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Editorials/Opinions Analysis For UPSC 16 December 2022


Editorials/Opinions Analysis For UPSC 16 December 2022


Contents

  1. States must share responsibility for border security  
  2. RBI gold bonds

States Must Share Responsibility for Border Security


Context

  • Union Home Minister Amit Shah presided over the 25th Eastern Zonal Council (EZC) meeting in Kolkata.
  • Among the topics discussed at the meeting were illegal infiltration, trans-border smuggling, and the vulnerable India-Bangladesh border.
  • In light of the border force’s expanded operational area earlier this year, the role of the BSF was also discussed.
    • In October 2021, the Union government expanded the BSF’s jurisdiction from 15 kilometres to 50 kilometres inside the international border along Punjab, West Bengal, and Assam.
    • The West Bengal government was opposed to this.

Relevance

GS Paper 3: Security challenges and their management in border areas

Mains Question

Do you believe the Border Security Force (BSF) is adequately equipped to combat illegal migration and cross-border crime? Express your thoughts. (250 words)


Backgound

  • The first Prime Minister, Jawaharlal Nehru, proposed the formation of Zonal Councils in 1956.
  • This was suggested during the debate on the States Re-organisation Commission’s report.
  • It was suggested that a high-level advisory forum be established: o to minimise the impact of linguistic hostilities prevalent at the time; o to create a healthy inter-State and Centre-State environment.

About

  • Under the States Re-organisation Act, 1956, five Zonal Councils were established in response to the idea promoted by then-Prime Minister Nehru.
    • Zonal Councils are statutory, not constitutional, bodies.
  • The five councils are as follows:
    • Northern Zonal Council; Central Zonal Council; Eastern Zonal Council; Western Zonal Council; and Southern Zonal Council.
  • The North Eastern States are not represented in Zonal Councils.
    • The North Eastern Council, established under the North Eastern Council Act of 1972, is in charge of their special problems.

Objective

  • The main goals of establishing Zonal Councils are as follows: o Bringing out national integration;
    • Preventing the growth of acute State consciousness, regionalism, linguistic and particularistic tendencies;
    • Enabling the Centre and the States to collaborate and exchange ideas and experiences;
    • Establishing a climate of cooperation among the States for successful and timely execution of development projects.

The zonal councils’ organisational structure

  • Chairman o The Union Home Minister presides over each of these Councils.
  • Vice Chairman o By rotation, the Chief Ministers of the States included in each zone serve as Vice-Chairman of the Zonal Council for that zone, each for a year at a time.
  • Members of the zone include the Chief Minister and two other Ministers nominated by the Governor of each state, as well as two members from Union Territories.
  • Advisers o One person nominated by the Planning Commission (now NITI Aayog) for each Zonal Council, o Chief Secretaries and another officer/Development Commissioner nominated by each of the Zone’s states
  • Union Ministers are also invited to participate in Zonal Council meetings if necessary.

Functions

  • Each Zonal Council is an advisory body that may discuss any matter in which some or all of the States represented in that Council have a common interest.
  • It may advise the Central Government and the Government of each State concerned on the action to be taken on any such matter.

What distinguishes this council from other platforms promoting cooperative federalism?

  • There are numerous other platforms that operate on the principle of promoting cooperative federalism.
    • For example, National Development Council, Inter-State Council, Governor’s/Chief Minister’s Conferences, and other periodic high-level conferences.
  • Zonal Councils, on the other hand, differ in both content and character.
  • They are regional fora of cooperative endeavour for states that are economically, politically, and culturally linked.
  • Being compact high-level bodies designed specifically to look after the interests of respective zones, they are capable of focusing attention on specific issues while taking regional factors into account, while keeping the national perspective in mind.

RBI Gold Bonds


Context

The Reserve Bank of India (RBI) has announced the Sovereign Gold Bond Scheme 2022-23 – Series III, which will be available for subscription from December 19 to December 23, 2022. During the subscription period, the issuance price of the Bond will be Rs 5,409 per gramme.

Relevance

GS Paper – 2 Government Policies & Interventions

GS Paper – 3 Capital Market

Mains Question

Discuss the main characteristics and significance of the Sovereign Gold Bond Scheme. (150 Words)


About the scheme:

  • Sovereign Gold Bonds (SGBs) are government securities issued by the Reserve Bank of India on behalf of the Government of India.
  • SGBs are measured in grammes of gold.
  • Investors must pay the issue price in cash, and the bonds must be redeemed in cash when they reach maturity.

How does the Scheme work?

  • Under the Gold Monetization Scheme, the Government of India introduced SGBs in 2015.
  • They are issued by the RBI in various tranches throughout the fiscal year.
  • These securities can be obtained through banks, brokers, post offices, and online platforms.
    • To encourage investors to buy SGBs online, a discount of INR 50 per gramme is offered to those who do so digitally.
  • Bonds can be purchased in physical, digital, or dematerialized form.
  • SGBs have an eight-year maturity period and a half-yearly interest rate of 2.5%.
  • At maturity, after 8 years, the Gold Bonds will be redeemed in Indian Rupees, with the redemption price based on the simple average of the closing price of gold over the previous three business days.
    • On coupon payment dates after the fifth year from the date of issue, early encashment/redemption of the bond is permitted.
  • Each individual purchase is limited to 4kgs per fiscal year, while trust purchases are limited to 20kgs.
  • A PAN card is the only document required for the purchase of SGBs; otherwise, no investment in these bonds is permitted.

Advantages: SGBs outperform physical gold.

  • The amount of gold paid for by the investor is protected because he receives the current market price at the time of redemption/premature redemption.
  • Because the risks and costs of storage are eliminated, the SGB is a superior alternative to holding gold in physical form.
  • Investors are guaranteed the market value of gold at maturity as well as periodic interest.
  • SGB is free of issues such as making charges and purity in the case of gold in jewellery form.
  • The bonds are held in the RBI’s books or in demat form, removing the risk of script loss, etc.
  • SGBs can be used as collateral for bank, financial institution, and non-banking financial company loans (NBFC).
  • The bonds will be tradable on a date to be announced by the RBI. The bonds can also be sold and transferred in accordance with the provisions of the Government Securities Act of 2006.

• Maturity Period – o Because of the long maturity period of 8 years, many investors are put off by gold bonds.

o The government has kept the maturity period long in order to prevent gold price volatility from causing investors to lose money.

• Capital Loss Risk – o An investment in SGB may result in a capital loss because the bond’s value is directly related to the price of gold in international markets.

o You may incur a loss if the price at which you purchase the bond is higher than the price at which you redeem it at maturity.

The scheme’s performance

  • Since 2016-17, the government has issued gold bonds totaling 96,283 kg (96.28 tonnes) in 61 issuances, totaling Rs 52,080 crore at current market prices.
  • To date, investors have prematurely redeemed 876 kg of gold bonds.

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