Week II September 2017 - UPSC PDF Download

 Page 1


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: II, September 2017 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
Page 2


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: II, September 2017 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
 
 
 
NATIONAL ECONOMIC AFFAIRS 
Loan Waiver  
? In India, farm loan waivers have been announced intermittently by both the central and state governments to 
provide relief to farmers facing distress due to natural calamities/crop failure. However, according to a recent 
report by the RBI, farm loan waiver amounting to Rs 88,000 crore likely to be released in 2017-18 by seven 
states, including Uttar Pradesh and Maharashtra, may push inflation on permanent basis by 0.2%. 
Analysis: 
? Modern agriculture requires investment in farm machinery and use of purchased inputs like seed, fertiliser, 
agri-chemicals, diesel and hired labour. Most often, savings generated from unremunerative crop enterprise 
are inadequate for such investments. Rising expenses on health, education, social ceremonies and non-food 
items put additional financial demand on farm families. Consequently, majority of the farmers have to take 
loans from institutional or non-institutional sources or both. The share of institutional loans disbursed during 
a year to agriculture and allied sectors has risen from 8.9% of the value of output in 2000-01 to 31.4% in 
2015-16. 
? The amount of short-term institutional loans for agriculture exceeds the total cost of inputs including hired 
labour at an all-India level and in many States. This indicates that a part of crop loans is likely spent on non-
agricultural purposes.  
? A more worrisome fact out of NSS surveys on Investment and Debt (NSS-I&D) is that the loans taken by 
cultivators from non-institutional sources, which involve high interest rate, is rising faster than from 
institutional sources. These indicators point to a worrying development — much of the growth in household 
demand in rural India has been debt-ridden and not supported by growth in income. 
? Recently a few States like Uttar Pradesh, Maharashtra, Punjab and Karnataka have responded to farm distress 
by rolling out farm loan waiver schemes as a measure of immediate relief to those farmers who qualify 
certain criteria. The demand for such measures is spreading to other States too. 
? The ultimate goal of farm loan waiver is to lessen the debt burden of distressed and vulnerable farmers and 
help them qualify for fresh loans. The success of the loan waiver lies on the extent to which the benefits 
reach the needy farmers. Loan waivers suffer from several drawbacks in this respect. First, it covers only a 
tiny fraction of farmers. According to 2012-13 NSS-SAS, 48% of the agricultural households did not have any 
outstanding loan. 
? Further, out of the indebted agricultural households, about 39% borrowed only from non-institutional 
sources. The farmers investing from their own savings and those borrowing from non-institutional sources 
are equally vulnerable to weather and market risks. But all such households are outside the purview of loan 
waiver. 
? Second, it provides only a partial relief to the indebted farmers as about half of the institutional borrowing of 
a cultivator is for non-farm purposes.  
? Third, in many cases, one household has multiple loans either from different sources or in the name of 
different family members, which entitles it to multiple loan waiving.  
? Fourth, loan waiving excludes agricultural labourers who are even weaker than cultivators in bearing the 
consequences of economic distress.  
? Fifth, it severely erodes the credit culture, with dire long-run consequences to the banking business.  
Page 3


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: II, September 2017 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
 
 
 
