Daily Current Affairs for 9th June 2020

HC asks Manipur Speaker to keep 7 Cong. MLAs out

Paper: II

Mains: General Studies- II: Governance, Constitution, Polity, Social Justice and International relations.

Why in news:

The Manipur High Court on Monday directed the State Assembly Speaker Yumnam Khemchand to “restrain” seven Congress MLAs, who had “defected” to the BJP, from entering the House until further orders.The seven lawmakers had bolstered the strength of the BJP-led coalition government to 40 in the 60-member Assembly.

 Key Details:

• The MLAs had raised the strength of the BJP-led coalition government to 40 in the 60-member Assembly.
• After hearing disqualification petitions against them, the court also directed the Speaker to ensure compliance of the order by all concerned.

Anti-Defection Law

The 10th Schedule of the Indian Constitution (which talks about the anti-defection law) is designed to prevent political defections prompted by the lure of office or material benefits or other like considerations. The Anti-defection law was passed by Parliament in 1985 and reinforced in 2002.

• The 10th Schedule of the Indian Constitution popularly referred to as the ‘Anti-Defection Law’ was inserted by the 52nd Amendment (1985) to the Constitution.
• ‘Defection’ has been defined as, “To abandon a position or association, often to join an opposing group”.
• The anti-defection law was enacted to ensure that a party member does not violate the mandate of the party and in case he does so, he will lose his membership of the House.  The law applies to both Parliament and state assemblies.
• The aim of the Anti-Defection Law is to prevent MPs from switching political parties for any personal motive.

10th Schedule – Provisions under Anti-Defection Law

The Tenth Schedule includes the following provisions with regard to the disqualification of MPs and MLAs on the grounds of defection:

Grounds for disqualification:

• If an elected member gives up his membership of a political party voluntarily.
• If he votes or abstains from voting in the House, contrary to any direction issued by his political party.
• If any member who is independently elected joins any party.
• If any nominated member joins any political party after the end of 6 months.
• The decision on disqualification questions on the ground of defection is referred to the Speaker or the Chairman of the House, and his/her decision is final.
• All proceedings in relation to disqualification under this Schedule are considered to be proceedings in Parliament or the Legislature of a state as is the case.

Exceptions under the Anti Defection Law

• In the situation where two-thirds of the legislators of a political party decide to merge into another party, neither the members who decide to merge, nor the ones who stay with the original party will face disqualification.
• Any person elected as chairman or speaker can resign from his party, and rejoin the party if he demits that post.
• Earlier, the law allowed parties to be split, but at present, this has been outlawed.

Deciding Authority

Any question regarding disqualification arising out of defection is to be decided by the presiding officer of the House.

Role of microRNA in growth and spread of tongue cancer cells

Paper: II

Mains: General Studies- II: Governance, Constitution, Polity, Social Justice and International relations.

Why in News:

• Researchers at the Indian Institute of Technology Madras have identified a specific microRNA (miRNAs) called ‘miR-155’ that is over-expressed in tongue cancer.
• The research team has shown that knocking out miR-155 causes death of cancer cells, arrests the cell cycle and regresses tumour size in animal models and reduces cell viability and colony formation in bench top assays.

Significance:

• The finding could help develop molecular strategies to manipulate miR-155 expression to develop therapeutics for tongue cancer.
• The miRNAs affect cancer growth through inhibiting or enhancing the functions of certain proteins.

Key Findings:

• MicroRNAs (miRNAs) are short noncoding RNAs containing 20–24 nucleotides that participate in virtually all biological pathways in animals.
• They have been found to play important roles in many cancers, in carcinogenesis (start of cancer), malignant transformation and metastasis — the development of secondary cancer.
• The miRNAs associated with cancer are called ‘Oncomirs’.
• Many of the Oncomirs affect cancer by suppressing the performance of tumour-suppressing agents. Some of them can prevent the growth and spread of cancer cells and yet others prevent tumour growth itself.
• miRNA manipulation is being combined with conventional cancer treatment methods such as chemotherapy, radiotherapy and immunotherapy.

Withdraw mandi trade ordinance, changes in power Act: Farmers in Punjab

Paper: II

Mains: General Studies- II: Governance, Constitution, Polity, Social Justice and International relations.

Why in news:

Several farmers under the banner of the Kisan Mazdoor Sangarsh Samiti held protests in several districts of Punjab against the Centre’s recent ordinance on the agriculture sector, besides the proposed amendment to the Electricity Act, 2003.

