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INDEX

1. National news

1.1 PMO seeks change in UPSC allocation

1.2 Air quality causes premature deaths

1.3 ‘Clean Air India Initiative’ Launched

1.4 Foreign investor’s cold to residency scheme

2. International News

2.1 Iran will face stringent sanctions

3. Polity and Governance 3.1 EC plays down VVPAT malfunction

3.2 National Parties under RTI Act, EC clarifies

3.3 Special Parliament session sought to discuss farm crisis

4. Economy

4.1 A year on, UDAN is yet to soar

4.2 SEBI proposes stringent norms for debt disclosure

4.3 Capital remaining for banks is ‘sufficient’ – Govt

4.4 India moves WTO over U.S. steel tariffs

4.5 Windfall oil tax on ONGC in offering to soften full prices

5. Science and Tech

5.1 Women’s health crucial to combat stunting study

6. Environment / Geography

6.1 Sterlite copper told to shut shop in TN

7. Security

7.1 Centre plans connectivity push on china border


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Current Affairs (21 to 31 May 2018)

1. National News

1.1PMO seeks change in UPSC allocation

The Centre is considering a major change in the allocation of services to successful

candidates of the civil services examination.

The Prime Minister’s Office (PMO) has asked the department concerned to examine if the

services can be allocated after the completion of the foundation course, according to an

official communiqué.

The duration of the foundation course for officers of almost all the services is three

months. At present, service allocation to the candidates selected on the basis of the civil

services examination, conducted by the Union Public Service Commission (UPSC), is made

well before the commencement of the foundation course. The PMO has desired to

examine if service allocation/cadre allocation to probationers selected can be made after

the foundation course, as per the communication sent by the Personnel Ministry to

different cadre-controlling authorities.

Seeks feedback

The departments have been asked to examine the feasibility of giving due weightage to

the performance in the foundation course, and making service allocation as well as cadre

allocation to all-India services officers based on the combined score obtained in the exam

and the foundation course, it said.

The Indian Administrative Service (IAS) and Indian Police Service (IPS) are all-India

services.

The departments have been asked to give their feedback on the proposal to allocate other

Central services such as the Indian Revenue Service and Indian Telecommunications

Services, a Ministry official said.

1.2 Air quality causes premature deaths

IIT-CEED study in 11 north Indian cities says pollution is a major reason for premature mortality


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Worsening air quality in the last two decades has emerged as one of the major reasons

for high numbers of premature deaths, says a new study conducted in 11 north Indian

cities.

The findings titled ‘Know what you breathe’, released here on Tuesday, were researched

by Indian Institute of Technology (IIT)-Delhi in collaboration with environmental NGO

Centre for Environment and Energy Development (CEED). The report found annual

mortality linked to air pollution to be in the range of 150-300 persons per 1 lakh

population.

Three States

The study was conducted in seven cities of Uttar Pradesh (Allahabad, Kanpur, Lucknow,

Meerut, Varanasi and Gorakhpur), three cities of Bihar (Patna, Gaya and Muzaffarpur),

and the capital of Jharkhand, Ranchi.

Kanpur recorded the highest number of premature deaths per year (4,173) due to chronic

exposure to air pollution, followed by Lucknow (4,127), Agra (2,421), Meerut (2,044),

Varanasi (1,581), Allahabad (1,443) and Gorakhpur (914).

The study calculated the annual “mortality burden” through averages of recorded deaths

caused due to Chronic Obstructive Pulmonary Disease (COPD), Acute Lower Respiratory

Infection (ALRI), coronary disease, stroke, and lung cancer, in these cities. COPD was the

largest cause of the deaths (at 29.7%) and lung cancer the lowest (0.6%).

The largest share in total burden was attributed to ALRI in Agra and Meerut, and to COPD

in Allahabad, Gaya, Kanpur, Gorakhpur, Lucknow, Patna, Muzaffarpur and Varanasi.

Not ‘instant deaths’

The estimates should not be perceived as instant deaths, said the report, clarifying that

they represent premature (earlier than the expected lifetime of the Indian population)

deaths due to chronic exposure from pollution. However, “it isn’t possible to validate

these estimates, as cause-specific mortality data do not exist in India,” said the report

authored by Dr. Sagnik Dey, Associate Professor, Centre for Atmospheric Sciences, IIT-

Delhi. Premature mortality burden would reduce by 14%-28% annually with the

achievement of Indian air quality standards in these cities, the report said.

Using satellite-based high-resolution PM2.5 database to generate particulate matter

statistics for the past 17 years, the report concludes that the mean annual ambient fine

particulate matter concentration was 75-120% higher than the Indian annual air quality

standard in the 10 of the 11 cities.

‘Anthropogenic sources’


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The study has attributed residential (cooking, heating and lighting) sources as the largest

contributors to annual ambient PM2.5 concentration (73.8%).

Ankita Jyoti, senior programme officer, CEED, said, “the analysis of aerosol composition

indicates a higher percentage of sulphates, organic carbons and black carbon emitted

primarily from anthropogenic sources.”

1.3 ‘Clean Air India Initiative’ Launched

Prime Minister of Netherlands Mark Rutte, who is in India on a two-day visit, launched

the ‘Clean Air India Initiative’ in the national capital on Thursday. The campaign aims to

curb air pollution in Indian cities by promoting partnerships between Indian start-ups and

Dutch companies and build a network of entrepreneurs working on business solutions for

cleaner air.

The Clean Air India Initiative is a collaborative project between Get In The Ring, a platform

for start-ups, the government of the Netherlands, Start-up India, and INDUS Forum, an

online matchmaking platform of Indian and Dutch businesses.

Speaking at the launch, Mr. Rutte said, “Governments need to be articulate about the

problems they want to solve, bring together the right partners, and channelise

entrepreneurs in the right direction to find solutions to global problems.” “Sustainable

businesses present an opportunity to do social good, as they represent a for-profit

orientation in the right framework. They advance the U.N.’s Sustainable Development

Goals [SDGs] in a smartly profitable way,” said Ms. Sigrid Kaag, the Dutch Minister for

Foreign Trade and Development Cooperation.

