NBFC Liquidity Norms

The Reserve Bank of India (RBI) has introduced ‘liquidity management framework’ for Non-Banking Financial Companies (NBFCs).

• The RBI move has come following liquidity crunch among some NBFCs in meeting their recent repayment obligations after the collapse of the Infrastructure Leasing and Financial Services (IL&FS) group.

Key Points

• Liquidity Coverage Ratio
  
  • All non-deposit taking NBFCs (NBFC-NDs) with asset size of Rs 10,000 crore and above and all deposit-taking NBFCs have to maintain a liquidity buffer in terms of Liquidity Coverage Ratio (LCR).
    
    • However Type I - NBFC-ND entities are exempt from the applicability of LCR norms.
    • Type I - NBFC-ND entities are those which do not accept public funds and do not have customer interface and do not intend to engage in such activities.

• The LCR requirement will be binding on NBFCs from 1^st December, 2020 with the minimum HQLAs to be held being 50% of the LCR, progressively reaching up to the level of 100% by 1st December, 2024.
• Assets to be included as HQLA include cash, government securities and marketable securities issued or guaranteed by foreign sovereigns. These assets should be free of any financial liability.
• Significance: The presence of liquid reserve will prevent a NBFC from going into a default loss if some inflows get delayed.

• NBFCs should adopt liquidity risk monitoring tools and metrics in order to capture strains in liquidity position.

Source: IE

Punjab's Water Law Linked to Air Pollution in Delhi

Why in News

The severe air pollution crisis in NCR-Delhi region is found to be related to the timing of stubble burnings in the neighbouring states of Punjab, Haryana.

• Farmers in these states have been setting fire to their fields after harvesting of paddy since the 1980s. But “the timing” of stubble burning has significantly changed after Punjab Preservation of Subsoil Water Act, 2009 (PPSW) came into effect.

Practice Prior to the PPSW Act, 2009

• The farmers in Punjab were sowing paddy nurseries from mid-to-late April and transplanting the seedlings from mid-May to late-May.
  
  • For the first three weeks after transplanting, the plants have to be irrigated almost daily to ensure water-logged conditions to prevent weed growth.
  • But nursery sowing and transplanting, during peak summer, led to massive groundwater depletion.
• As a result, the paddy, including 155-day varieties such as Pusa-44, got harvested by early October — and the burning of the stubble used to get over around mid-October.
  
  • The stubble burning period and the onset of winter in Northern India had a considerable time gap which avoided the air pollution crisis in the area.

Implementation of PPSW Act, 2009

• The act was brought in to prevent the groundwater crisis during summer.
• The Act barred any nursery sowing and transplanting of paddy before May 15 and June 15, respectively.
• This ensured that a significant part of the crop’s water requirement is met from monsoon rains and also, lesser water loss due to evaporation after mid-June.
• Late transplanting left farmers with little time between harvesting and preparing the field for the next crop and hence farmers are resorting to the burning of stubble.

Positives of PPSW Act, 2009

• The delayed paddy transplantation has been helping to save 1,000 billion liters.
  
  • It is equal to the total water consumption of Ludhiana, an industrial town, for two years.

Impact of PPSW Act, 2009

• Implementation of the PPSW Act (2009) made the time period of stubble burning coincident with the onset of winter in Northern India.
• Also, wind movement remains very slow and moisture levels in the lower atmosphere remain high during this period.
• It creates a layer, due to which all the particulate matter and gases from the burnt stubble, as well as vehicles and industries, get accumulated, instead of moving away.
• At this time of the year, winds in Punjab generally blow from the northwest to the southeast.
  
  • Haryana and Delhi are to the south and southeast of Punjab.
  • Also, these northwesterly winds are calm with a speed of less than 2 kmph which results in ‘air locking’ at many places.

Thus, the PPSW Act (2009) may have helped arrest the rapid decline in the groundwater table and aquifers, but it has contributed to the unprecedented deterioration in Air Quality Index (AQI) in the National Capital Region

Source: IE

3rd RCEP Summit

Why in News

In the recently held Regional Comprehensive Economic Partnership (RCEP) Summit in Thailand, India decided not to finalize the RCEP trade deal. India has expressed its concerns over lowering and elimination of tariffs on products from other countries, as it would negatively affect the domestic agricultural and industrial sector.

Key Points

• All members of RCEP (except India) have concluded the text-based negotiations for the trade deal. The agreement is expected to be signed by 2020.
• The purpose of the deal is to create an integrated market. This would ensure easier availability of products and services across the entire region.

Reasons for India’s Exit

• Inadequate Protection against Import-surge: India has apprehensions that the rising imports due to the signing of the Free Trade Agreement (FTA) would lead to flooding of Chinese products in the Indian market.
  • India had already been demanding an auto-trigger mechanism that would allow it to raise tariffs on products in instances where imports cross a certain threshold; which now won’t happen with this deal.
• Trade Deficit: Despite having separate bilateral FTAs with most RCEP nations, India has recorded trade deficits with these countries.
  • India already has a trade deficit of over $50 billion with China, and the current deal will further lead to increasing of this deficit.
• Lack of Market Access: India has not received any credible assurance on its demand for more market access with respect to mobility of Indian labour, services and agricultural commodities, and its concerns over non-tariff barriers. 
  • RCEP participants (like China) have used non-tariff barriers in the past to prevent India from expanding its exports to the country.
  • A nontariff barrier is a way to restrict trade by using barriers other than a tariff. These include quotas, embargoes, sanctions, and levies.
• Problem with Base Year: India’s demands regarding the base year that would be used to reduce tariffs on the products (traded as part of the pact) was not considered.
  • India demanded for considering 2014 as the base year for tariff reductions instead of 2013, as India raised import duties on several products between 2014 and 2019. Using a base year before 2014 would lead to a drastic drop in the import duties on these products which would negatively impact Indian interests.
• Sectors Impacted: Due to the availability of cheaper alternatives from other participant countries, some domestic sectors may take a hit.
  • For instance, the Indian dairy industry would face stiff competition from Australia and New Zealand, if India signs this deal. 
  • Likewise, steel and textiles sectors have also demanded protection from similar competition.
• Rules of Origin: India has concerns over possible circumvention of these rules.
  • Rules of Origin is the criteria used to determine the national source of a product. Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports.
  • Current provisions in the deal reportedly do not prevent countries from routing their products through other countries (on which India would originally maintain higher tariffs). 
  • This may allow countries like China to dump in more products into India.

