A) Economic Developments: India and World
1. Zero Coupon Bonds (IE)
- Context: The government has issued special types of Zero Coupon Bonds to recapitalise Punjab & Sind Bank.
- Zero Coupon Bonds are issued at a discount and redeemed at par (face value).
- No interest (coupon) payment is made on such bonds at periodic intervals before maturity.
- For example, a 91 days Zero Coupon Bond of ₹100/- (face value) may be issued at say ₹ 98.20, that is, at a discount of say, ₹1.80 and would be redeemed at the face value of ₹100/- after 91 days.
- When a company issues a new bond, if it receives the face value of the security the bond is said to have been issued at par. If the issuer receives less than the face value for the security, it is issued at a discount.
What kind of bonds are issued to Punjab & Sind Bank?
- Unlike the previous tranches of recapitalisation bonds which carried interest and were sold to different banks, these “non-interest bearing, not tradable, non-transferable special GOI securities” issued for a specified period … these are held at the held-to-maturity (HTM) category of the bank as per the RBI guidelines and issued specifically to Punjab & Sind Bank.
- Since it is held to maturity, it is accounted at the face value (and) no mark-to-market gains or losses will be there.
- The government seems to have found an innovative way to capitalise banks, which does not affect the fiscal deficit while at the same time provides much needed equity capital to the banks.
- Only those banks, whosoever is specified, can invest in them, nobody else.
- Though zero coupon, these bonds are different from traditional zero coupon bonds on one account — as they are being issued at par, there is no interest; in previous cases, since they were issued at discount, they technically were interest bearing.
- There is a difference between zero coupon bonds issued by other corporates and these. Normally zero coupon bonds are issued at a discount, which are tradable also. Here, there is no question of trading and these are special types of bonds, which the government issues specifically to a specified person and it’s issued at par.
2. Dedicated Freight Corridor (DFC) Project (PIB)
- Context: Prime Minister will inaugurate the ‘New Bhaupur- New Khurja section’ of Eastern Dedicated Freight Corridor (EDFC).
- The purpose of the project is to provide a safe and efficient freight transportation system.
- The corridor, touted as one of the biggest infrastructure projects in the country, will cover a 3,360-km stretch consisting of eastern and western corridors.
- The 1,504-km western freight corridor begins at Dadri, Uttar Pradesh, and goes up to India’s largest container port, Jawaharlal Nehru Port Trust, near Mumbai, passing via Haryana, Rajasthan and Gujarat.
- The 1,856-km eastern corridor will run from Sahnewal near Ludhiana in Punjab to Dankuni near Kolkata, traversing Haryana, Uttar Pradesh, Bihar and Jharkhand.
- Once the entire corridor becomes operational in December 2021, the average speed of the freight trains is expected to increase from the current 26 km/hour on Indian Railways line to 70 km/hour on the dedicated freight corridor.
- The DFC tracks are separate from the Indian Railways tracks. However, mostly they run parallel to each other.
- In 2006, the Government of India established a dedicated body, the Dedicated Freight Corridor Corporation of India (DFCCIL), set up as a special purpose vehicle, to build and operate Dedicated Freight Corridors.
- The existing quadrilateral railway network, also known as the Golden quadrilateral, which links the major metropolitan cities of Delhi, Mumbai, Chennai and Kolkata, is unable to support the growing demand due to capacity constraints.
- A dedicated freight corridor was, hence, required to address these concerns.
- Several large coal mines and steel production facilities are located along the proposed Eastern DFC line.
- Container traffic is similarly predominant along the Western DFC route, arriving mainly from the Jawaharlal Nehru Port (JNPT).
- About 67% of the construction costs of the Western DFC will be funded by a soft loan of $4bn provided by Japan International Cooperation Agency.
- The Eastern DFC will be constructed through funds received from the World Bank and the Asian Development Bank.
- The corridors include both single/double-line diesel/electrified track
- The project will use single-stack containers on the Eastern DFC and double-stack containers on the Western.
- The maximum speed of the locomotives will be around100km/h.
World’s second-biggest Operation Control Centre
- The world’s second-biggest Operation Control Centre for goods trains, built in India by the Dedicated Freight Corridor Corporation of India (DFCCIL) is ready to begin operations, has been built at Prayagraj in Uttar Pradesh and will be the ‘nerve-centre’ of the over 1,800 km-long eastern dedicated freight corridor.
- The Western corridor will have a similar operation control system at Ahmedabad.
- Once operational, the freight corridor will help decongest the existing Indian Railway network, while also helping increase the average speed of goods trains to 70 kmph, from the existing 25 kmph.
What is a Special Purpose Vehicle?
- A special purpose vehicle is a legal entity created for one very limited, particular task.
- Typically, SPVs are subsidiaries of a larger corporation.
- Usually, the task of a special purpose entity is to isolate risk.