A major business opportunity for Dutch firms that was highlighted included the potential

for sale of equipment (such as sensors), data, and solutions concerning air quality

monitoring (AQM), with experts estimating that 80% of India is not covered by AQM data

collecting which is the first step toward monitoring and combating air pollution.

Also under focus was the severe air pollution in Delhi caused by the burning of paddy

straw in neighbouring Haryana and Punjab. An ‘INDUS impact’ projects aims to halt the

hazardous burning of paddy stubble by promoting business partnerships that “upcycle”

it. This entails using paddy straw as feedstock to make materials that would find use in

construction and packaging — a technology and expertise that Dutch companies are keen

to market in India.

1.4 Foreign investors cold to residency scheme


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Two years after it was launched by the Union government, the Permanent Residency

Status (PRS) scheme providing a host of facilities for foreigners who invest at least ₹10

crore under the Foreign Direct Investment (FDI) route is yet to find a single applicant.

A senior Home Ministry official said no foreigner had applied, but cautioned that the lack

of applicants should not be seen as “no foreign investment”. Except Pakistani citizens or

third-country nationals of Pakistani origin, the scheme is open for citizens of every

country.

Inflows dip

From April to December 2017, the FDI inflow stood at ₹2,31,457 crore, a decrease from

₹2,40,385 crore for the corresponding period in 2016.

Most European Union countries, the U.S., Canada and others offer permanent residency

to foreign investors.

The U.S. offers the EB-5 visa programme where foreigners could apply for permanent

residency if they created employment opportunities for 10 people with a minimum

investment of ₹6.5 crore.


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An official said this was not a “citizenship” that was being offered to foreigners and was

subject to review every 10 years.

The Union Cabinet had cleared the PRS in 2016 to boost its “Make in India” policy. The

scheme is open for foreign investors who invest a minimum of ₹10 crore within 18 months

or ₹25 crore in 36 months.

“The foreign investment should result in generating employment to at least 20 resident

Indians in every financial year … PRS will be granted for a period of 10 years with multiple

entry and can be renewed for another 10 years. There will be no requirement of

registration with the Foreigners Regional Registration Office (FRRO),” the Home Ministry

document on the scheme said.

The PRS card holders are also eligible to buy residential property in India.

Among foreign countries, the maximum investment proposals in critical sectors such as

telecom and defence that was cleared by Home Ministry in 2017, were from China, the

U.K., the U.S. and Mauritius.

Security clearance

Last year, the Ministry gave security clearance to more than 1,071 proposals in 11 critical

sectors like defence, telecommunications, information and broadcasting.

Over 90% of the FDI proposals have come through the automatic route, an official said.

Among the foreign countries, the U.S., China (including Hong Kong), Mauritius and the

U.K. have received the green signal for the most number of projects at 10 each, followed

by Germany at six, Bangladesh at three and Italy, Israel, Netherlands and Switzerland at

two each.


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2. International News

2.2 Iran will face stringent sanctions

Since the imposition of a new round of stringent sanctions, attention has been focussed

on Iran's capacity to cope with the fresh attempts by the West to enforce its economic

isolation. Led by the United States, Iran was confronted with three sets of sanctions in

quick succession. The fourth round imposed by the United Nations Security Council on

June 9 has been followed by a stringent set of economic measures, slapped unilaterally

by the U.S. and the European Union.

The purpose of the sanctions is apparently to promote the international non-proliferation

agenda. By causing Iran economic pain, the West hopes to discourage it from pursuing a

path of acquiring atomic weapons. In other words, the economic route is being pursued

to achieve a political objective — of persuading Tehran to relinquish such measures that

may take it closer to acquiring nuclear weapon capability. Unlike the Bush administration,

which flashed “regime change” as its call sign, the new mantra in Washington is about

changing “regime behaviour.” Applied to Iran, it means enforcing a change in its nuclear

policy by confronting it with the prospect of severe economic deprivations.

In seeking to deny Iran atomic weapons, the Security Council's focus so far has been on

curbing uranium enrichment. Uranium, when enriched above a 90 per cent level, can be

used for making atomic weapons. Iran has enriched most of its uranium to a level of five

per cent. However, since February, it has begun enrichment to a 20-per cent level. The

Iranians argue that they need a 20-per cent level to eventually fabricate the nuclear fuel

necessary to produce medical isotopes required for treatment of cancer.

Unsurprisingly, a string of resolutions passed by the five permanent members of the

Security Council and Germany has called upon Iran to halt uranium enrichment — a

demand it has refused to meet. The global powers have been especially alarmed at Iran's

20 per cent enrichment for, they fear that unless checked, this could be a stepping stone

for Tehran purifying uranium to a weapon-grade level. As for the five per cent uranium

stockpile, there has been a concerted attempt, led by the West, to remove the bulk of

this material to locations outside Iran.

Will the heavy sanctions be weighty enough to persuade Tehran to sufficiently rein in its

atomic programme? Given the level of suffering they are likely to cause, it is unlikely that

sanctions alone would be severe enough to exhort Iran to significantly re-orient its atomic

programme. However, there is a subtle but powerful political message in the new set of


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sanctions that Iran may find difficult to ignore, and which could encourage a dialogue in

the future.

Among the latest sanctions, those imposed unilaterally by the Americans and the

Europeans strike at the very foundations of Iran's economy — its oil and gas sector.

For instance, EU sanctions ban the sale, supply or transfer of equipment and technology

that Iran can use for refining, exploration and production of oil. The ban covers liquefied

natural gas as well. The U.S. sanctions hope to target Iranian petrol imports. While Iran is

one of the world's largest producers of crude, it lacks sufficient refining capacity.

