- M.P. Speaker serves notice on 13 rebel MLAs
- No doubtful category in NPR, says Shah
- Bills on bankruptcy code, mineral law get RS nod
- Retail Inflation eases to, industrial production quickens
- RBI opens dollar-swap window
- Why consumers won’t gain from cheap oil?
- India’s current account deficit eases to 0.2% of GDP
Focus: GS-II Governance
Why in news?
- Amid the political turmoil in Madhya Pradesh, Assembly Speaker has served notice on 13 rebel MLAs, asking them to appear before him immediately and attest that they had resigned of their own accord as legislators.
- The Speaker has asked the MLAs to verify in person that they had submitted their resignations independently and under no duress.
Powers of the Speaker
According to the Constitution of India, a Speaker is vested with immense administrative and discretionary powers, some of which are enumerated below:
- The Speaker presides over the meetings in the House. In other words, the business in the House is conducted by the Speaker, ensuring discipline and decorum amongst its members. He/she guards the rights and privileges of the members of the two Houses, deciding who should speak at what time, the questions to be asked, the order of proceedings to be followed, among others.
- A Speaker uses his/her power to vote, in order to resolve a deadlock. That is, when the House initiates a voting procedure, he does not cast a vote in the first instance. However, when the two sides receive equal number of votes, the Speaker’s vote is used to resolve the deadlock, making the his position as impartial as in the English system of democracy.
- In the absence of a quorum in the House, it is the duty of the Speaker to adjourn the House or to suspend any meeting, until the quorum is met. The Speaker decides the agenda that must be discussed in a meeting of the Members of the Parliament.
- The Speaker is invested with the immense powers of interpreting the Rules of Procedure. That is, since he/she is the member of the House as well as the Presiding Officer at the same time, he ensures the discipline of the House. The Speaker ensures that MPs are punished for unruly behaviour. A Speaker can also disqualify a Member of Parliament from the House on grounds of defection. It is in the power of a Speaker, to permit the various parliamentary procedures such as the motion of adjournment, the motion of no confidence, the motion of censure, among others.
- The Speaker of the Lok Sabha presides over a joint sitting of the two Houses of Parliament.
- Once a Money Bill is transmitted from the Lower House to the Upper House, the Speaker is solely responsible for endorsing his or her certificate on the Bill. In other words, he/she is given the pivotal power to decide whether any Bill is a Money Bill. This decision is considered final, and all procedures henceforth, must be carried along accordingly.
- The Speaker has under his or her jurisdiction, a number of Parliamentary Committees such as the Rules Committee, the Business Advisory Committee and the General Purposes Committee. The Speaker nominates the various Chairmen of these Committees, as well as looks into the procedural hindrances of the workings of these Committees, if any.
- Besides heading the Lok Sabha, the Speaker is also the ‘ex-officio’ President of the Indian Parliamentary Group. He/she also acts in the capacity of Chairman of the Conference of Presiding Officers of Legislative Bodies in India.
- As part of the Speaker’s administrative role, he or she is the head of the Lok Sabha Secretariat, maintaining absolute security surveillance in the Parliament.
Focus: GS-II Governance
Why in news?
Union home minister on 12th March 2020, sought to allay fears over National Population Register (NPR) and assured the Upper House of Parliament that no one, including Muslims, will be marked as D (doubtful citizen) during the updation of National Population Register (NPR).
National Population Register (NPR)
- It is a Register of usual residents of the country.
- It is being prepared at the local (Village/sub-Town), sub-District, District, State and National level under provisions of the Citizenship Act 1955 and the Citizenship (Registration of Citizens and issue of National Identity Cards) Rules, 2003.
- It is mandatory for every usual resident of India to register in the NPR.
What are the Advantages?
- Every country must have a comprehensive identity database of its residents with relevant demographic details.
- It will help the government formulate its policies better and also aid national security.
- It will ease the life of those residing in India by cutting red tape. Not only will it help target government beneficiaries in a better way, but also further cut down paperwork and red tape in a similar manner that Aadhaar has done.
- With NPR data, residents will not have to furnish various proofs of age, address and other details in official work.
- It would also eliminate duplication in voter lists, government insists.
Focus: GS-II Governance
Why in news?
The Rajya Sabha has passed two Bills — the Insolvency and Bankruptcy Code (Amendment) Bill, 2020 and the Mineral Laws (Amendment) Bill, 2020.
Insolvency and Bankruptcy Code (Amendment) Bill, 2020
- The bill seeks to remove bottlenecks and streamline the corporate insolvency resolution process. It aims to provide protection to new owners of a loan defaulter company against prosecution for misdeeds of previous owners. The latest changes pertain to various sections of the IBC as well as introduction of a new section.
- The IBC, which came into force in 2016, has already been amended thrice.
- Stressing that the government is “very responsive” and has been talking to the industry, she assured the House that amendments to the IBC are not being “unthinkingly done”.
- The Bill replaces an ordinance.
- The amendments were earlier introduced as ordinances. Now after the Parliament session begun the ordinance was introduced as bill. And the bill has now been passed as an act in the parliament. The amendment aims to protect the successful bidders of insolvent companies from risk of criminal proceedings. The criminal proceedings may be expected from previous promoters of the company.