NATIONAL ECONOMIC AFFAIRS 
Loan Waiver  
? In India, farm loan waivers have been announced intermittently by both the central and state governments to 
provide relief to farmers facing distress due to natural calamities/crop failure. However, according to a recent 
report by the RBI, farm loan waiver amounting to Rs 88,000 crore likely to be released in 2017-18 by seven 
states, including Uttar Pradesh and Maharashtra, may push inflation on permanent basis by 0.2%. 
Analysis: 
? Modern agriculture requires investment in farm machinery and use of purchased inputs like seed, fertiliser, 
agri-chemicals, diesel and hired labour. Most often, savings generated from unremunerative crop enterprise 
are inadequate for such investments. Rising expenses on health, education, social ceremonies and non-food 
items put additional financial demand on farm families. Consequently, majority of the farmers have to take 
loans from institutional or non-institutional sources or both. The share of institutional loans disbursed during 
a year to agriculture and allied sectors has risen from 8.9% of the value of output in 2000-01 to 31.4% in 
2015-16. 
? The amount of short-term institutional loans for agriculture exceeds the total cost of inputs including hired 
labour at an all-India level and in many States. This indicates that a part of crop loans is likely spent on non-
agricultural purposes.  
? A more worrisome fact out of NSS surveys on Investment and Debt (NSS-I&D) is that the loans taken by 
cultivators from non-institutional sources, which involve high interest rate, is rising faster than from 
institutional sources. These indicators point to a worrying development — much of the growth in household 
demand in rural India has been debt-ridden and not supported by growth in income. 
? Recently a few States like Uttar Pradesh, Maharashtra, Punjab and Karnataka have responded to farm distress 
by rolling out farm loan waiver schemes as a measure of immediate relief to those farmers who qualify 
certain criteria. The demand for such measures is spreading to other States too. 
? The ultimate goal of farm loan waiver is to lessen the debt burden of distressed and vulnerable farmers and 
help them qualify for fresh loans. The success of the loan waiver lies on the extent to which the benefits 
reach the needy farmers. Loan waivers suffer from several drawbacks in this respect. First, it covers only a 
tiny fraction of farmers. According to 2012-13 NSS-SAS, 48% of the agricultural households did not have any 
outstanding loan. 
? Further, out of the indebted agricultural households, about 39% borrowed only from non-institutional 
sources. The farmers investing from their own savings and those borrowing from non-institutional sources 
are equally vulnerable to weather and market risks. But all such households are outside the purview of loan 
waiver. 
? Second, it provides only a partial relief to the indebted farmers as about half of the institutional borrowing of 
a cultivator is for non-farm purposes.  
? Third, in many cases, one household has multiple loans either from different sources or in the name of 
different family members, which entitles it to multiple loan waiving.  
? Fourth, loan waiving excludes agricultural labourers who are even weaker than cultivators in bearing the 
consequences of economic distress.  
? Fifth, it severely erodes the credit culture, with dire long-run consequences to the banking business.  
 
 
? Sixth, the scheme is prone to serious exclusion and inclusion errors, as evidenced by the Comptroller and 
Auditor General’s (CAG) findings in the Agricultural Debt Waiver and Debt Relief Scheme, 2008. 
? It appears that loan waiving can provide a short-term relief to a limited section of farmers; it has a meagre 
chance of bringing farmers out of the vicious cycle of indebtedness. There is no concrete evidence on 
reduction in agrarian distress following the first spell of all-India farm loan waiver in 2008. In the longer run, 
strengthening the repayment capacity of the farmers by improving and stabilising their income is the only 
way to keep them out of distress. 
Payment of Gratuity (Amendment) Bill, 2017  
? The Union Cabinet has given its approval for introduction of the Payment of Gratuity (Amendment) Bill, 2017 
in the Parliament. 
? The Payment of Gratuity Act, 1972 applies to establishments employing 10 or more persons. The main 
purpose for enacting this Act is to provide social security to workmen after retirement, whether retirement is 
a result of the rules of superannuation, or physical disablement or impairment of vital part of the body.  
? Therefore, the Payment of Gratuity Act, 1972 is an important social security legislation to wage earning 
population in industries, factories and establishments. 
? Important points: 
? The move aims at providing social security to workmen after retirement, whether it is because of rules of 
superannuation, or physical disablement or impairment of vital parts of the body. 
? The Amendment will increase the maximum limit of gratuity of employees, in the private sector and in Public 
Sector Undertakings/ Autonomous Organizations under Government who are not covered under CCS 
(Pension) Rules, at par with Central Government employees.\ The Union Cabinet chaired by the Prime 
Minister Shri Narendra Modi has given its approval for introduction of the Payment of Gratuity (Amendment) 
Bill, 2017 in the Parliament. 
? The Amendment will increase the maximum limit of gratuity of employees, in the private sector and in Public 
Sector Undertakings/ Autonomous Organizations under Government who are not covered under CCS 
(Pension) Rules, at par with Central Government employees. 
? The present upper ceiling on gratuity amount under the Act is Rs. 10 Lakh. The provisions for Central 
Government employees under Central Civil Services (Pension) Rules, 1972 with regard to gratuity are also 
similar. Before implementation of 7th Central Pay Commission, the ceiling under CCS (Pension) Rules, 1972 
was Rs. 10 Lakh. However, with implementation of 7th Central Pay Commission, in case of Government 
servants, the ceiling now is Rs. 20 Lakhs effective from 1.1.2016. 
? Therefore, considering the inflation and wage increase even in case of employees engaged in private sector, 
the Government is of the view that the entitlement of gratuity should be revised for employees who are 
covered under the Payment of Gratuity Act, 1972. Accordingly, the Government initiated the process for 
amendment to Payment of Gratuity Act, 1972. 
 Dairy Processing & Infrastructure Development Fund 
? The Cabinet Committee on Economic Affairs has approved a Dairy Processing & Infrastructure Development 
Fund” (DIDF) with an outlay of Rs 10,881 crore during the period from 2017-18 to 2028-29. 
 The major activities of DIDF: 
? The project will focus on building an efficient milk procurement system by setting up of chilling infrastructure 
& installation of electronic milk adulteration testing equipment, creation/modernization/expansion of 
processing infrastructure and manufacturing faculties for Value Added Products for the Milk Unions/ Milk 
Producer Companies. 
 Management of DIDF: 
? The project will be implemented by National Dairy Development Board (NDDB) and National Dairy 
Development Cooperation (NCDC) directly through the End Borrowers such as Milk Unions, State Dairy 
Federations, Multi-state Milk Cooperatives, Milk Producer Companies and NDDB subsidiaries meeting the 
Page 4