Consequently, nearly 40 per cent of its petrol requirements are met through imports,

although the figure may have declined to 30 per cent if Iranian official estimates are to be

believed.

A Reuters report quoting the Oil Ministry said Iran's daily consumption of gasoline since

March stands at 63.1 million litres. Of this, 45 million litres is produced domestically,

which means Iran requires to import 18 million litres a day. Taking advantage of Iran's

dependence on imports, the U.S. on June 24 passed its sanctions legislation, which not

only imposed restrictions on its own companies but also targeted the international firms

that supply petrol and petroleum products to Iran. Under the new law, firms violating the

sanctions will face denial of access to the U.S. financial system or contracts.

The significantly tightened sanctions have begun to take effect. In July, Iran reportedly

received four shipments of petrol, far short of the 11 monthly cargoes of around 45

million litres each it normally requires at this time of the year. Of these, three were

provided by the Turkish refining firm Tupras and China's Unipec, trading arm of Chinese

refiner Sinopec. Venezuela was expected to provide the fourth gasoline cargo to Iran.

Selling petrol to Iran has become all the more difficult as Lloyds of London, a trendsetting

firm, has since July 9 decided that it would not insure or reinsure petroleum shipments

bound for that country.

Though the petroleum and financial sanctions have hit Iran hard, it may not find it

unbearable to shoulder the burden. Iran has adopted a three-pronged strategy to meet

its gasoline shortfall. First, it has decided to slash consumption. In the coming days,

Tehran is expected to cut subsidies on gasoline. Second, it expects that friends such as

China, Turkey and Venezuela will continue to support it with their petroleum supplies.

While supporting the U.N. sanctions, China publicly rejected the imposition of unilateral

sanctions by the U.S. and the EU which severely target Iran's oil and gas sector. Third, Iran

plans to rapidly expand its domestic refining sector to acquire self-sufficiency within the

next few years.

While Iran may be prepared to face the economic hardship, it is the political challenge

posed by the sanctions that may make it uneasy. Notwithstanding the dismissive rhetoric,

it is unlikely that Tehran would have missed the political signal sent by the sanctions —


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that the West may be running out of non-military options to curb its nuclear programme.

The latest round of sanctions, in other words, may have brought war closer to Iran's

doorstep than ever before.

A combination of factors — the retirement of the former head of the International Atomic

Energy Agency, Mohamed ElBaradei, a vocal critic of military action in the region; and the

re-emergence of the hawkish Israeli Prime Minister, Benjamin Netanyahu, and his

powerful partners in New York and Washington — has hardened the anti-Iran mood in

large sections of the U.S. establishment. Combined with the intense exertions of the non-

proliferation crowd within the American bureaucracy, Washington's intolerance of an

independent Iranian nuclear programme has been further re-energised. Some of the rich

Gulf Arab petro-monarchies are also doing their bit to exhort the West to curb Iran's

atomic programme.

Those opposing the Iranian nuclear programme argue, unfairly, that once armed with

atomic weapons, Iran would be well positioned to destabilise West Asia. In the West,

there are also fears that after acquiring atomic weapons, it would emerge as a regional

heavyweight, impossible to contain. A nuclear Iran, it is feared, would become a mighty

counterweight to Israel, a key anchor well positioned to defend core western interests in

large parts of West Asia. Iran's emergence as Israel's potent rival would, therefore, change

the pro-West balance of power in the region. Once in command of a nuclear deterrent

and insulated from a military attack, Iran, it is believed, would also have the capacity to

impede vital western interests on two other fronts.

First, Iran would be unrestrained to tamper at will with the flow of international energy

shipments through the Strait of Hormuz, a move that would have a disastrous impact on

the global oil industry. Second, a nuclear Iran would be well positioned to cause instability

in some of the neighbouring oil rich Gulf countries, with significant Shia populations. For

Saudi Arabia, a nuclear Iran is the ultimate nightmare for, most of the Shia population is

concentrated in the country's eastern provinces, where much of the Saudi oil and related

infrastructure is located. Iran would therefore emerge as a significant threat not only to

the Kingdom but also to the global economy because the world's largest oil reserves are

located in Saudi Arabia.

From an Iranian standpoint, the latest round of sanctions signals a time for serious

circumspection, followed by a sharp focus on dialogue to ease nuclear tensions with the

West. The promise of the revival of Iran's talks in September with the Vienna group,

comprising the U.S, Russia, France and the IAEA, presents an opportunity for nuclear

confidence-building measures which neither Iran nor the global powers can afford to

miss. Iran's position supporting the involvement of Turkey and Brazil in talks with the

global powers is also logical, and maybe necessary, in order to prevent the standoff

between Tehran and the West from heading towards the brink of war.


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3. Polity and Governance

3.1 EC plays down VVPAT malfunction

Allegations of largescale malfunctioning of VVPATs and EVMs were reported from Uttar

Pradesh and Maharashtra during Monday’s bypolls for four Lok Sabha and 10 Assembly

seats across 10 States.

The Election Commission (EC), however, termed them an exaggerated projection of

reality, stating that defective machines were replaced.

The counting for all the seats will be on May 31.

Elections were also conducted in R.R. Nagar in Bengaluru, where polling had been

deferred following allegations of electoral malpractice by political parties.

According to the EC, only 96 ballot and 84 control units of EVMs, besides 1,202 VVPATs

had to be replaced. “It amounts to 0.76% of the ballot units, 0.81% control units and

11.60% of total VVPATs,” said an official.

The highest number of VVPATS (20.82%) were replaced in Uttar Pradesh’s Kairana

parliamentary constituency, followed by 19.22% in the Bhandara-Gondiya and 13.16% in

the Palghar Lok Sabha constituencies of Maharashtra.

With the Opposition hoping to repeat the Gorakhpur and Phulpur Lok Sabha byelection

victories of the Samajwadi Party, backed by the BSP, the focus was sharply on Kairana.

The constituency, however, reported a low turnout if 54.17% till 6 p.m.