- The Ordinances are laws promulgated the President of India. The President issues ordinance on recommendation of Council of Ministers. An ordinance shall be issued only when the Parliament is not in session.
Mineral Laws (Amendment) Bill, 2020
- The Minerals Laws (Amendment) Bill, 2020 will ensure a new era for promoting the Indian coal and mining sector, especially the ease of doing business. Experts believe that coal production will increase and dependence on imports will be reduced when this action will come into the force.
- The amended bill has clear provisions for companies to participate in the auction of coal and lignite blocks even if they don’t have prior experience of coal mining in India. This will not only increase participation in coal and lignite block auctions but will also facilitate the implementation of FDI policy in the coal sector.
- Now, companies that are not involved in any specific type of end-use can participate in the auction of Schedule II and III coal mines. The removal of the last usage barrier will allow for wider participation in the auction of coal mines specified by the Central Government for various purposes such as its consumption, sale or any other purpose.
Focus: GS-III Indian Economy, Prelims
Why in news?
Retail inflation based on the Consumer Price Index slowed to 6.58% in February, while the industrial production growth as measured in the Index of Industrial Production (IIP) quickened to 2% in January amid subdued performance by the manufacturing sector, official data released on 12th March 2020 showed.
- Retail inflation, which was 7.59% in January 2020 and 2.57% in February 2019, slowed mainly due to easing food prices. Inflation in the food basket was 10.81% February 2020, lower from 13.63% in the previous month, as per data from Ministry of Statistics and Programme Implementation.
- The government has mandated the central bank to keep inflation at 4% with a margin of two percentage points on either side.
- Cumulative IIP growth for the period April-January 2019-20 over the corresponding period of the previous year stands at 0.5%, as against a growth of 4.4% in the corresponding period of 2018-19.
Inflation is defined as a situation where there is sustained, unchecked increase in the general price level and a fall in the purchasing power of money.
Thus, inflation is a condition of price rise. The reason for price rise can be classified under two main heads : (1) Increase in demand (2) Reduced supply.
Causes of Inflation
- Demand-pull inflation is the most common cause of rising prices. It occurs when consumer demand for goods and services increases so much that it outstrips supply. Producers can’t make enough to meet demand.
- Cost-Push Inflation only occurs when there is a supply shortage combined with enough demand to allow the producer to raise prices.
Consumer Price Index
The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living; the CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.
- The IIP is a composite indicator that measures the changes in the volume of production of a basket of industrial products during a given period with respect to the volume of production in a chosen base period. The data refers to the General Index as well as for each industry group.
- The industry groups that it measures are classified under the following:
- Broad sectors like manufacturing, mining and electricity.
- Use-based sectors like capital goods, basic goods, intermediate goods, infrastructure goods, consumer durables and consumer non-durables.
The eight core industries of India represent about 40% of the weight of items that are included in the IIP. The Eight Core Sectors/Industries are:
- Refinery products
- Crude oil
- Natural gas
Focus: GS-III Indian Economy
Why in news?
The Reserve Bank of India (RBI) has opened a six-month dollar sell-buy swap window to pump liquidity in the foreign exchange market — the first move following financial markets in India and across the globe experiencing turbulence over the spread of COVID-19, which could lead to a slowdown in growth.
What did the RBI say?
- RBI said the financial markets worldwide are facing intense selling pressures on extreme risk aversion due to the spread of COVID-19 infections, compounded by the slump in international crude prices and a decline in bond yields in advanced economies.
- It stands ready to take all necessary measures to ensure that the effects of the COVID-19 pandemic on the Indian economy are mitigated, and financial markets and institutions in India continue to function normally.
What is a Currency Swap?
- A currency swap is an agreement in which two parties exchange the principal amount of a loan and the interest in one currency for the principal and interest in another currency.
- At the inception of the swap, the equivalent principal amounts are exchanged at the spot rate.
- Unlike an interest rate swap, the principal is not a notional amount, but it is exchanged along with interest obligations.
- In a currency swap, the parties exchange interest and principal payments on debt denominated in different currencies.
- Currency swaps can take place between countries.
- The purpose of a currency swap is to hedge exposure to exchange rate risk or reduce the cost of borrowing a foreign currency.
How is this going to help?
It will help RBI in its efforts to fight market volatility.
The currency swap will provide liquidity to the foreign exchange market.
Focus: GS-III Indian Economy, Industry and Infrastructure, Prelims
Why in news?
- Global stocks plunged into a bear market and oil slumped further on 12th March 2020, after stimulus efforts from the European Central Bank failed to calm investors alarmed by U.S. moves overnight to restrict travel from Europe over the spread of COVID-19.
- The price of Brent Crude (one of the main benchmarks for oil prices) has fallen from close to $52 per barrel on 6 March to $31.49 per barrel on 8 March.
- On 6 March 2020 crude oil prices crashed big time, as the cosy deal between Saudi Arabia-led the Organization of the Petroleum Exporting Countries (Opec) and Russia broke down.