Way Forward

• A mutually beneficial RCEP in which all countries gain reasonably is the need of the hour. 
  • India has a services trade surplus with the world. Therefore, it is trying to push for a strong agreement on the services trade, including a deal on easier movement of skilled manpower.
• RCEP provides a chance for India to bring in historic trade reforms in the economic sector, which in itself will cement India's position as a major global economy and make Indian industry globally competitive.

Source: IE

ICEDASH and ATITHI

Why in News

The Ministry of Finance has launched two Information Technology (IT) initiatives - ICEDASH and ATITHI.

• ICEDASH- For improved monitoring of customs clearance of imported goods.
• ATITHI - For facilitating arriving international passengers.
• Both the initiatives have been developed by the Central Board of Indirect Taxes and Customs (CBIC).

ICEDASH

• It is an Ease of Doing Business (EoDB) monitoring dashboard of the Indian Customs that will help public see the daily customs clearance times of import cargo at various ports and airports.
• It will help the businesses in comparing clearance times across ports and thus plan their logistics accordingly.
• It has been developed in collaboration with the National Informatics Centre (NIC).

ATITHI

• It is an easy to use mobile app for international travelers to file the Customs declaration in advance.
• Passengers can use this app to file declaration of dutiable items and currency with the Indian Customs even before boarding the flight to India.
• It would encourage tourism and business travel to India.

Source: PIB

Danakil Depression

Why in News

A recent study stated that an active and naturally occurring life cannot be sustained at Danakil, Ethiopia.

• The two barriers to the survival of life in the Danakil region are:
  
  • Magnesium-dominated brines that cause cells to break down
  • An environment having simultaneously very low pH and high salt, a combination that makes adaptation highly difficult.

Danakil Depression

• It is located in northeastern Ethiopia.
  
  • At the northern end of the Great Rift Valley, and separated by live volcanoes from the Red Sea.
• Danakil is one of the world’s lowest places at 100 metres below sea level.
• The plain was formed by the evaporation of an inland water body.
• All the water entering Danakil evaporates, and no stream flows out from its extreme environment.
• It is covered with more than 10 lakh tonnes of salt.

Source: IE

World’s First Drug for Alzheimer’s Disease

Recently, China has approved the world’s first multi-targeting and carbohydrate-based drug GV-971 for Alzheimer’s disease.

• Multi-target drugs hit several targets in the body, which is often necessary to do in order to yield a therapeutic effect in complex diseases like Parkinson’s or Alzheimer’s. This is different from most drugs which target only a single biological substance, like a protein or enzyme.

GV-971

• It has been extracted from brown algae and can treat mild to moderate forms of the disease and improve cognition.
• This is the only drug out of more than 320 developed by pharmaceutical companies around the globe to survive clinical trials for treating Alzheimer’s.
• The medicine can be taken orally by the patients.

Alzheimer's Disease

• It is an irreversible and progressive brain disorder.
• The disease slowly destroys memory, thinking ability and the capability to carry out simple tasks.
• The possibility of Alzheimer’s increases as the age of the population increases.
• Nearly 50 million people are affected by the disease and the number is expected to increase.
  
  • China has the highest Alzheimer's affected the population in the world.

Source:BS

Vigyan Samagam

Why in News

India’s first-ever global mega-science exhibition ‘Vigyan Samagam’ was recently inaugurated at the Science City of Kolkata.

Key Points

• The exhibition showcases India’s participation in the world’s major Mega Science projects, where several developed countries are participating collectively.
  
  • The Mega Science Projects in which India is participating are:
    
    • Large Hadron Collider (LHC) at the European Organization for Nuclear Research (CERN),
    • Facility for Antiproton and Ion Research (FAIR),
    • India-based Neutrino Observatory (INO),
    • International Thermonuclear Experimental Reactor (ITER),
    • Laser Interferometer Gravitational-Wave Observatory (LIGO),
    • Thirty Meter Telescope (TMT), and
    • Square Kilometre Array (SKA).
  • From the discovery of the Higgs particle to that of gravitational waves, these projects throw light on crucial questions related to the origin of the Universe and its evolution through its various stages.
• The primary goal of such an exhibition is to expose young minds to the deep mysteries of the Universe and various facets of its evolution. The exhibition encourages them to take up science as a career option and contribute to the nation's intellectual growth.
• ‘Connecting with School Children, Students’ is one of the key objectives of Vigyan Samagam. For this, in each city, a number of activities engaging the curiosity, attention, and imagination of school children and students will be taken up.
• Vigyan Samagam is a valuable addition to the India International Science Festival (IISF) programme-2019.
• The Science City of Kolkata is the largest science centre in the Indian subcontinent. It is managed by the National Council of Science Museums, Ministry of Culture.

Source: PIB