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Indian Express Explained-09/07/2020

1) Explained: Will ‘Samadhan-se-vikas’ help recover hundreds of crores builders owe?

Central Theme- Several real estate giants in Haryana have not deposited hundreds of crores of rupees worth mandatory External Development Charges (EDC) and Infrastructural Development Charges (IDC) for the residential and commercial colonies they have built across Haryana.

The government has now introduced a one-time settlement scheme for recovery of EDC, and what it aims to achieve with it:

How much do real estate developers owe the state government towards EDC/ IDC?

Official documents show an outstanding EDC/IDC worth nearly Rs 10,000 crore. The documents also reveal that in certain cases, the bank guarantee for several developers is nil, while their outstanding EDC is in crores.

What are EDC and IDC?

  • The developer is supposed to pay External Development Charges (EDC) to civic authorities for maintenance of civic amenities within the periphery of the developed project including construction of roads, water and electricity supply, landscaping, maintenance of drainage and sewage systems, waste management etc.
  • The EDC is decided by the civic authorities. In many cases, the developer collects it from home buyers, but does not pay it to civic authorities.
  • Infrastructure Development Charges (IDC) is collected by the state government for development of major infrastructure projects across the state.
  • These funds are utilised for socio-economic growth including construction of highways, bridges, and transportation network etc.

Where are major defaulters located?

A large number of the colony licenses on which the developers have defaulted are for commercial and residential colonies developed in Gurgaon, Faridabad, Sonepat and Panchkula, while a few are in Rohtak, Karnal, Jhajjar, Bahadurgarh and Yamunanagar.

What does the rules say?

As per terms and conditions of the LC-IV and the bilateral agreement executed at the time of issuance of license in terms of Rule 11 of Haryana Development and Regulation of Urban Areas Rules, 1976, a licensee has to pay the EDC as per schedule of payment.

Further action of revocation/encashment of BG (bank guarantee) on account of non-payment of EDC/IDC.

What is the new one-time settlement policy?

  • The new scheme is called ‘Samadhan se Vikas’. It is modeled on the central scheme of ‘Vivad se Vishwas-2020’.
  • The scheme will be applicable to the full outstanding EDC including interest as well as penal interest.
  • In case a coloniser deposits 100 per cent of the outstanding principal amount against EDC as well as 25 per cent of the accumulated interest and penal interest within six months from the date of notification of this scheme, the balance 75 per cent of the accumulated interest and penal interest shall be waived off.

2) Explained: Postal ballots and why they are fast turning into a political controversy

Central Theme- The Election Commission has announced that it will allow those above the age of 65 as well as those under home or institutional quarantine to vote using postal ballots during the Bihar elections.

What is postal voting?

A restricted set of voters can exercise postal voting. Through this facility, a voter can cast her vote remotely by recording her preference on the ballot paper and sending it back to the election officer before counting.

Who can avail this facility?

  • Members of the armed forces like the Army, Navy and Air Force, members of the armed police force of a state (serving outside the state), government employees posted outside India and their spouses are entitled to vote only by post. In other words, they can’t vote in person.
  • Voters under preventive detention can also vote only by post.
  • Special voters such as the President of India, Vice President, Governors, Union Cabinet ministers, Speaker of the House and government officers on poll duty have the option to vote by post. But they have to apply through a prescribed form to avail this facility.
  • Recently, the Law Ministry, at the Election Commission’s behest, introduced a new category of ‘absentee voters’, who can now also opt for postal voting.
  • These are voters employed in essential services and unable to cast their vote due to their service conditions. Currently, officials of the Delhi Metro Rail Corporation, Northern Railway (Passenger and Freight) Services and media persons are notified as absentee voters.
  • Last month, senior citizens above the age of 65 and voters who test positive for COVID19 or are suspected to be COVID-affected were allowed to cast their vote by post.

How are votes recorded by post?

  • The Returning Officer is supposed to print ballot papers within 24 hours of the last date of nomination withdrawal and dispatch them within a day. This is done so that the ballot papers reach the concerned voter well before the polling date and she has enough time to send it back before the counting day.
  • After receiving it, the voter can mark her preference with a tick mark or cross mark against the candidate’s name. They also have to fill up a duly attested declaration to the effect that they have marked the ballot paper.

Why have so many political parties written to Election Commission on postal ballots recently?