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: II, September 2017 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
 
 
 
NATIONAL ECONOMIC AFFAIRS 
Loan Waiver  
? In India, farm loan waivers have been announced intermittently by both the central and state governments to 
provide relief to farmers facing distress due to natural calamities/crop failure. However, according to a recent 
report by the RBI, farm loan waiver amounting to Rs 88,000 crore likely to be released in 2017-18 by seven 
states, including Uttar Pradesh and Maharashtra, may push inflation on permanent basis by 0.2%. 
Analysis: 
? Modern agriculture requires investment in farm machinery and use of purchased inputs like seed, fertiliser, 
agri-chemicals, diesel and hired labour. Most often, savings generated from unremunerative crop enterprise 
are inadequate for such investments. Rising expenses on health, education, social ceremonies and non-food 
items put additional financial demand on farm families. Consequently, majority of the farmers have to take 
loans from institutional or non-institutional sources or both. The share of institutional loans disbursed during 
a year to agriculture and allied sectors has risen from 8.9% of the value of output in 2000-01 to 31.4% in 
2015-16. 
? The amount of short-term institutional loans for agriculture exceeds the total cost of inputs including hired 
labour at an all-India level and in many States. This indicates that a part of crop loans is likely spent on non-
agricultural purposes.  
? A more worrisome fact out of NSS surveys on Investment and Debt (NSS-I&D) is that the loans taken by 
cultivators from non-institutional sources, which involve high interest rate, is rising faster than from 
institutional sources. These indicators point to a worrying development — much of the growth in household 
demand in rural India has been debt-ridden and not supported by growth in income. 
? Recently a few States like Uttar Pradesh, Maharashtra, Punjab and Karnataka have responded to farm distress 
by rolling out farm loan waiver schemes as a measure of immediate relief to those farmers who qualify 
certain criteria. The demand for such measures is spreading to other States too. 
? The ultimate goal of farm loan waiver is to lessen the debt burden of distressed and vulnerable farmers and 
help them qualify for fresh loans. The success of the loan waiver lies on the extent to which the benefits 
reach the needy farmers. Loan waivers suffer from several drawbacks in this respect. First, it covers only a 
tiny fraction of farmers. According to 2012-13 NSS-SAS, 48% of the agricultural households did not have any 
outstanding loan. 
? Further, out of the indebted agricultural households, about 39% borrowed only from non-institutional 
sources. The farmers investing from their own savings and those borrowing from non-institutional sources 
are equally vulnerable to weather and market risks. But all such households are outside the purview of loan 
waiver. 
? Second, it provides only a partial relief to the indebted farmers as about half of the institutional borrowing of 
a cultivator is for non-farm purposes.  
? Third, in many cases, one household has multiple loans either from different sources or in the name of 
different family members, which entitles it to multiple loan waiving.  
? Fourth, loan waiving excludes agricultural labourers who are even weaker than cultivators in bearing the 
consequences of economic distress.  
? Fifth, it severely erodes the credit culture, with dire long-run consequences to the banking business.  
 