The highest of turnout of 90.42% was recorded in Meghalaya’s Ampati Assembly

constituency, followed by 76.60% in Shahkot and 75% in the Nagaland Lok Sabha

constituency. In Maharashtra’s Bhandara-Gondiya, the turnout was 38.65% till 6 p.m.

while in Palghar it stood at 46.5% till 5 pm.

Following reports of VVPAT malfunctions, a joint delegation of the RLD, SP and the

Congress, besides a separate BJP delegation, met the EC. The Commission told them that

VVPAT-related complaints had been attended to on the ground and that the issues raised

by them would also be addressed.

Stating that there was no abnormality in EVM malfunctions, The Commission said VVPAT

glitches were higher than the normal in Kairana and the Noorpur Assembly constituency

in Uttar Pradesh; and Bhandara-Gondiya.

“The VVPAT malfunctions could be due to first-time use by polling staff, extreme heat

conditions, placement of machines under direct light and mishandling during use. The EC

conducts root-cause analyses in such cases to improve in future,” the EC said.

However, former UP Chief Minister Akhilesh Yadav, and leaders of the Shiv Sena and NCP

demanded restoration of ballot paper.


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A total of 2,651 EVM control units, equal number of ballot units and 2,596 VVPATs were

deployed in Kairana and Noorpur. In all, 384 VVPATs were replaced, and over 15 EVMs

were also changed.

In Maharashtra, 4,246 EVMs and 5,360 VVPATs were used in Palghar and Bhandara-

Gondiya. 276 of the total 2,608 VVPATs were replaced in Palghar. Responding to reports

of machine malfunctions, Palghar District Collector Dr. Prashant Narnaware said VVPATs

were sensitive to light and heat.

3.2 National Parties under RTI Act, EC clarifies

The Election Commission today said national parties are public authorities under

the RTI Act as declared by the Central Information Commission, a day after the poll

panel's appeal order on an RTI application saying "political parties are out of the purview

of RTI Act" was reported.

In a statement issued today, the Election Commission of Indiaclarified that it goes by the

CIC order of 3rd June, 2013 that declared national parties as public authorities for the

purposes of RTI Act.

In pursuance of this, the CIC order had said, all the information about the contributions

received by these parties as well as their annual audited accounts, as and when submitted

to the Commission, are put in public domain.

The appeal order had come on an RTI applicant Vihar Dhurve who had sought details of

donations, through electoral bonds, collected by the six national parties declared as public

authorities under the RTI Act by the CIC -- Congress, BJP, NCP, BSP, CPM and CPI.

In its order deciding his first appeal, a senior official of the Election Commission had said,

"Requisite information is not available in the Commission. This is related to political

parties and they are out of purview of the RTI."

The First Appellate Authority in the Election Commission K F Wilfred, the Senior Principal

Secretary in poll panel, wrote in the order that he agrees with the view taken by the CPIO

of the Commission.

Six out of seven political parties -- the BJP, Congress, BSP, NCP, CPI and CPM -- for which

information was sought by the applicant were brought under the ambit of the RTI Act by

a full bench of the commission on June 3, 2013.

The order has not been challenged in the higher courts but the political parties have

refused to entertain the RTI applications directed at them. Several activists have

approached the Supreme Court on the grounds of non-compliance of the CIC order and

the matter is pending.


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3.3 Special Parliament session sought to discuss farm crisis

Delegation calls on President Ram Nath Kovind

A special session of Parliament is needed to discuss the agrarian crisis, farmer leaders

from the All India Kisan Sangharsh Coordination Committee told President Ram Nath

Kovind during a meeting on Monday.

‘Save lives’

“While the country can have a midnight special session for GST, don’t the farmers of the

country, who have been sacrificing their lives to ensure food security of the country,

deserve this special session to save their lives?” said a memorandum submitted to the

President by an 18-member delegation of the AIKSCC, an umbrella platform for 193

farmers’ organisations.

The AIKSCC delegation also presented the President with the two private members’ Bills

regarding farm loan waivers and guaranteed minimum support prices, which they wish

to discuss in the special session. The Bills were drafted after a series of consultations

with farmers fora across the country, and have been fine-tuned in consultation with 21

political parties which have expressed their support, according to the memorandum.

“We told the President about the precedent set by the Atal Bihari Vajpayee government

in December 2003, when they had called for a special session after the death of three

sugarcane farmers,” said AIKSCC leader V.M. Singh after the meeting.


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4. Economy

4.1 A year on, UDAN is yet to soar

Only 15%, or 70, of the 453 routes in the regional air connectivity scheme are operational

The promise of cheap flights between smaller cities still eludes many. A year since the

Centre unveiled the regional air connectivity scheme (RCS) with the aim to connect tier-2

and tier-3 cities and make flying affordable for the masses, a mere 15% or 70 of the total

453 routes awarded to various airline and helicopter operators have taken off.

None of the 75 helicopter routes connecting hilly terrain and islands have commenced

yet. According to an official of Pawan Hans, the nodal body for overseeing helicopter

operations under the RCS, it has identified close to 50 sites for helipads and development

work may take 3-6 months to finish. These routes were awarded in January and there is

a deadline of six months to start operations.

According to official sources in the Ministry of Civil Aviation, of the 56 unserved airports

that the government planned to add to the aviation map in a year, only 16 are ready, and

10 of the 25 under-served airports have been developed.

Two rounds over

Two rounds of bidding have ended for routes under the scheme, also known as Ude Desh

Ka Aam Nagrik (UDAN), in the past year. Operators are offered a subsidy by the Centre

and the State governments to keep airfares low.

Airlines have to set aside half the total seats in an aircraft at a discounted rate of ₹2,500

each per hour of flight and helicopters need to offer a maximum of 13 seats for ₹2,500

each per 30 minutes of flight. Operators get exclusive rights to fly on a route for three

years, to protect them from competition.