  • Opposition parties are not against postal ballots.
  • The Congress, CPI, CPI(M), Trinamool Congress and the RJD have objected to the EC’s decision to allow voters aged 65 and above and those infected or suspected to be infected with COVID19 to vote via postal ballots.
  • TMC has described it as an “arbitrary, malafide, unconstitutional” move against free and fair elections
  • The Congress has argued that allowing those aged 65 and above to vote by postal ballot violates secrecy in voting as a large segment of the population is uneducated and they might seek assistance from others at numerous stages, ending up disclosing their preferred candidate.

3) Explained: Why the new crop of apps should worry Indian users?

Central Theme- One of the major issues, cyber-security experts say, is the lack of data privacy norms and guidelines in these apps.

less than a fortnight after the Ministry of Electronics and Information Technology (MeiTY) banned 59 Chinese apps, Google Play Store and Apple’s App Store are teeming with alternatives to these platforms and software applications.

A lot of the new entrants are nowhere near these numbers, nor are they able to offer the privacy features of the established apps, making them prone to hacking or stealing of critical user information

Types of App

According to experts, there are two kinds of apps which have rushed to fill the vacuum created by Chinese apps.

  • There are established apps which have been around for a very long period of time and were already competing with the Chinese offerings.
  • Others, however, are like ‘fly-by-night operators’, which have downloaded entire app codes from online market places such as Codecanyon and are trying to take advantage of the anti-China sentiment
  • These apps can be bought from online marketplaces for as little as Rs 3,000. These scripts are easy to buy, and even the owner of the apps does not know how the app works. Now, if 10 people buy the same script, all the apps will have the same flaw

What are the issues with these apps?

  • One of the major issues, cyber-security experts said, is the lack of data privacy norms and guidelines in these apps.
  • With the newer apps from small developers, there is also no clarity on why certain permissions are being sought on the device. For example, most of the alternatives launched over the past 10 days seek permissions to view contacts and gallery.
  • with little knowledge about who owns these platforms and whether the app’s code also scans and stores private data of a user, no one is likely to be held accountable in case of a breach.

Do such apps bode well for the Indian app ecosystem?

Despite the surge, experts don’t see this being a long-term phenomenon, or any of these apps developing into world class products. “They (users) will quickly move on to easily available alternatives. In the short term, some knockoffs might appear but in the longer run, it is a chance for the ecosystem to mature and take the place left vacant.

4) Explained: What is a bad bank, and why is a proposal to set it up being floated?

Central Theme- The banking sector, led by the Indian Banks Association, had recently submitted a proposal for setting up a bad bank to the finance ministry and the RBI.

Various analysts suggest that in a couple of years, the proportion of stressed assets in the banking system could jump to as high as 18 per cent from around 11 per cent at present. To tackle this upcoming challenge, the banking industry has proposed the setting up of a government-backed bad bank.

What is the recent proposal of a bad bank?

  • A bad bank buys the bad loans and other illiquid holdings of other banks and financial institutions, which clears their balance sheet.
  • There were talks about creating a bad bank in 2018 too, but it never took shape.

What kind of NPA spike is expected down the line?

  • The impact of Covid-19 and the associated policy response is likely to result in an additional Rs 1,67,000 crore of debt from the top 500 debt-heavy private sector borrowers turning delinquent between FY21 and FY22, according to a report by India Ratings and Research (Ind-Ra).
  • This is over and above the Rs 2,54,000 crore anticipated prior to the onset of the pandemic, taking the cumulative quantum to Rs 421,000 crore, the report said.
  • Given that 11.57 per cent of the outstanding debt is already stressed, the proportion of stressed debt is likely to increase to 18.21 per cent of the outstanding quantum.

What is the government’s view?

  • While the finance ministry has not formally submitted its view on the proposal, senior officials have indicated that it is not keen to infuse equity capital into a bad bank. The government’s view is that bad loan resolution should happen in a market-led way, as there are many asset reconstruction companies already operating in the private space.
  • The proposal of a bad bank was also discussed at a meeting of the Financial Stability and Development Council (FSDC) chaired by Finance Minister Nirmala Sitharaman on May 28, but it has subsequently not found favour.

What is the RBI view?

  • The central bank has so far never come out favourably about the creation of a bad bank with other commercial banks as main promoters. Former RBI Governor Raghuram Rajan had opposed the idea of setting up a bad bank with a majority stake by banks, arguing it would solve nothing.
  • Rajan argued that a government-funded bad bank would just shift loans “from one government pocket (the public sector banks) to another (the bad bank) and did not see how it would improve matters”.

What are the alternatives to a bad bank?