 
? Sixth, the scheme is prone to serious exclusion and inclusion errors, as evidenced by the Comptroller and 
Auditor General’s (CAG) findings in the Agricultural Debt Waiver and Debt Relief Scheme, 2008. 
? It appears that loan waiving can provide a short-term relief to a limited section of farmers; it has a meagre 
chance of bringing farmers out of the vicious cycle of indebtedness. There is no concrete evidence on 
reduction in agrarian distress following the first spell of all-India farm loan waiver in 2008. In the longer run, 
strengthening the repayment capacity of the farmers by improving and stabilising their income is the only 
way to keep them out of distress. 
Payment of Gratuity (Amendment) Bill, 2017  
? The Union Cabinet has given its approval for introduction of the Payment of Gratuity (Amendment) Bill, 2017 
in the Parliament. 
? The Payment of Gratuity Act, 1972 applies to establishments employing 10 or more persons. The main 
purpose for enacting this Act is to provide social security to workmen after retirement, whether retirement is 
a result of the rules of superannuation, or physical disablement or impairment of vital part of the body.  
? Therefore, the Payment of Gratuity Act, 1972 is an important social security legislation to wage earning 
population in industries, factories and establishments. 
? Important points: 
? The move aims at providing social security to workmen after retirement, whether it is because of rules of 
superannuation, or physical disablement or impairment of vital parts of the body. 
? The Amendment will increase the maximum limit of gratuity of employees, in the private sector and in Public 
Sector Undertakings/ Autonomous Organizations under Government who are not covered under CCS 
(Pension) Rules, at par with Central Government employees.\ The Union Cabinet chaired by the Prime 
Minister Shri Narendra Modi has given its approval for introduction of the Payment of Gratuity (Amendment) 
Bill, 2017 in the Parliament. 
? The Amendment will increase the maximum limit of gratuity of employees, in the private sector and in Public 
Sector Undertakings/ Autonomous Organizations under Government who are not covered under CCS 
(Pension) Rules, at par with Central Government employees. 
? The present upper ceiling on gratuity amount under the Act is Rs. 10 Lakh. The provisions for Central 
Government employees under Central Civil Services (Pension) Rules, 1972 with regard to gratuity are also 
similar. Before implementation of 7th Central Pay Commission, the ceiling under CCS (Pension) Rules, 1972 
was Rs. 10 Lakh. However, with implementation of 7th Central Pay Commission, in case of Government 
servants, the ceiling now is Rs. 20 Lakhs effective from 1.1.2016. 
? Therefore, considering the inflation and wage increase even in case of employees engaged in private sector, 
the Government is of the view that the entitlement of gratuity should be revised for employees who are 
covered under the Payment of Gratuity Act, 1972. Accordingly, the Government initiated the process for 
amendment to Payment of Gratuity Act, 1972. 
 Dairy Processing & Infrastructure Development Fund 
? The Cabinet Committee on Economic Affairs has approved a Dairy Processing & Infrastructure Development 
Fund” (DIDF) with an outlay of Rs 10,881 crore during the period from 2017-18 to 2028-29. 
 The major activities of DIDF: 
? The project will focus on building an efficient milk procurement system by setting up of chilling infrastructure 
& installation of electronic milk adulteration testing equipment, creation/modernization/expansion of 
processing infrastructure and manufacturing faculties for Value Added Products for the Milk Unions/ Milk 
Producer Companies. 
 Management of DIDF: 
? The project will be implemented by National Dairy Development Board (NDDB) and National Dairy 
Development Cooperation (NCDC) directly through the End Borrowers such as Milk Unions, State Dairy 
Federations, Multi-state Milk Cooperatives, Milk Producer Companies and NDDB subsidiaries meeting the 
 