Key Details:

The Cabinet recently approved ordinances to remove restrictions on farmers selling their produce outside notified market yards, as well as to facilitate contract farming and allow farmers to engage in direct marketing.

• The amendment will be made effective immediately via an ordinance, according to the Agriculture Ministry.
• The Essential Commodities Act (ECA) empowers government to impose curbs on stocking of farm produce.
• The amendment to the ECA, which has been under discussion for more than a decade, will deregulate the production, storage, movement and distribution of these food commodities.
• By removing the private sector’s fears of excessive regulatory interference, the Centre hopes to increase private and foreign investment, especially in cold storage facilities and the modernisation of the food supply chain.
• According to the government, even as India has become surplus in most agri-commodities, farmers have been unable to get better prices due to lack of investment in cold storage, processing and export.
• Adequate processing and storage facilities will reduce wastage and increase income for farmers of perishable commodities.
• The amendment would remove cereals, pulses, oilseeds, edible oils, onions and potatoes from the list of essential commodities.
• However, to protect consumers, the amendment allows regulation during war, famine, extraordinary price rise and natural calamity, while providing exemptions for exporters and processors at such times as well.

Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020:

• It aims to open up agricultural marketing outside notified mandis for farmers.
• It will help in the creation of one agriculture market across the country wherein farmers and traders will enjoy freedom of choice of sale and purchase of agri-produce.
• It will also allow for hassle-free inter-state and intra-state trade in agriculture produce.
• While both agriculture and markets are State subjects, the Centre is counting on the fact that trade and commerce in foodstuffs is part of the concurrent list to push through its ordinance.
• Industry sources suggest that 60% of agricultural trade already takes place outside the mandis through unregulated sales. By legalising and facilitating such sales, the Centre hopes that farmers will benefit, rather than middlemen.
• It is believed that allowing the farmer more choices will raise his income and also reduce wastage and improve quality.
• Not all States have been on board with these reforms, especially as State governments will not be allowed to levy fees on these sales.

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020:

• It is aimed at facilitating contract farming, where a private buyer contracts to purchase a crop at a certain price at the beginning of a season.
• The ordinance empowers farmers to engage with processors, aggregators, wholesalers, large retailers and exporters.
• This would facilitate transferring the risk of market unpredictability from the farmer to the corporate sponsor.
• It would help attract private investments to the farm sector.
• However, farmers groups have expressed concern that corporates will benefit more than small farmers from such direct marketing measures.

RBI moots comprehensive norms for sale of loans

Paper: III

Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management

Why in news:

The Reserve Bank of India (RBI) has proposed a comprehensive set of norms for sale of loans by banks which could be either standard or sub-standard or non-performing assets (NPAs).

• This is a part of the overall exercise to deepen the market for lending.
• Observing that loan sales are carried out by lenders for reasons ranging from strategic sales to rebalancing their exposures or as a means to achieve resolution of stressed assets by extinguishing the exposures, the RBI said, “A dynamic secondary market for bank loans will also ensure proper discovery of credit risk pricing associated with each exposure, and will be useful as a leading indicator for impending stress, if any, provided that the volumes are sufficiently large.”
• The revision in guidelines is an attempt to align the regulatory framework with the Basel guidelines on securitisation that have come into force effective January 1, 2018.

Key Details:

• At present, the guidelines for sale of loan exposures, both standard as well as stressed exposures, are spread across various circulars of the RBI.
• The move is aimed at building a robust secondary market for bank loans that could ensure proper price discovery and can be used as an indicator for impending stress.
• These guidelines will be applicable to commercial banks, all financial institutions, non-banking finance companies and small finance banks.
• The directions will be applicable to all loan sales, including sale of loans to special purpose entities for the purpose of securitisation.

Draft Norms for sale of loans by banks:

• The price discovery process has been deregulated to be as per the lenders’ policy.
• Standard assets would be allowed to be sold by lenders through assignment, novation or a loan participation contract.
• The stressed assets, however, would be allowed to be sold only through assignment or novation. That is, stressed assets may be sold to any entity that is permitted to take on loan exposures by its statutory or regulatory framework.
• As per the draft norms, one of the key changes relates to differential treatment for Residential Mortgage Backed Securities (RMBS) compared to other securitisations in respect of prescriptions regarding minimum holding period (MHP), minimum retention requirements (MRR) and reset of credit enhancements.

Minimum Retention Requirements:

• It is also proposed to do away with the requirement of Minimum Retention Requirement (MRR) for sale of loans by lenders.
• MRR was introduced in order to ensure that the originator bank/NBFC has a continued interest in the securitised assets.