  • Many industry experts and government officials involved in economic policy-making argue that the enactment of IBC has reduced the need for having a bad bank, as a transparent and open process is available for all lenders to attempt insolvency resolution.
  • The view is that an IBC-led resolution, or sale of bad loans to ARCs already existing, is a better approach to tackle the NPA problem rather than a government-funded bad bank.
  • Former RBI Deputy Governor Viral Acharya proposed two models.
  • The first model is a private Asset Management Company (PAMC) which would be suitable for sectors where the stress is such that assets are likely to have economic value in the short run, with moderate levels of debt forgiveness.
  • The second model is a National Asset Management Company (NAMC) for sectors where the problem is not just of excess capacity, but possibly also of economically unviable assets in the short- to medium-term, such as in the power sector.

5) Patrolling Points: What do these markers on LAC signify?

Central Theme- Patrolling Points (PPs) are identified and marked on the LAC, which are patrolled with a stipulated frequency by the security forces.

The standoffs between Indian and Chinese troops in Ladakh on the Line of Actual Control (LAC), where initial steps towards disengagement have taken place, are around a number of patrolling points or PPs in Galwan, Hot Springs and Gogra areas.

What exactly are Patrolling Points?

  • PPs are patrolling points identified and marked on the LAC, which are patrolled with a stipulated frequency by the security forces. They serve as a guide to the location of the LAC for the soldiers, acting as indicators of the extent of ‘actual control’ exercised on the territory by India.
  • By regularly patrolling up to these PPs, the Indian side is able to establish and assert its physical claim about the LAC.

Are all the Patrolling Points numbered?

No. Some of the PPs are prominent and identifiable geographical features, such as a pass, or a nala junction where no numerals are given. Only those PPs, where there are no prominent features, are numbered as in the case of PP14 in Galwan Valley.

Are all on the Patrolling Points bang on the LAC?

Mostly, yes. Except for the Depsang plains in northern Ladakh, where PP10, PP11, PP11A, PP12 and PP13 – from Raki Nala to Jivan Nala – do not fall on the LAC. These are short of the LAC, on the Indian side.

Are these Patrolling Points not manned?

The PPs are not posts and thus not manned. Unlike on the Line of Control (LoC) with Pakistan, the border with China is not physically held by the Army all along. They are just physical markers on the ground, chosen for their location and have no defensive potential or tactical importance for the Army.

If the Patrolling Points are not manned, how is the claim actually asserted?

The claim is asserted by the Army or joint Army-ITBP patrols as they show more visible presence in these areas. This is done by physically visiting PPs with a higher frequency, as the deployment has moved closer to the LAC and due to improved infrastructure. As the Chinese may not see when the Indian patrols visit these PPs, they will leave some cigarette packets or food tins with Indian markings behind. That lets the Chinese know that Indian soldiers had visited the place, which indicates that India was in control of these areas.

Who has given these Patrolling Points?

  • These PPs have been identified by the high-powered China Study Group, starting from 1975 when patrolling limits for Indian forces were specified.
  • It is based on the LAC, after the government accepted the concept in 1993, which is also marked on the maps with the Army in the border areas.
  • But the frequency of patrolling to PPs is not specified by the CSG – it is finalised by the Army Headquarters in New Delhi, based on the recommendations made by the Army and ITBP.

What is this frequency?

The frequency of reaching various PPs are given in the annual patrolling programme. Based on the terrain, the ground situation and the location of the LAC, the duration for visiting each PP is specified – it can vary from once a month to twice a year.

Which Patrolling Points are currently under dispute?

PPs 10 to 13 in Depsang sector, PP14 in Galwan, PP15 in Hot Spring, and PP17 and PP17A in Gogra are currently being disputed by both sides, where the standoffs have taken place in the past nine weeks.

6) Explained Ideas: How to digitise the Indian state

Central Theme COVID-19 demonstrated how large parts of the Indian state continue to resist, underinvest in, and delay digitisation

  • COVID-19 demonstrated how one element of Digital India — Aadhaar enabled Direct Benefit Transfer — facilitated quick and targeted action.
  • The three-phase transition to mandatory digital payments, accounting, and transactions for government proposed by the CAG (Comptroller and Auditor General) under a new project and law called DATA (Digital Accountability and Transparency Act) uses the COVID policy window for an empowering, elegant, and overdue reform with delightful consequences
  • DATA recognises that digitally empowered citizens require digital public utilities that not only provide e-services but make all government revenue and expenditure data electronic, machine-readable, granular, comprehensive, purpose linked, non-repudiable, reliable, accessible and searchable
  • A big gift to this project could be a 12-month mandatory deadline for all government payments to go digital; bad behaviour currently costs the RBI Rs 4,000 crore in bank agency commissions because many parts of the government do not use the RBI’s free e-kuber system.
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