 
 
eligibility criteria under the project. An Implementation and Monitoring Cell (IMC) located at NDDB, Anand, 
will manage the implementation and monitoring of day-to-day project activities. 
? The end borrowers will get the loan @ 6.5% per annum. The period of repayment will be 10 years with initial 
two years moratorium. 
? The respective State Government will be the guarantor of loan repayment. Also for the project sanctioned if 
the end user is not able to contribute its share; State Government will contribute the same. 
? Rs 8004 crore shall be loan from NABARD to NDDB/NCDC, Rs 2001 crore shall be end borrowers contribution, 
Rs 12 crore would be jointly contributed by NDDB/NCDC and Rs 864 crore shall be contributed by DADF 
towards interest subvention. 
Anlaysis: 
? With this investment, 95,00,000 farmers in about 50,000  villages would be benefitted. Additional Milk 
processing capacity of 126 lakh litre per day, milk drying capacity of 210 MT per day, milk chilling capacity of 
140 lakh litre per day, installation of 28000 Bulk Milk Coolers (BMCs) along with electronic milk adulteration 
testing equipment and value added products manufacturing capacity of 59.78 lakh litre per day of milk 
equivalent shall be created. 
? Initially 39 MUs the Department will start the project with 39 profit making milk unions of 12 States, other 
Milk Cooperatives which become eligible on the basis of their net worth and profit levels, in subsequent 
years, to apply for loan under DIDF. 
? The implementation of DIDF scheme will generate direct and indirect employment opportunities for skilled, 
semi-skilled and unskilled manpower. Direct employment opportunities for about 40,000 people will be 
created under the scheme through project activities like expansion & modernisation of existing milk 
processing facilities, setting up of new processing plants, establishment of manufacturing facilities for value 
added products and setting up of Bulk Milk Coolers (BMCs) at village level. 
? About 2 lakh indirect employment opportunities will be created on account of expansion of milk and milk 
product marketing operations from existing Tier I, II & III to Tier IV, V & VI cities/towns etc. This will lead to 
deployment of more marketing staff by Milk Cooperatives, appointment of distributors and opening of 
additional milk booths/retail outlets in urban/rural locations. 
? With the increase in milk procurement operations of the Milk Cooperatives, there would be generation of 
additional manpower employment for supervision of increased milk procurement operations, transportation 
of milk from villages to processing units, and increased input delivery services like Artificial Insemination (AI)  
services, Veterinary Services, etc. 
RBI is not comfortable with bitcoins 
? The Reserve Bank has indicated that it is uncomfortable with “non-fiat” cryptocurrencies like Bitcoin. 
? A non-fiat cryptocurrency is “Bitcoins for example. That’s a private cryptocurrency.” Whereas, the fiat 
cryptocurrency is a digital currency which would be issued by the Reserve Bank of India (RBI) in place of the 
physical one at present. 
About Bitcoins: 
? It is a type of digital currency in which encryption techniques are used to regulate the generation of units of 
currency and verify the transfer of funds, operating independently of a central bank. 
? or in other words, Bit coin is a form of digital currency, created and held electronically. No one controls it. Bit 
coins aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running 
computers all around the world, using software. 
? Bit coin’s most important characteristic that makes it different from conventional money, is that it is 
decentralized. No single institution controls the bitcoin network. This puts some people at ease, because it 
means that a large bank can’t control their money. 
? A software developer called Satoshi Nakamoto proposed bit coin. 
Page 5


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: II, September 2017 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
 
 
 