Minimum Holding Period:

• RBI is also planning to do away with the minimum holding period (MHP) for sale of loans.
• The bank guidelines and NBFC guidelines had each set out the minimum number of instalments that must have been received in respect of loans (categorised by maturity) before they can be securitised. This is the minimum holding period.
• As per the draft guidelines, the MHP (the minimum period for which an originator must hold the exposures before they can be transferred to a purchasing entity) will not be applicable to loans with tenor up to 24 months extended to individuals for agricultural activities where both interest and principal are due only on maturity.

Changes in definition of Securitisation:

• Significant changes have been proposed in securitisation norms which are aimed at development of a strong and robust market for such transactions.
• Securitisation is the conversion of an asset, especially a loan, into marketable securities, typically for the purpose of raising cash by selling them to other investors.
• Only transactions that result in multiple tranches of securities being issued reflecting different credit risks will be treated as securitisation transactions, and accordingly covered under these revised norms.
• The definition of securitisation has been modified to allow single asset securitisations.
• Securitisation of exposures purchased from other lenders has been allowed, according to the revised guidelines.
• The norm has prescribed a special case of securitisation, called Simple, Transparent and Comparable (STC) securitisations with clearly defined criteria and preferential capital treatment.

Auction based method for price discovery:

• In order to bring down the vintage of bad loans sold by lenders as well as to enable faster debt aggregation by Asset Reconstruction Companies (ARCs), lenders shall put in place board approved policy on adoption of an auction-based method for price discovery.
• In particular, once bids are received, the lender shall first invite the ARC, if any, or in the absence of such an ARC, any other financial institution, if any, which has already acquired highest significant stake to match the highest bid.
• The RBI said the commitment of the ARC to redeem the securities shall be unconditional and not linked to the realization of the assets.

Economy to contract 3.2% in FY21: WB

Paper: III

Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management

Why in News:

The Indian economy is expected to contract by 3.2% in this fiscal year as a result of the COVID-19 pandemic and its associated restrictions, the World Bank said in its Global Economic Prospects (GEP) June 2020 report released on Monday. Growth is forecast at 3.1% next year.

Key Details:

• Growth is forecast at 3.1% next year.
• The world economy, as a whole, is set to witness its deepest recession since World War II, with a forecasted contraction of 5.2% this year.
• About 70-100 million could be pushed into extreme poverty.
• Emerging market and developing economies (EMDEs) are expected to contract by 2.5% this year, and economic activity in advanced economies is forecast to shrink by 7%, as domestic supply and demand, finance and trade have been disrupted due to the pandemic.
• Countries most reliant on global trade, tourism, external financing and commodity exports are likely to be hit the hardest.
• The downside scenario is more severe as the global economy could shrink in 2020-21 by as much as 8% (5% for EMDEs), followed by weak recovery at just above 1% growth next year.

India:

• India’s growth is estimated to have slowed to 4.2% in FY 2019-20 (year ended March 31, 2020).
• Output is expected to contract by 3.2% (so growth is -3.2%) in FY2020-21, as the impact of the pandemic (the restrictions on activity) will largely fall in this year, despite the fiscal and monetary stimulus.
• India is forecast to see some recovery next year and grow at 3.1%.

Global Economic Prospects:

• Global Economic Prospects is a World Bank Group flagship report that examines global economic developments and prospects, with a special focus on emerging market and developing economies.
• It is issued twice a year, in January and June.
• The January edition includes in-depth analyses of topical policy challenges while the June edition contains shorter analytical pieces.

Other points:

• The report states that EMDEs (Emerging Market and Developing Economies) are especially vulnerable.
• The report said EMDEs face health crises, restrictions and external shocks like falling trade, tourism and commodity prices, as well as capital outflows.
• These countries are expected to have a 3-8% output loss in the short-term, based on studies of previous pandemics, as per the Bank’s analysis.
• EMDEs are also expected to witness the spill-over effects of the U.S., the Euro Area and China, which represent almost half of global output, being unlikely to return to pre-pandemic levels of output before the end of 2021.
• If these three big economies simultaneously lose 1% in output, EMDEs (excluding China) are expected to lose 1.3% in their output with the lag of a year, the Bank warned.
• Longer term, there is a risk not just of a drop in the level of output but a lowering of potential output growth, it said. The severity of the current recession has been unseen in eight decades.
• Also, sixty million people could be pushed into extreme poverty this year, World Bank President said.
• He also said that the policy choices — including greater debt transparency to invite new investment, faster advances in digital connectivity, and a major expansion of cash safety nets for the poor — will help limit the damage and build a stronger recovery.