In March last year, after the first round of bidding, five operators were awarded 128

routes, which had to be opened by September-end. A year later, less than half of these

routes are operational.

While established players such as Air India subsidiary Alliance Air, budget carrier SpiceJet

and regional airline TruJet have been able to deliver on most or all the routes awarded to

them, smaller players like Air Odisha and Air Deccan, which won 65% of the routes, have

only been able to service less than 15% of the total routes awarded in round one. Air

Odisha has commenced flights on eight of the 50 routes it was awarded and Air Deccan

has started flying in 10 of 34 it won.

While we are two months away from the deadline to start operations for routes awarded

in the second round, three of 15 operators have commenced services on 10 routes of the


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total 325 routes awarded. Jet Airways and IndiGo have announced that they will be

starting flights on some of the routes in June and July, respectively.

In fact, smaller players like Air Odisha and Air Deccan have struggled to raise sufficient

capital for their operations, hire trained manpower and lease planes, and have slowed

down the implementation of the scheme. The two started their operations with a

combined fleet of four 19-seater Beechcraft B-1900D aircraft.

Sources in the Ministry of Civil Aviation said their services had been irregular, often due

to lack of trained pilots or when the few planes they have were grounded due to technical

issues. The cancellation rates of flights for Air Odisha and Air Deccan have been as high

has 80% for some of the months.

“We had reviewed (the status of flights) at the level of the Secretary (Ministry of Civil

Aviation) and both [the] players have given some timeline with supporting documents

such as the status of leasing aircraft, which we are examining. They have given a

programme for starting nine more routes and we are processing it,” said a senior official

of the ministry.

However, in the past, each time the two carriers were issued show cause notices, they

had failed to honour the commitments made by them.

While a senior ministry official said last year that they were mulling over penalising those

operators who miss their deadlines, sources say such an action would be detrimental to

the scheme and it may prove to be difficult to look for new players for a large chunk of

routes that had been granted to Air Odisha and Air Deccan.

Another senior ministry official said, “When we started the UDAN scheme, we kept entry

barriers low to attract more players. But there is always a downside that they will take

time to build efficient operations. We recognise them as weak players and handhold them

with regulatory procedures.”

So, the success of the scheme largely depends on interest from bigger players such as

IndiGo, SpiceJet and Jet Airways. Significantly, SpiceJet and IndiGo have not sought any

government subsidy for most of their routes.

“With commitments by IndiGo, SpiceJet, Jet Airways and Alliance, RCS is finally gaining

traction,” according to aviation think tank CAPA in a report on its India outlook. “But there

is little or no business case for small, independent operators without scale, operating

older equipment on routes dispersed across multiple stations.”

It remains to be seen whether little-known carriers allotted routes in the second round,

such as Ghodavat, Pinnancle Air, Meh Air, Zoom Air, Turbo Aviation and AAA Aviation, will

be able to deliver.

Infrastructure problems

Infrastructure constraints, too, have checked the pace of implementation of the scheme.

Forty unserved and 15 underserved airports are not ready yet for operations. Some


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airports owned by State governments and private players have been hesitant in

participating as there is little for them to gain with RCS flights exempt from paying landing

and parking charges and States required to provide land, security and fire services free of

cost.

“Many airports in round two are unserved [ie where no operations exist] and it is difficult

to start flights there because virtually nothing exists there. For example, the airport at

Darbhanga is operated by Indian Air Force, where the runway is capable of handling only

IAF jets and not commercial aircraft like a Q400. To strengthen the runway, we need to

lay concrete, which requires two watering seasons; it will take at least 18 months for it to

be ready. There is a lot of capital also required for investment at these airports,”

Chairman, Airports Authority of India, Guruprasad Mohapatra told The Hindu.

On the other hand, bigger airports have struggled to allocate slots for RCS flights. In Phase

I, Delhi’s Indira Gandhi International Airport and Mumbai’s Chhatrapati Shivaji

International Airport could grant only half of the 20 slots sought from each of them by the

Ministry. Airport officials say the smaller planes carrying 20-40 passengers take more time

on the runway affecting the operational efficiency. Severe capacity limitations meant that

in Phase II, no slots were granted for RCS operations by these two airports and airlines

were told to use their existing slots at these cities.

Silver lining

However, there may be a silver lining: many routes have seen a steady rise in the number

of passengers, though there are still pockets such as those in the northeast which are yet

to generate any interest in travellers.

“The cumulative average of seat occupancy on our routes has increased from 55% to 70%

in a year,” said Senthil Raja, head, commercial, TruJet. “The routes we are operating in

didn’t have any flights earlier and we have seen demand picking up.” Alliance Air CEO C.S.

Subbiah said, “The routes we started last year under UDAN-1 have begun to stabilise.”

He, however, added yields or revenue per passenger per mile are still low as demand was

cyclical and airlines were not able to increase fares for seats not covered by the scheme.

Another airline executive said, on condition of anonymity, “Because of RCS you have no

competition; you can work with a pricing model and develop a route. That is a great

thing... you are protected from competitive pressures. [Demand] can be generated by

developing capacities and stimulating the market [with] a good pricing strategy,” the

official said.

4.2 SEBI proposes stringent norms for debt disclosure


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Eyes payment delays for interest, dividend on NCDs, NCRPS

Listed companies might soon have to make a quick disclosure in the event of a default on

debt securities or even if the company is merely expecting a possible delay or default in

the payment of the interest or the principal amount.

The Securities and Exchange Board of India (SEBI), whose attempts last year to tighten

the disclosure norms for default of loans taken from banks or financial institutions met

with opposition and failed ultimately, plans to amend the listing regulations to make such

disclosures mandatory.

The capital market regulator has proposed amending the Listing Obligations and

Disclosure Requirements Regulation 2015, which all listed companies have to comply.

The watchdog has proposed changes that would make it compulsory for a company to

disclose within 24 hours, any default or an expected default or delay in the payment of

interest or dividend on debt instruments like non-convertible debt securities (NCDs) or

non-convertible redeemable preference shares (NCRPS).

