Syllabus – GENERAL STUDIES-III -Regulatory framework for money and banking.

• The Indian banking sector has been evolving on a continuous basis, from being exclusivist to becoming a carrier of social reform and financial inclusion. However, in recent times, the banking industry has experienced many issues.
• For instance, a decline in asset quality, financial soundness, and efficiency has marred the functioning of the Indian banking industry.
• Given the current challenges of a burgeoning population, the ongoing Covid-19 pandemic, and the West’s intention to shift its manufacturing base to India and elsewhere, it is essential to say ‘yes’ to fifth generation banking reforms.

Evolution of Indian Banking Industry

• First Generation Banking:During the pre-Independence period (till 1947), the Swadeshi Movement saw the birth of many small and local banks.
  • Most of them failed mainly due to internal frauds, interconnected lending, and the combining of trading and banking books.
• Second Generation Banking (1947-1967):Indian banks facilitated concentration of resources (mobilised through retail deposits) in a few business families or groups, and thus neglected credit flow to agriculture.
• Third Generation Baking (1967-1991):The government was successful in breaking the nexus between industry and banks through the nationalisation of 20 major private banks in two phases (1969 and 1980) and introduction of priority sector lending (1972).
  • These initiatives resulted in the shift from ‘class banking’ to ‘mass banking’.
  • Further, it had a positive impact on the expansion of branch networks across (rural) India, massive mobilisation of public deposits and incremental credit flow to agriculture and allied sectors.
• Fourth Generation Banking (1991-2014):This period saw landmark reforms such as issue of fresh licences to private and foreign banks to infuse competition, enhanced productivity as well as efficiency.
  • This was done by leveraging technology; introduction of prudential norms; providing operational flexibility coupled with functional autonomy; focus on implementation of best corporate governance practices; and strengthening of capital base as per the Basel norms.
• Current Model:Since 2014, the banking sector has witnessed the adoption of the JAM (Jan-Dhan, Aadhaar, and Mobile) trinity, and issuance of licences to Payments Banks and Small Finance Banks (SFBs) to achieve last-mile connectivity in the financial inclusion drive.

The recent COVID-19 epidemic has put a lot of strain on the already tottering healthcare system in India. This, along with other challenges in achieving Sustainable Development Goals (SDGs), need the healthcare systems to be strengthened.

Healthcare workforce

One of the critical building blocks of the health system is human resources. Health workers are critical not just for the functioning of health systems but also for the preparedness of health systems in preventing, detecting and responding to threats posed by diseases and epidemics such as COVID-19.

A 2019 report by US based Center for Disease Dynamics, Economics & Policy (CDDEP) found out that

• India has a shortage of an estimated 600,000 doctors and 2 million nurses. There is one government doctor for every 10,189 people (the World Health Organisation (WHO) recommends a ratio of 1:1,000).

The workforce crisis has been aggravated by the imbalances within the country.

• Spatial Imbalances- the doctor-population ratio in northern States is far short of the required norm, while the southern States, barring Telangana, have enough doctors in possession.
• Rural-Urban Divide– across the nation there is a general lack of adequate staffing in rural areas.

For democracy to be meaningful and just, it is important that the election system is impartial and transparent. Several efforts have been made in India to ensure the free and fair election system and process. The most important among these is the creation of an independent Election Commission to ‘supervise and conduct’ elections.

ABOUT ELECTION COMMISSION:

• It is a permanent and independent body established by the Constitution of India to ensure free and fair elections in the country.
• Article 324 of the Constitution provides that the power of superintendence, direction, and control of elections shall be vested in the election commission.
• This includes elections to parliament, state legislatures, the office of president of India, and the office of vice-president of India.
• It grants election symbols and also recognizes political parties.
• It issues a model code of conduct and keeps an eye on the election expenditure of candidates.

An Earthquake of 6.4 magnitude hit Assam on April 28th, 2021. It caused sufficient damage to buildings and property but fortunately, no fatalities were reported.

•  It occurred near Dhekiajuli in the Sonitpur district of Assam, 80 kilometres northeast of Guwahati.
• Following the main tremors, six aftershocks (of magnitude ranging from 3.2 to 4.7) also occurred within two-and-a-half hours.
• The National Centre for Seismology (NCS) recently mentioned that these tremors were attributed to the Kopili Fault Zone.

The northeastern region has a peculiar record of experiencing earthquakes at regular intervals due to its unique geographical location. The state of Assam itself witnessed two great earthquakes (Magnitude >8) in 1897 and 1950.

How does an earthquake occur?

• Firstly, an earthquake occurs when there is a sudden release of energy in the Earth’s lithosphere that creates seismic waves.
• Secondly, the release of energy occurs along a fault. A fault is a sharp break in the crustal rocks.
• Thirdly, rocks along a fault tend to move in opposite directions. As the overlying rock strata press them, the friction locks them together. However, their tendency to move apart at some point in time overcomes the friction.
• Fourthly, as a result, the blocks get deformed, and eventually, they slide past one another abruptly. This causes a release of energy, and the energy waves travel in all directions.

The precarious second wave of COVID-19 infections has hit India with greater ferocity than the first.

Second wave of corona virus infections:

• India’s aggressive second wave of corona virus infections marked by over 3,50,000 cases a day and many deaths is clearly the result of lowering of guard against covid early in the new year.
• After prematurely assuming that COVID-19 was virtually over, governments made rash decisions to allow large religious gatherings and political campaigns with little regard for disease control.
• The lapse is now also threatening a nascent economic recovery.