- By setting up an SPV dedicated to the acquisition and financing of specific assets, the parent corporation is protected in case of bankruptcy, loan default or other loss on those assets.
B) Polity, Bills, Acts and Judgments
3. Governor’s role in calling an Assembly session: what the law, courts say (IE)
- Context: In yet another tug-of-war between the Kerala Governor and the Chief Minister, the Governor has turned down a request to summon a special sitting of the Assembly to debate the new three central farm laws.
- The episode raises questions on the role of a Governor and the contours of the powers he or she has under the Constitution.
Who can summon a session of the Assembly?
- “The Governor shall from time to time summon the House or each House of the Legislature of the State to meet at such time and place as he thinks fit…” says Article 174 of the Constitution.
- The provision also puts on the Governor the responsibility of ensuring that the House is summoned at least once every six months.
- Although it is the Governor’s prerogative to summon the House, according to Article 163, the Governor is required to act on the “aid and advice” of the Cabinet.
- So, when the Governor summons the House under Article 174, this is not of his or her own will but on the aid and advice of the Cabinet.
Can the Governor refuse the aid and advice of the Cabinet?
- There are a few instances where the Governor can summon the House despite the refusal of the Chief Minister who heads the Cabinet.
- When the Chief Minister appears to have lost the majority and the legislative members of the House propose a no-confidence motion against the Chief Minister, then the Governor can decide on his or her own on summoning the House.
- But the actions of the Governor, when using his discretionary powers can be challenged in court.
How have the courts ruled?
- A number of rulings by the Supreme Court has settled the position that the Governor cannot refuse the request of a Cabinet that enjoys majority in the House unless it is patently unconstitutional.
- The court read the power to summon the House as a “function” of the Governor and not a “power” he enjoys.
4. Explained: What is Inner Line Permit, what is its CAA context? (TH)
- Context: Union Home Minister Amit Shah said the Inner-Line Permit (ILP) had been the Centre’s biggest gift to Manipur since its statehood.
What is Inner Line?
- A concept drawn by colonial rulers, the Inner Line separated the tribal-populated hill areas in the Northeast from the plains.
- The policy of exclusion first came about as a response to the reckless expansion of British entrepreneurs into new lands which threatened British political relations with the hill tribes.
- On the other hand, the Inner Line also protects the commercial interests of the British from the tribal communities.
- After Independence, the Indian government replaced “British subjects” with “Citizen of India”. The main aim of ILP system now is to prevent settlement of other Indian nationals in the States where ILP regime is prevalent, in order to protect the indigenous/tribal population.
- To enter and stay for any period in these areas, Indian citizens from other areas need an Inner Line Permit (ILP). Arunachal Pradesh, Nagaland and Mizoram are protected by the Inner Line, and lately Manipur was added.
- The concept originates from the Bengal Eastern Frontier Regulation Act (BEFR), 1873.
What is the Inner Line Permit?
- The Inner Line Permit (ILP) is an official travel document issued by the Government of India to grant inward travel of an Indian citizen into a protected area for a limited period.
- It is obligatory for Indians residing outside those states to obtain permission prior to entering the protected areas.
- Currently, the Inner Line Permit is operational in Arunachal Pradesh, Mizoram, Manipur and Nagaland.
- These States have also been exempted from the Citizenship legislation.
- The document has been issued under the Bengal Eastern Frontier Regulation, 1873 and the conditions and restrictions vary from state to state.
- It can be issued for travel purposes solely.
- Visitors are not allowed to purchase property in these regions. However, there might be a different set of rules for long term visitors, though they are not valid for central government employees and security forces.
- Any rubber, wax, ivory or other forest product (or any book, diary, manuscript, map, picture, photograph, film, curio or article of religious or scientific interest) found in the possession of any person convicted of any offence under this Act may be confiscated to State Government.
How is it connected to the Citizenship Amendment Act?
- The CAA, which relaxes eligibility criteria for certain categories of migrants from three countries seeking Indian citizenship, exempts certain categories of areas, including those protected by the Inner Line system.
- Amid protests against the Act, the Adaptation of Laws (Amendment) Order, 2019, issued by the President, amended the BEFR, 1873, extending it to Manipur and parts of Nagaland that were not earlier protected by ILP.
Meghalaya Residents Safety and Security Act (MRSSA) 2016
- The Meghalaya Cabinet approved amendments to the Meghalaya Residents Safety and Security Act (MRSSA) 2016, which will lead to laws that require non-resident visitors to register themselves on the lines of the Inner Line Permit (ILP) system of Arunachal Pradesh, Nagaland, Manipur and Mizoram.
- The move comes in the backdrop of concerns that people excluded from the National Register of Citizens (NRC) in Assam might try to enter Meghalaya.
- The new rules will encompass not only tenants but all visitors and tourists staying, for example, in hotels, home stays, relatives’ houses, etc.