Further, if there is any action or proposal that could affect the redemption, conversion,

cancellation, retirement in whole or in part of the debt securities then it will also have to

be disclosed “as soon as reasonably possible but not later than twenty four hours from

occurrence of event or information”, as per SEBI’s discussion paper.

“There was a view that SEBI’s circular last year on debt default disclosure went beyond

the securities market and so got stalled. This time though the regulator has acted within

its powers and has proposed changes to tighten the regulations for disclosure by

amending the LODR regulations, which every listed entity has to comply with,” said

Sandeep Parekh, founder, Finsec Law Advisors.

“With the proposed changes, the regulator aims to move from principal-based to

regulation-based disclosure requirements. While there are obvious incentives for

companies to suppress such disclosures, the proposed changes would explicitly state the

compliance requirements for the listed entities.” added Mr.Parekh, who has earlier

worked with SEBI as an executive director in-charge of legal affairs.

Among other things, the regulator wants listed companies to disclose five days prior to

every quarter details related to interest or dividend payable on all NCDs or NCRPS during

the quarter. Thereafter, within two working days from the end of the quarter a certificate

needs to be provided confirming all such payments.

Tejesh Chitlangi, Senior Partner, IC Universal Legal is of the view that the proposals, if

accepted in the form currently proposed, would address certain discrepancies in the

manner disclosures are currently done.

“SEBI has sought to address two key issues in relation to the listed companies who have

their debt securities listed. First, to tighten up the disclosure and governance norms whilst

leaving no room for delay in dissemination of material information... Second, to also


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rationalise the disclosure norms to mitigate the unwarranted hardships faced by the

issuers,” said Mr. Chitlangi.

Companies will also be required to report any material deviation in the use of proceeds

on a quarterly basis instead of the current requirement of providing such information

every six months.

“Material deviations in the use of proceeds is a serious issue and needs to be intimated

more frequently than the instant provision,” said SEBI.

While stressing on the need for a review of the LODR Regulations, the regulator

highlighted the fact there have been a spate of incidents regarding non-compliance with

the listing regulations by issuers of debts securities.

“Therefore, in order to ensure safeguard of interest of investors, a need has been felt to

review and strengthen the SEBI LODR Regulations wherever necessary pertaining to NCDs

and NCRPS,” stated the SEBI paper.

The capital market regulator has also proposed empowering the investors in instances

wherein the company plans to change the structure of an NCD or NCRPS.

“It is proposed that the listed entity shall not make any material modification without

obtaining consent in writing of the holders of not less than three-fourths, by number, of

holders of that class of securities for which modification in structure is proposed,” said

the SEBI paper.

Further, such consent has to be an affirmative one and a mere non response shall not be

treated as deemed consent, it added.

Thereafter, the debenture trustee will have to vet the consent and issue a certificate to

the company that will have to disclose the same to the stock exchanges.

According to the norms currently in force, a company can modify the structure by taking

an approval from the board of directors and debenture trustees in the case of NCDs.

Market participants have been given time until June 11 to submit their feedback for the

proposals.

4.3 Capital remaining for banks is ‘sufficient’ – Govt

About ₹65,000 cr. left from ₹2.11 lakh cr. announced last year, says Rajiv Kumar: PSBs to be

ranked based on performance

Despite huge losses made by large public sector banks in the fourth quarter of 2017-18,

the government has indicated it may not increase the capital allocation beyond what had

already been budgeted.


19


“The capitalisation amount which we have worked out is sufficient,” said Rajiv Kumar,

Secretary, Financial Services in the Finance Ministry, on the sidelines of an event.

“We have with us which is nearly ₹65,000 crore which is the leftover of ₹2.11 lakh crore.

That capital is intact, that’s budgeted and it is with us,” he said when asked what kind of

support the government could provide to the banks in the wake of mounting losses. Mr.

Kumar said there were other avenues for banks to raise funds like selling of non-core

assets.

Last year, the government had announced a ₹2.11 lakh crore capitalisation plan for the

public sector banks for two years, including ₹1.35 lakh crore via recapitalisation bonds.

The government had already allocated the capital of the previous financial year.

Following stricter norms on bad loans, many banks, including the country’s largest lender

State Bank of India and the second largest, Punjab National Bank, reported a loss of

₹7,718 crore and ₹13,400 crore respectively in the Jan.-March quarter.

Cleaning of books

“One or two quarters no issues. It’s the cleaning of the books, transparently recognising

everything, and in the process even if there is a provisioning requirement or even if there

is a loss, it’s okay. We are ready to take this,” Mr. Kumar said. “The future and the

roadmap is only that worst is over and it’s only the positive which can take place now. It

is visible in the credit offtake.”

The Finance Ministry is also planning to rate public sector banks based on their

performance and make the rating available on public domain. “We are ranking all the

banks on the reforms and at the end of every year, we will make that ranking public. So,

its a report card to the citizen on the health of each bank,” Mr. Kumar said.

The government may start announcing the ranking from the next financial year taking into

account this year’s performance. Future capital infusion in banks may depend on how the

bank fare in these rankings.

CEO appointments

With the CEO post in three public sector banks remaining vacant and another divested of

portfolios, the Finance Ministry said the Bank Board Bureau was in the process of selecting

the candidates. “We are aware of it and the banks board bureau is in the process of

selecting the candidates. We are in the process of bringing the best possible talent to

the banking industry,” Mr. Kumar said. The CEO’s post in Dena Bank, Andhra Bank and

Punjab and Sind Bank is vacant, while the board of Allahabad Bank has divested its MD &

CEO Usha Ananthasubramanian of power after investigative agencies named her in the

charge sheet filed in the Nirav Modi scam.

Mr. Kumar said that the BBB was also in the process of selecting a new CEO for Allahabad

Bank.