NATIONAL ECONOMIC AFFAIRS 
Loan Waiver  
? In India, farm loan waivers have been announced intermittently by both the central and state governments to 
provide relief to farmers facing distress due to natural calamities/crop failure. However, according to a recent 
report by the RBI, farm loan waiver amounting to Rs 88,000 crore likely to be released in 2017-18 by seven 
states, including Uttar Pradesh and Maharashtra, may push inflation on permanent basis by 0.2%. 
Analysis: 
? Modern agriculture requires investment in farm machinery and use of purchased inputs like seed, fertiliser, 
agri-chemicals, diesel and hired labour. Most often, savings generated from unremunerative crop enterprise 
are inadequate for such investments. Rising expenses on health, education, social ceremonies and non-food 
items put additional financial demand on farm families. Consequently, majority of the farmers have to take 
loans from institutional or non-institutional sources or both. The share of institutional loans disbursed during 
a year to agriculture and allied sectors has risen from 8.9% of the value of output in 2000-01 to 31.4% in 
2015-16. 
? The amount of short-term institutional loans for agriculture exceeds the total cost of inputs including hired 
labour at an all-India level and in many States. This indicates that a part of crop loans is likely spent on non-
agricultural purposes.  
? A more worrisome fact out of NSS surveys on Investment and Debt (NSS-I&D) is that the loans taken by 
cultivators from non-institutional sources, which involve high interest rate, is rising faster than from 
institutional sources. These indicators point to a worrying development — much of the growth in household 
demand in rural India has been debt-ridden and not supported by growth in income. 
? Recently a few States like Uttar Pradesh, Maharashtra, Punjab and Karnataka have responded to farm distress 
by rolling out farm loan waiver schemes as a measure of immediate relief to those farmers who qualify 
certain criteria. The demand for such measures is spreading to other States too. 
? The ultimate goal of farm loan waiver is to lessen the debt burden of distressed and vulnerable farmers and 
help them qualify for fresh loans. The success of the loan waiver lies on the extent to which the benefits 
reach the needy farmers. Loan waivers suffer from several drawbacks in this respect. First, it covers only a 
tiny fraction of farmers. According to 2012-13 NSS-SAS, 48% of the agricultural households did not have any 
outstanding loan. 
? Further, out of the indebted agricultural households, about 39% borrowed only from non-institutional 
sources. The farmers investing from their own savings and those borrowing from non-institutional sources 
are equally vulnerable to weather and market risks. But all such households are outside the purview of loan 
waiver. 
? Second, it provides only a partial relief to the indebted farmers as about half of the institutional borrowing of 
a cultivator is for non-farm purposes.  
? Third, in many cases, one household has multiple loans either from different sources or in the name of 
different family members, which entitles it to multiple loan waiving.  
? Fourth, loan waiving excludes agricultural labourers who are even weaker than cultivators in bearing the 
consequences of economic distress.  
? Fifth, it severely erodes the credit culture, with dire long-run consequences to the banking business.  
 
 
? Sixth, the scheme is prone to serious exclusion and inclusion errors, as evidenced by the Comptroller and 
Auditor General’s (CAG) findings in the Agricultural Debt Waiver and Debt Relief Scheme, 2008. 
? It appears that loan waiving can provide a short-term relief to a limited section of farmers; it has a meagre 
chance of bringing farmers out of the vicious cycle of indebtedness. There is no concrete evidence on 
reduction in agrarian distress following the first spell of all-India farm loan waiver in 2008. In the longer run, 
strengthening the repayment capacity of the farmers by improving and stabilising their income is the only 
way to keep them out of distress. 
Payment of Gratuity (Amendment) Bill, 2017  
? The Union Cabinet has given its approval for introduction of the Payment of Gratuity (Amendment) Bill, 2017 
in the Parliament. 
? The Payment of Gratuity Act, 1972 applies to establishments employing 10 or more persons. The main 
purpose for enacting this Act is to provide social security to workmen after retirement, whether retirement is 
a result of the rules of superannuation, or physical disablement or impairment of vital part of the body.  
? Therefore, the Payment of Gratuity Act, 1972 is an important social security legislation to wage earning 
population in industries, factories and establishments. 
? Important points: 
? The move aims at providing social security to workmen after retirement, whether it is because of rules of 
superannuation, or physical disablement or impairment of vital parts of the body. 
? The Amendment will increase the maximum limit of gratuity of employees, in the private sector and in Public 
Sector Undertakings/ Autonomous Organizations under Government who are not covered under CCS 
(Pension) Rules, at par with Central Government employees.\ The Union Cabinet chaired by the Prime 
Minister Shri Narendra Modi has given its approval for introduction of the Payment of Gratuity (Amendment) 
Bill, 2017 in the Parliament. 
? The Amendment will increase the maximum limit of gratuity of employees, in the private sector and in Public 
Sector Undertakings/ Autonomous Organizations under Government who are not covered under CCS 
(Pension) Rules, at par with Central Government employees. 
? The present upper ceiling on gratuity amount under the Act is Rs. 10 Lakh. The provisions for Central 
Government employees under Central Civil Services (Pension) Rules, 1972 with regard to gratuity are also 
similar. Before implementation of 7th Central Pay Commission, the ceiling under CCS (Pension) Rules, 1972 
was Rs. 10 Lakh. However, with implementation of 7th Central Pay Commission, in case of Government 
servants, the ceiling now is Rs. 20 Lakhs effective from 1.1.2016. 
? Therefore, considering the inflation and wage increase even in case of employees engaged in private sector, 
the Government is of the view that the entitlement of gratuity should be revised for employees who are 
covered under the Payment of Gratuity Act, 1972. Accordingly, the Government initiated the process for 
amendment to Payment of Gratuity Act, 1972. 
 Dairy Processing & Infrastructure Development Fund 
? The Cabinet Committee on Economic Affairs has approved a Dairy Processing & Infrastructure Development 
Fund” (DIDF) with an outlay of Rs 10,881 crore during the period from 2017-18 to 2028-29. 
 The major activities of DIDF: 
? The project will focus on building an efficient milk procurement system by setting up of chilling infrastructure 
& installation of electronic milk adulteration testing equipment, creation/modernization/expansion of 
processing infrastructure and manufacturing faculties for Value Added Products for the Milk Unions/ Milk 
Producer Companies. 
 Management of DIDF: 
? The project will be implemented by National Dairy Development Board (NDDB) and National Dairy 
Development Cooperation (NCDC) directly through the End Borrowers such as Milk Unions, State Dairy 
Federations, Multi-state Milk Cooperatives, Milk Producer Companies and NDDB subsidiaries meeting the 
 