- Saudi Arabia started a price war with its oil producing ally Russia last week when it slashed the official cost of crude oil to the kingdom’s buyers by the most in more than 30 years.
Current Scenario of Oil Prices in the International Market
- The Saudis, the world’s top oil exporter, are trying to destroy the shale oil industry in the US, which isn’t viable at sub-$50 per barrel and create some trouble for the Russian oil industry as well.
- While Saudi Arabia produces oil at very low rates, its government’s massive expenditure is highly dependent on high oil prices.
- As per the International Monetary Fund (IMF), the break-even price for the Saudi Arabian government to be able to meet its expenditure in 2020 is expected to be at $83.6 per barrel.
- Once we take this into account, it is easy to conclude that the Saudis cannot afford the price war for very long.
- The Russians, on the other hand, are slightly better placed.
How will this impact India?
Given that the country is the world’s third-largest crude consumer and imports close to 85% of the oil that it consumes, any fall in oil prices is a relief, as the import bill comes down.
But will the Indian consumer get to see lower petrol and diesel prices?
- The safe answer here is, given that state governments are facing a slowdown in tax collections, they are likely to capture some of the fall in prices by increasing the value-added tax (VAT)/sales tax they charge on petrol and diesel.
- Also, in the recent past, the central government has tended to increase the excise duty on petrol and diesel when oil prices have fallen.
Will this time be any different for Indian Consumers?
- With oil prices falling, the dollar demand for imports is going to come down and this should act in India’s favour, at a time when there is a greater pressure on the rupee
The India story
- India’s import dependency on crude oil in FY20 (April 2019 to January 2020) has shot up to 84.9%, as against 83.6% during the same period in FY19.
- Between April 2019 and January 2020, India had imported around 188.4 million tonnes of crude oil and paid $87.7 billion for it.
- The price of the Indian basket of crude oil has a fallen by 28% in a matter of days.
- There are bound to be savings on this front, at least in the short term.
- Another point that needs to be remembered here is that crude oil is bought and sold internationally in dollars.
- When an Indian company imports oil, it needs to pay for it in dollars.
- This pushes the demand for dollar vis-à-vis the rupee.
- With oil prices falling, the dollar demand for oil imports is going to come down and this should act in India’s favour at a time when there is tremendous downward pressure on the rupee.
- Saudis are trying to kill two birds—the US shale oil industry and the Russian oil industry—with one stone. Will they succeed? The US shale oil industry continues to remain vulnerable to low oil prices.
- Clearly, Saudi Arabia is not in a situation to sustain low oil prices for long. Given this and the fact that many US shale producers are likely to go bankrupt with the oil price falling below $50, pumping up production, at best seems like a short- to medium-term strategy for Saudi Arabia.
- Brent Crude is a major trading classification of sweet light crude oil that serves as one of the two main benchmark prices for purchases of oil worldwide, the other being West Texas Intermediate.
- This grade is described as light because of its relatively low density, and sweet because of its low sulphur content.
- Brent Crude is extracted from the North Sea and comprises Brent Blend, Forties Blend, Oseberg and Ekofisk crudes (also known as the BFOE Quotation).
- The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum.
- Brent is the leading global price benchmark for Atlantic basin crude oils. It is used to price two thirds of the world’s internationally traded crude oil supplies.
- West Texas intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing.
- This grade is described as light crude oil because of its relatively low density, and sweet because of its low sulfur content.
- It is the underlying commodity of New York Mercantile Exchange’s oil futures contracts.
- The price of WTI is often included in news reports on oil prices, alongside the price of Brent crude from the North Sea. Other important oil markers include the Dubai crude, Oman crude, Urals oil, and the OPEC reference basket.
- WTI is lighter and sweeter, containing less sulfur, than Brent, and considerably lighter and sweeter than Dubai or Oman.
Focus: GS-III Indian Economy, Economic Development, Prelims
Why in news?
India’s current account deficit almost got wiped out in the December quarter standing at just $1.4 billion due to lower trade deficit and a rise in net services receipts, according to data released by Reserve Bank of India on 12th March 2020.
Private transfer receipts, mainly representing remittances by Indians employed overseas, increased to $20.6 billion, up by 9% from their level a year ago. In the financial account, net foreign direct investment at $10.0 billion was higher than $7.3 billion in Q3 of 2018-19. Foreign portfolio investment recorded net inflow of $7.8 billion – as against an outflow of $2.1 billion in Q3 of 2018-19 – on account of net purchases in both the debt and equity market.
- A fiscal deficit is a shortfall in a government’s income compared with its spending. The government that has a fiscal deficit is spending beyond its means.
- A fiscal deficit is calculated as a percentage of gross domestic product (GDP), or simply as total dollars spent in excess of income.
- In either case, the income figure includes only taxes and other revenues and excludes money borrowed to make up the shortfall.
Current Account Deficit
- The current account deficit is a measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the products it exports.
- The current account includes net income, such as interest and dividends, and transfers, such as foreign aid, although these components make up only a small percentage of the total current account.
- The current account represents a country’s foreign transactions and, like the capital account, is a component of a country’s balance of payments (BOP).