Banks under PCA


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Mr. Kumar said the Finance Ministry had asked all the banks that were facing restrictions

under the prompt corrective action framework of RBI to come out with a specific plan for

the future. “It includes their business strategy, niche areas, sale of non-core assets, capital

requirement. The government is committed to give them the regulatory capital and

maintained their capital adequacy levels,” he said.

4.4 India moves WTO over U.S. steel tariffs

Trump imposed tariffs, levying 25 % on steel imports, 10 % on aluminium

India has launched a complaint against the United States to challenge U.S. President

Donald Trump’s tariffs on steel and aluminium, a filing published by the World Trade

Organization showed on Wednesday.

Indian officials told Reuters last month that their government would open a WTO

dispute if the country’s firms were not granted an exemption. Mr. Trump imposed the

tariffs in March, levying 25 % on steel imports and 10 % on aluminium. He said they

were justified by national security concerns and therefore outside the WTO’s remit.

Dismisses U.S. claim

India, China, Russia, Japan, Turkey and the European Union have all dismissed that claim,

regarding the U.S. tariffs as ”safeguards” under the WTO rules, entitling them to a

combined $3.5 billion in annual compensation.

India’s retaliation claim seeks to recoup a cost of $31 million levied on its aluminium

exports and $134 million on steel, and it has said it could target U.S. exports of soya oil,

palmolein and cashew nuts in its retaliation.

Its latest legal challenge seeks to force the U.S. to scrap the tariffs entirely. It follows a

similar move last month by China, which Washington called “completely baseless”.

Under WTO rules, the U.S. has 60 days to settle the complaint, after which India could ask

the WTO to set up an expert panel to adjudicate.

However, uncertainty is hanging over the WTO’s dispute settlement system because

Mr.Trump is vetoing the appointment of new appeals judges.

In its complaint, India listed a string of ways the U.S. tariffs violated the WTO rules and

unfairly damaged India’s interests.

It said they broke the WTO’s safeguards agreement and the U.S.was trying to use its tariffs

to get other countries to agree to “voluntary export restraints”.


21


The U.S. had also exceeded the maximum import tariff allowed by the WTO and the tariffs

were not applied uniformly to steel and aluminium imports from all suppliers, breaking a

core principle of the WTO rulebook.

4.5 Windfall oil tax on ONGC in offering to soften full prices

Oil producers would have to part with any revenue they earn from prices crossing $70 per

barrel; States may be asked to cut VAT

The government may levy a windfall tax on oil producers like Oil and Natural Gas Corp.

(ONGC), as part of a permanent solution it is working on for moderating the spiralling

retail prices of petrol and diesel.

The tax, which may come in the form of a cess, will kick in the moment oil prices cross

$70 per barrel, sources privy to the development said.

Under the scheme, oil producers, who get paid international rates for the oil they produce

from domestic fields, would have to part with any revenue they earn from prices crossing

$70 per barrel mark.

Paying retailers

The revenues so collected would be used to pay fuel retailers so that they absorb spikes

beyond the threshold levels, they said.

This may be accompanied by a minor tinkering with excise duty rates to give immediate

relief to consumers. States too would be asked to cut sales tax or VAT to show a visible

impact on retail prices.

Sources said the thinking in the government is to levy cess on all oil producers — both

public and private sector — so as not to attract criticism of stifling State-owned explorers.

A similar tax was considered in 2008 when oil prices were on the rise but the idea was

dropped after stiff opposition from private sector firms like Cairn India.

Windfall tax, they said, is levied in some of the developed countries globally. The U.K. in

2011 raised the tax rate to be applied to North Sea oil and gas profits when the price was

above $75 per barrel.

China on April 1, 2006, began levying the special upstream profit tax on domestic oil

producers to redistribute and allocate the windfall income enjoyed by the oil companies

and subsidise disadvantaged industry and social groups that are most affected by soaring

crude oil prices. It, in 2012, raised the windfall tax threshold to $55 per barrel.

Sources said the windfall tax is one of the options being considered by the government as

a permanent solution to dealing with the problem of spike in oil prices.


22


Excise duty cut

This follows reluctance on part of the Finance Ministry to cut excise duty as it has to

ensure adequate funds are available to social welfare schemes in the election year. In

particular, resources have to be arranged for the National Health Protection Scheme

(NHPS) that aims to provide health insurance cover of ₹5 lakh to every eligible household.

On Wednesday, Law Minister Ravi Shankar Prasad had stated that the government will

take a long-term view on the retail prices of petrol and diesel, which had touched record

high instead of having an ad hoc measure.

Petrol and diesel prices were raised for the 11th day in succession on Thursday as the

State-owned oil firms gradually passed on to the consumer the increased cost of

international oil that had accumulated since a 19-day freeze was imposed just before

Karnataka elections.

Since the time the hiatus ended on May 14, rates had gone up by ₹2.84 a litre in case of

petrol and ₹2.60 in diesel. Petrol costs ₹77.47 a litre in Delhi and diesel ₹68.53. Sources

said a $70 per barrel threshold for the windfall tax is sufficient to cover for capital

expenditure requirement of ONGC and other oil producers.

Fuel subsidy

Incidentally, ONGC and Oil India Ltd. had till June 2015 provided for up to 40% of the

annual fuel subsidy bill.

This they did by way of providing discounts on crude sold to downstream refining and

marketing companies, IOC, BPCL, and HPCL. This discount helped the retailers make good

a part of the losses they incurred on selling petrol and diesel below cost.

The government raised excise duty nine times between November 2014 and January 2016

to shore up finances as global oil prices fell, but then cut the tax just once in October last

year by ₹2 a litre.

The Centre levies ₹19.48 as excise duty on a litre of petrol and ₹15.33 on diesel. State

sales tax or VAT varies from state to state. Unlike excise duty, VAT is ad valorem and

results in higher revenues for the State when rates move up.


23


5. Science and Tech

5.1 Women’s health crucial to combat stunting study

Research across 640 districts links better healthcare, education to reduced stunting.