Inner Line Permit Vs Protected Area Permit (PAP)/Restricted Area Permit (RAP) Regime
- Inner Line Permit is for domestic tourists and Restricted Area Permit is for foreigners.
Protected Area Permit (PAP)/Restricted Area Permit (RAP) regime
- Under the Foreigners (Protected Areas) Order, 1958, all areas falling between the ‘Inner line’, as defined in the said order, and the International Border of the State have been declared as a Protected Area.
- Currently, Protected Areas are located in the following States: –
- (i) Whole of Arunachal Pradesh
- (ii) Parts of Himachal Pradesh
- (iii) Parts of Jammu & Kashmir
- (iv) Whole of Manipur
- (v) Whole of Mizoram
- (vi) Whole of Nagaland
- (vii) Parts of Rajasthan
- (viii) Whole of Sikkim (partly in Protected Area and partly in Restricted Area)
- (ix) Parts of Uttarakhand
- Under the Foreigners (Restricted) Areas Order, 1963, the following areas have been declared as `Restricted’ Areas:
- (i) Andaman & Nicobar Islands – Part of the Union Territory; Even in those parts where no permit is required, citizens of Afghanistan, China and Pakistan and foreign nationals having their origin in these countries would continue to require RAP to visit the Union Territory. For visiting Mayabunder and Diglipur, citizens of Myanmar will continue to require RAP.
- (ii) Sikkim – Part of the State
- The Home Ministry has decided to relax the Protected Area Permit regime from Nagaland, Mizoram and Manipur.
- Foreign tourists, except those from Pakistan, China and Afghanistan, would now be allowed to visit the hitherto restricted areas in these States.
C) Indices, Reports, Surveys, Committees and Organisations
5. Human Freedom Index (TH)
- Context: The Human Freedom Index presents the state of human freedom in the world based on a broad measure that encompasses personal, civil, and economic freedom.
- Human freedom is a social concept that recognizes the dignity of individuals and is defined here as negative liberty or the absence of coercive constraint.
- The report is co‐published by the Cato Institute and the Fraser Institute.
The Human Freedom Index — 2020
- This sixth annual index uses 76 distinct indicators of personal and economic freedom in the following areas:
- Rule of Law
- Security and Safety
- Association, Assembly, and Civil Society
- Expression and Information
- Identity and Relationships
- Size of Government
- Legal System and Property Rights
- Access to Sound Money
- Freedom to Trade Internationally
- Regulation of Credit, Labor, and Business
- The HFI covers 162 countries for 2018, the most recent year for which sufficient data are available.
- The index ranks countries beginning in 2008, the earliest year for which a robust enough index could be produced.
- On a scale of 0 to 10, where 10 represents more freedom, the average human freedom rating for 162 countries in 2018 was 6.93.
- Among countries included in this year’s and last year’s report, the level of freedom scarcely improved (0.01) compared with 2017, with 87 countries increasing their ratings and 70 decreasing.
- Since 2008, the level of global freedom has decreased slightly (−0.04), with 70 countries in the index increasing their ratings and 70 decreasing.
- The jurisdictions that took the top 10 places, in order, were New Zealand, Switzerland, Hong Kong, Denmark, Australia, Canada, Ireland, Estonia, and Germany and Sweden (tied in 9th place).
- Selected countries rank as follows: Japan (11), the United Kingdom and the United States (tied in 17th place), Taiwan (19), South Korea (26), Chile (30), France (33), South Africa (68), Argentina (70), Mexico (86), Brazil (88), Kenya (93), India (111), Russia (115), Turkey (119), China (129), Saudi Arabia (151), Egypt (157), Iran (158), Venezuela (160), and Syria (162).
- Out of 10 regions, the highest levels of freedom are in North America (Canada and the United States), Western Europe, and East Asia. The lowest levels are in the Middle East and North Africa, sub‐Saharan Africa, and South Asia.
- Women‐specific freedoms, as measured by five indicators in the index, are strongest in North America, Western Europe, and East Asia and are least protected in the Middle East and North Africa, sub‐Saharan Africa, and South Asia.
- Countries in the top quartile of freedom enjoy a significantly higher average per capita income than those in other quartiles.
- The HFI also finds a strong relationship between human freedom and democracy. Hong Kong is an outlier in this regard.
6. Thoubal Multipurpose Project (PIB)
- The Thoubal Multipurpose Project, located in the Mapithel valley of Manipur, was approved by the Planning Commission in 1980.
- The stated objective of the project was to utilise the water of the Thoubal river for irrigation, drinking water and to generate electricity.
- Construction started in 1989. But the project has seen inordinate delays over the years, and is yet to be fully functional till date.
7. Korba Tribe (PIB)
- Korba is a a particularly vulnerable tribal group of Jharkhand.
- It is believed that Korwa came from Madhya Pradesh in Jharkhand, extremely poor and backward castes.
- The population of Korwa tribe is merely 6,000.