 
 
eligibility criteria under the project. An Implementation and Monitoring Cell (IMC) located at NDDB, Anand, 
will manage the implementation and monitoring of day-to-day project activities. 
? The end borrowers will get the loan @ 6.5% per annum. The period of repayment will be 10 years with initial 
two years moratorium. 
? The respective State Government will be the guarantor of loan repayment. Also for the project sanctioned if 
the end user is not able to contribute its share; State Government will contribute the same. 
? Rs 8004 crore shall be loan from NABARD to NDDB/NCDC, Rs 2001 crore shall be end borrowers contribution, 
Rs 12 crore would be jointly contributed by NDDB/NCDC and Rs 864 crore shall be contributed by DADF 
towards interest subvention. 
Anlaysis: 
? With this investment, 95,00,000 farmers in about 50,000  villages would be benefitted. Additional Milk 
processing capacity of 126 lakh litre per day, milk drying capacity of 210 MT per day, milk chilling capacity of 
140 lakh litre per day, installation of 28000 Bulk Milk Coolers (BMCs) along with electronic milk adulteration 
testing equipment and value added products manufacturing capacity of 59.78 lakh litre per day of milk 
equivalent shall be created. 
? Initially 39 MUs the Department will start the project with 39 profit making milk unions of 12 States, other 
Milk Cooperatives which become eligible on the basis of their net worth and profit levels, in subsequent 
years, to apply for loan under DIDF. 
? The implementation of DIDF scheme will generate direct and indirect employment opportunities for skilled, 
semi-skilled and unskilled manpower. Direct employment opportunities for about 40,000 people will be 
created under the scheme through project activities like expansion & modernisation of existing milk 
processing facilities, setting up of new processing plants, establishment of manufacturing facilities for value 
added products and setting up of Bulk Milk Coolers (BMCs) at village level. 
? About 2 lakh indirect employment opportunities will be created on account of expansion of milk and milk 
product marketing operations from existing Tier I, II & III to Tier IV, V & VI cities/towns etc. This will lead to 
deployment of more marketing staff by Milk Cooperatives, appointment of distributors and opening of 
additional milk booths/retail outlets in urban/rural locations. 
? With the increase in milk procurement operations of the Milk Cooperatives, there would be generation of 
additional manpower employment for supervision of increased milk procurement operations, transportation 
of milk from villages to processing units, and increased input delivery services like Artificial Insemination (AI)  
services, Veterinary Services, etc. 
RBI is not comfortable with bitcoins 
? The Reserve Bank has indicated that it is uncomfortable with “non-fiat” cryptocurrencies like Bitcoin. 
? A non-fiat cryptocurrency is “Bitcoins for example. That’s a private cryptocurrency.” Whereas, the fiat 
cryptocurrency is a digital currency which would be issued by the Reserve Bank of India (RBI) in place of the 
physical one at present. 
About Bitcoins: 
? It is a type of digital currency in which encryption techniques are used to regulate the generation of units of 
currency and verify the transfer of funds, operating independently of a central bank. 
? or in other words, Bit coin is a form of digital currency, created and held electronically. No one controls it. Bit 
coins aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running 
computers all around the world, using software. 
? Bit coin’s most important characteristic that makes it different from conventional money, is that it is 
decentralized. No single institution controls the bitcoin network. This puts some people at ease, because it 
means that a large bank can’t control their money. 
? A software developer called Satoshi Nakamoto proposed bit coin. 
 