A first of-its-kind study across all 640 districts of the country, highlights the impact of

women’s health on stunting of children.

According to the International Food Policy Research Institute (IFPRI) study, analysing data

from the National Family Health Survey (NHFS)- IV, parameters related to women,

including education and age at marriage, account for 50% of the difference between

districts with high and low levels of stunting among children below the age of five.

Across the country, in 239 districts more than 40% of the children are stunted, while 202

districts record between 30% and 40 % of stunting. Only 29 districts have levels between

10% and 20%, most of them in south India, the study reports.

South does better

India accounts for approximately a third of the world’s stunted children at 63 million.

While levels have improved in the country from 48% in 2006 to 38.4% in 2016, there are

wide variations among different districts ranging between 12.4% and 65.1%.

The populous northern States account for more than 80% of stunted children at 52.6

million. In comparison, all of the southern States together have 8.1 million stunted

children and the north-eastern and island States account for nearly 2.4 million. Within the

States, however, the levels vary with regions in Andhra Pradesh and Karnataka recording

high prevalence.

The research highlights the need for targeted policy intervention to combat stunting, with

a focus on addressing critical determinants in individual districts.

“Women related parameters are great drivers and these have to be focussed upon. This

will involve interventions through the course of a girl’s life such as her education,

nutrition, marriage as well as when she is a mother,” says Purnima Menon, senior

research fellow at IFPRI.


24


Four parameters

The four crucial parameters in women that together contribute to a 44% reduction in

stunting among children are levels of body mass index accounting for 19% of the

difference between districts; education accounting for 12% of the difference; age at

marriage contributing a 7% reduction and ante-natal care adding 6%.

Among other important factors highlighted by the study, authored by Purnima Menon,

Rashmi Avula, Derek Headey, Phuong Ngyuen, are adequate diet for children (9%),

household assets (7%) and open defecation (7%).


25


6. Environment / Geography

6.1 Sterlite copper told to shut shop in TN

State government orders “permanent closure” of plant

Sterlite Copper, the Vedanta Group’s copper smelter plant in Thoothukudi, was sealed on

Monday evening, shortly after the Tamil Nadu Environment and Forests Department

issued a two-page Government Order for its “permanent” closure. Vedanta termed the

decision “unfortunate.”

The decision to close down the factory that directly employed around 3,500 workers,

including 2,500 on contract (since put on notice), comes against the backdrop of the killing

of 13 persons in police firing at an anti-Sterlite rally a week ago.

The order said, “Under Sections 18(1)(b) of the Water Act 1974, in the larger public

interest, the government endorse the closure direction of the Tamil Nadu Pollution

Control Board (TNPCB) and also direct the TNPCB to seal the unit and close the plant

permanently.” It pointed out that the TNPCB did not renew the ‘consent to operate’ to

Vedanta Ltd.’s copper smelter plant in its order dated April 9, 2018.

Power supply cut

“Subsequently, on May 23, the TNPCB has also issued directions for closure and

disconnection of power supply to the unit. The power supply has been disconnected on

May 24,” it said.

Sterlite Copper’s CEO P. Ramnath had recently claimed that the company was responsible

for generating indirect employment for an estimated 30,000-40,000 people.

“The Amma [former Chief Minister Jayalalithaa] government has issued an order to have

the Sterlite plant closed down permanently in deference to the sentiments of the people

of Thoothukudi,” Chief Minister Edappadi K. Palaniswami told journalists in the evening

after chairing a meeting of legislators at the AIADMK headquarters in Chennai.

Mr. Palaniswami, who earlier met a cross-section of traders, fishermen and the church

members for over an hour, along with Deputy Chief Minister O. Panneerselvam and other

Ministers, told the media that the representatives of Thoothukudi had conveyed to him

that “the closure of the plant is the demand of all [in the area].”

To a question on the proceedings in the Madras High Court and the Supreme Court on

the issue, he pointed out that there was no stay order. The case was under way. “We have

taken this decision as a mark of respecting the feelings of the people. We are doing what

we consider is good for the people,” he said. The Chief Minister added that Mr.

Panneerselvam and other Ministers went to Thoothukudi in the morning, met the


26


affected people and assured them that proper medical treatment would continue to be

provided. “If they desire, they can be shifted to hospitals of their choice,” he said.

In a stock exchange announcement, the Sterlite confirmed the receipt of order from the

Tamil Nadu government directing the TNPCB to seal its ‘Copper Smelter Plant 1 at

Thoothukudi District, Tamil Nadu’ and to close the said plant permanently.


27


7. Security

7.1 Centre plans connectivity push on china border

To counter Chinese radio channels in Arunachal villages

The ‘invasion’ of Chinese radio channels has made the Centre plan installation of optical

fibre cables (OFC) in areas bordering China.

The OFC push is expected to arm civilians and defence personnel with cellular and radio

connectivity strong enough to counter the Chinese waves, Defence Minister Nirmala

Sitharaman said in Arunachal Pradesh’s capital, Itanagar, on Tuesday.

Ms. Sitharaman said she experienced poor communication network during her recent

visit to Kibithoo, the last border village in Arunachal Pradesh’s Anjaw district.

“I came to know people in the area access Chinese radio frequency but not All India

Radio,” she said.

“We will soon start work on extension of OFC in the remote border areas. The Union

Cabinet discussed the issue 10 days ago and sanctioned additional funds,” Ms.

Sitharaman, in the frontier State to highlight the achievements of the four-year-old

Narendra Modi government, said.

The Defence Minister also said the government was trying to recruit more women in the

armed forces from border areas. “I am considering permanent commission to women in

the defence forces, but the issue is caught in a legal battle,” she said.

Women in the forces who did not get permanent commission had approached the court

some time ago.

Ms. Sitharaman, however, declined to comment on reports about mining activities by

China near the border with Arunachal Pradesh.

“I do not have the details and cannot say anything at this point of time,” she said.


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