Shortcomings in the healthcare system

• Consistent shortage of beds and ventilators has exposed the systemic issues with healthcare system.
• Temporal and spatial unavailability of oxygen across the country is proving to be fatal for the patients
• Undue pressure on the already limited and exhausted workforce of healthcare professional
• Black marketing of essentials like oxygen cylinder, medicines like remdesivir highlights lack of proper management and monitoring across the system.

Vaccination as solution 

• Vaccination drives across the country with Covishield and Covaxin jabs have been initiated since January.

Context: India is one of the largest welfare states in the world yet, amidst the pandemic of COVID-19, the state failed to provide welfare for its most vulnerable citizens.

Introduction:

India is one of the largest welfare states in the world and yet, with COVID-19 striking in 2020, the state failed to provide for its most vulnerable citizens.The country witnessed multiple crises: mass inter- and intra-migration, food insecurity, and a crumbling health infrastructure. The extenuating circumstance of the pandemic has pushed an estimated 75 million people into poverty.The second wave has brought even the middle and upper-class citizens to their knees.Economic capital, in the absence of social capital, has proven to be insufficient in accessing healthcare facilities. Illness is universal, but healthcare is not.

Social capital:

1. Social capital is a sense of belonging and the concrete experience of social networking that can bring great benefits to people.
2. It consists of trust, mutual understanding, shared values and behaviour that bind together the members of a community and make cooperative action possible.

CONSTITUTIONAL PROVISIONS:

• Health care delivery is in State List.
• Most provisions related to health are in Part-IV {Directive Principles}. These are: Article 38, 339(e), 41,42, 47 and 48 A
• Panchayats and Municipalities also have some provisions related to health. These include drinking water, health and sanitation, family welfare, women and child development, social welfare etc.
• The right to life provided under Art. 21 of the Constitution of India have been used time and again to demand access to health care.

PROBLEMS WITH HEALTHCARE SYSTEM IN INDIA:

Health Infrastructure

• Insufficiency of Hospital Beds: Penetration of healthcare infrastructure, much lower than that of developed countries and even lower than the global average, the bed density in the country is 0.7 per 1,000 population, far below the global average of 2.6 and WHO benchmark of 3.5.
• Shortage of staff: India faces a shortage of about 6 lakhs doctors, one million nurses, 2 lakhs dental surgeons and a large number of paramedical staff.

• Current Context: The Variants of concern (VOC) together with widespread relaxation of COVID-19 appropriate behaviour resulted in the 2nd wave of Covid-19 in India.
• What is a Variant of Concern? The term variant of concern (VOC) is a category assigned to a newly emerged variant of a virus with an increased ability of transmission.

Properties of VOC: The VOC is characterized by three sinister properties:

• Increased Transmission Efficiency: In many countries, including India the VOC, by virtue of increased transmissibility, has started off a new wave(s) of epidemic transmission.
• Virulence: It is the ability to cause severe/life-threatening disease. The UK variant has the worse virulence. The South Africa and Brazil variants do not seem to have higher virulence.
• Immune to antibodies generated by previous vaccination or infection: Most vaccines were made using antigens made from D614G variant. However, these vaccines show low efficacy on the South African, Brazil and UK variants. Hence, reinfection can occur in spite of immunity provided by earlier D614G infection or vaccination.

WHY IN NEWS ?

• Indian Prime Minister Narendra Modi visited Bangladesh on 26th and 27th March 2021 to join the celebrations of the Golden Jubilee of the Independence of Bangladesh, the Birth Centenary of the Father of the Nation Bangabandhu Sheikh Mujibur Rahman and 50 years of establishment of diplomatic relations between India and Bangladesh.

BACKGROUND :

• India was the first country to recognize Bangladesh as a separate and independent state and established diplomatic relations with the country immediately after its independence in December 1971.
• The relationship between India and Bangladesh is anchored in history, culture, language and shared values of secularism, democracy, and countless other commonalities between the two countries.
• It is based on sovereignty, equality, trust, understanding and win-win partnership that goes far beyond a strategic partnership.
• In the last couple of years, the relationship has been further strengthened including through cooperation in new and high-technology areas.

Introduction

• In her latest Budget speech 2021-22, Finance Minister revived the idea of a ‘bad bank’ by stating that the Centre proposes to set up an asset reconstruction company(ARC) to acquire bad loans from banks.
• While the problem of bad loans has been a perennial one in the Indian banking sector, the COVID-19 pandemic-triggered lockdown last year and the moratorium subsequently extended to borrowers by the Reserve Bank of India (RBI) have worsened the crisis.
• With banks expected to report worse loansthis year, the idea of a ‘bad bank’ has gained particular significance.

Background

• The 2015 Asset Quality Review(AQR) conducted by Reserve Bank under Governor Raghuram Rajan, which forced banks to recognize problem accounts as non-performing assets(NPAs), had sparked a debate on bad bank as a possible solution.
• The 2017 Economic Survey also examined this idea, suggesting the creation of a Public Sector Asset Rehabilitation Agency (PARA).

Why bad loans are a concern for Indian economy?

• The banks’ pile of bad loans is a huge drag on the economy. It’s a drain on banks’ profits. Because profits are eroded, public sector banks (PSBs), where the bulk of the bad loans reside, cannot raise enough capital to fund credit growth. Lack of credit growth, in turn, comes in the way of the economy’s return to a higher growth trajectory. Therefore, the bad loan problem requires effective resolution.