 
? The idea was to produce a currency independent of any central authority, transferable electronically, more or 
less instantly, with very low transaction fees. 
Analysis: 
? Cryptocurrency could be referred to as digital gold, as it shares many of the characteristics that makes the 
precious metal a great store of value. Bitcoin shares those same characteristics, both have an extremely 
limited supply and a relatively inert state. Bitcoin and gold can both be used: for example, gold is used in 
electronic circuits and bitcoin is used as payment. 
? While gold has had a bit of a run in 2016, over the last five year period it's been a terrible performing asset. So 
people starting to wonder where there are safe havens to store their assets. This might be the main reason 
why people are making investments in bit coins. 
? However, there are some disagreement regarding considering bitcoins as a safe-haven asset. And bitcoin is 
still very volatile. Bitcoin is still such a new innovation that the economics of its value aren't fully understood, 
and the price looks likely to remain moderately volatile in the medium term. 
? Volatility and the long-term unknowns involved in bitcoin's development stop it from being considered a safe-
haven asset like gold. However, because bitcoin is unlinked to any one national currency or macroeconomic 
factor, it could be a good choice for portfolio diversification. 
? The recent rise in value of the digital currency is mainly due to an upcoming change which will see bitcoin 
miners make less money for each block that they extract. This is likely to tighten the supply of bitcoins as 
fewer new coins enter the system. 
? Another risk is to the security of the bitcoin's network. Part of the concern around the upcoming block award 
change is that if those miners make less money, then they are less incentivised to throw machinery at the 
network to secure it. 
? Meanwhile, gold remains a popular choice for investors looking for safety. Throughout civilisation gold has 
been viewed as a well-established safe haven used to store value by all cultures in all ages across the word 
and has never gone to zero in recorded history. As a physical asset gold cannot default or go bust and is 
protected by a strong property law which is simple, proven and universally understood. 
Corporate debt 
? According to a recently released report by Thomson Reuter, India’s corporate debt rose to a seven-year high 
at the end of March. 
Highlights of the report: 
? More than a fifth of large companies did not earn enough to pay interest on their loans and the pace of new 
loans fell to the lowest in more than six decades. 
? Net debt for 288 companies with a market capitalisation of more than $500 million, covering most big firms in 
India, has hit at least a seven-year high of ?18 trillion ($281 billion). Soured debt was 12% of total loans held 
by lenders at the end of March. 
? More than a fifth of 513 Indian companies had interest cover of less than 1%. New loans are also hard to come 
by. On an annual basis, the pace of new loans in the year to the end of March fell to the lowest since the 
fiscal year ended in March 1954. 
? The impact can be seen in the GDP data. Gross capital formation, a gauge of private investment, fell to less 
than 30% of GDP in the June quarter, from 31% a year earlier and 38% a decade ago. 
Analysis: 
? A small company is a segment of companies that does not have ready access to capital markets to raise funds 
nor the ability to withstand long periods of stress, which makes the trend a worrying one. 
? To solve the issue of large corporate segment, the most likely answer lies in asset sales. Such sales from 
distressed firms have certainly picked up in the past year but given that a number of these firms operate in 
sectors like iron and steel, infrastructure and power, finding buyers has not been easy. Banks that have taken 
over stressed assets under strategic restructuring schemes will face the same problem.