mainstream diplomacy and has many hosted high profile visitors in last few months such as Chinese Premiere.
Prime Minister Modi’s visit
- Prime Minister of India Sh. Narendra Modi is expected to visit Iran on May 22-23.
- The trip is expected to bridge the trust deficit in bilateral cooperation.
India’s Strategic Interests in Iran
- Strong ties with Iran are vital for India. The key factor is energy.
- It is pertinent to mention here that until the sanctions were imposed, Iran was second largest source of crude oil for India.
- The Chabahar Port in Iran once developed would provide India alternative access to landlocked Afghanistan by passing Pakistan.
- Both Iran and India share the goal of a stable government in Afghanistan free of Taliban’s influence.
- Globally, Iran and India have common interests like opposition towards Al-QAEDA and Islamic State.
To and fro of bilateral relations
- Despite common interests bilateral ties took a beating after international sanctions forced India to slash its trade with Iran.
- But with sanctions removed and companies rushing to Iran, it is an opportune moment for India to refresh its relations with Iran.
- The editor feels India needs to reboot its relations with Iran.
- Iran also seems keen on pursuing stronger ties with India and expediting stalled projects.
- The PM’s visit to Iran comes after his trips to United Arab Emirates and Saudi Arabia and ahead of visits to Qatar and Israel, this is consistent with government’s policy of enhanced engagement with West Asia.
- The success of the policy depends on India’s capacity to balance the variables in the region.
- The Iran visit is an opportunity to restore equilibrium in India’s foreign policy which of late was seen to be skewed towards Israel and Saudi Arabia.
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