Daily Current Affairs - 19-08-2021

• IAS NEXT, Lucknow
• 19, Aug 2021

Reference news:

In recent days, the Supreme Court has voiced concern over the Government’s lackadaisical attitude
towards the large number of vacancies in High Courts and tribunals.

• The vacancies in High Courts are at a staggering 455, as on August 1.

Concern:

The court has noted that the Centre’s delay in making appointments to the High Courts is adversely
affecting the adjudication of commercial disputes.

Reasons for Vacancies in both higher and lower judiciary:

1. Systemic defects in the appointment process most certainly contribute to vacancies in the lower judiciary. For example, exams are not conducted frequently enough to fill vacancies as they arise and even when they are, High Courts are often unable to find enough meritorious candidates to fill the vacancies advertised.
2. A Sheer lethargic approach for conducting the appointment process on time is another reason for increasing vacancies.
3. Unclear recruitment procedures, and difficulties in coordination between the High Court and State Public Service Commission, also frequently give rise to disputes and litigations surrounding recruitment, further stalling the process of recruitment.
4. Little Quantitative and qualitative data on the appointment process exists, and thus no impactful reform has emerged in the area.
5. Moreover, it is found that the source of the problem often lay in poor infrastructure, from courtrooms to residences for judges.

Impacts and implications:

1. Increase in the pendency of cases.
2. Any failure to allocate the required human and financial resources leads to the crippling of judicial work in the subordinate courts
3. It also amounts to letting down poor litigants and undertrials, who stand to suffer the most due to judicial delay.
4. Vacancies mean more work for a district's remaining judges.
5. Heavier caseloads due to vacancies meant they spent less time considering individual cases raises troubling concerns about the quality of justice dispensed.

Need of the hour:

1. Public Service Commission’s should recruit the necessary staff to assist these judges, while State governments should build courts or provide working space for them.
2. The recruitment of judges to fill vacancies should also begin earnestly.
3. A smooth and time-bound process of making appointments require a close coordination between the High Courts and the State Public Service Commissions.
4. This coordination should be facilitated by the respective State Governments and High Courts as best as possible.

Financial Inclusion Index

Reference News:

Recently, the Reserve Bank of India (RBI). has unveiled the first composite Financial Inclusion Index (FI-Index).

• The annual FI-Index for the financial year ended March 2021 crossed the halfway mark to 53.9, as compared to 43.4 for the year ended March 2017.

Key Points

• About
  • ​The index has been conceptualized as a comprehensive index incorporating details of banking, investments, insurance, postal as well as the pension sector in consulta the government and respective sectoral regulators.
    • It will be published annually in July every year.
  • It has been constructed without any ‘base year’ and as such it reflects cumulative efforts of all stakeholders over the years towards financial inclusion.
• AIM
  • ​To capture the extent of financial inclusion across the country.
• Parameters:
  • ​It captures information on various aspects of financial inclusion in a single value ranging between 0 and 100, where 0 represents complete financial exclusion and 100 indicates full financial inclusion.
  • It comprises three broad parameters (weights indicated in brackets) viz., Access (35%), Usage (45%), and Quality (20%) with each of these consisting of various dimensions, which are computed based on a number of indicators.
    • The index is responsive to ease of access, availability and usage of services, and quality of services for all 97 indicators.
• Importance of FI Index:
  • ​Measures Level of Inclusion: It provides information on the level of financial inclusion and measures financial services for use in internal policy making.
  • Development Indicators: It can be used directly as a composite measure in development indicators.
  • Fulfill the G20 Indicators: It enables fulfilment of G20 Financial Inclusion Indicators requiremets.
    • The G20 indicators assess the state of financial inclusion and digital financial services, nationally and globally.
  • Facilitate Researchers: It also facilitates researchers to study the impact of financial inclusion and other macroeconomic variables.

New Algal Species: Andaman & Nicobar

Reference news:

Recently, a group of botanists has discovered an algal species with an ‘umbrella head' from the Andaman and Nicobar Islands.

• The Andaman and Nicobar Islands are home to Coral Reefs and are rich in marine biodiversity.
• In March 2021 two new red algal Seaweed species were discovered along India’s coastline.

About:

• It is a bright green algae with a size as small as 20 to 40 mm.
• Named after the imaginary sea mermaid, Acetabularia jalakanyakae is very primitive and is a single-cell organism.
  • Jalakanyaka in Sanskrit literally means mermaid and a goddess of oceans.
• It is the first species of the genus Acetabularia discovered in India.

Characteristics

• It resembles an umbrella or a mushroom. It has grooves on its cap measuring 15 to 20 mm in diameter.
• It is made up of one gigantic cell with a nucleus. Its nucleus forms a rhizoid structure, which facilitates the algae to attach itself to shallow rocks.It is highly regenerative in nature.
  • Rhizoids are a structure in plants and fungi that functions like a root in support or absorption.

Significance:

As they have a giant cell it is advantageous for molecular biologists who study cellular processes; they can see it and manipulate it with naked eye. For this reason, Acetabularia is considered a model organism.

Concern:

• They along with various Coral Reefs face the threat of sea levels rising due to Global Warming.
• They are highly prone to Ocean Acidification caused by global Greenhouse Gas Emissions as the plants in the genus Acetabularia have rich calcium carbonate deposits that account for almost half their dry weight.

Cattle Island: Hirakud Reservoir

Reference News-

The Odisha Forest and Environment Department is starting ecotourism packages for tourists to
islands inside the Hirakud reservoir.

• Cattle Island, one of three islands in the Hirakud reservoir, has been selected as a sightseeing destination.

Cattle Island:

• It is located in one of the extreme points of Hirakud Reservoir. It is completely inhabited by wild animals, and without any trace of humans.
• It is near Kumarbandh village of Belpahar-Banharpali range which is about 90 km from Sambalpur, Odisha.
• The island is a submerged hill, and before the construction of Hirakud Dam it was a developed village.
  • During the resettlement period, villagers left some of their cattle behind; when the dam construction was over, the cattle settled on the hilltop.
  • As the area started to submerge following the dam’s construction, the cattle moved up to Bhujapahad, an elevated place in Jharsuguda district. Subsequently named 'Cattle island’.
• Hirakud Dam:
  • ​Establishment:
    • ​It is a multipurpose scheme conceived by Er. M. Visveswaraya in 1937, after recurrence of devastating floods in Mahanadi river.
    • Its first hydro power was commissioned in 1956.
    • It is the longest dam of India.
  • Location:
    • ​The dam is built across river Mahanadi at about 15 km upstream of Sambalpur town of Odisha.
      • The Mahanadi River system is the third largest of peninsular India after Godavari and Krishna, and the largest river of Odisha state.
      • It rises from a place near Sihawa in Bastar hills in the state of Chhattisgarh to the south of Amarkantak.
      • The catchment area of the river extends to Chhattisgarh, Madhya Pradesh, Odisha, Jharkhand and Maharashtra.
  • Objectives:
    • ​Irrigation: The project provides 1,55,635 hectares of Kharif and 1,08,385 ha of Rabi irrigation in the districts of Sambalpur, Bargarh, Bolangir and Subarnapur.
      • The water released through the power house irrigates further 4,36,000 ha of regions in Mahanadi Delta.
    • Power Generation: The installed capacity for power generation is 347.5 MW through its two power houses at Burla, at the right bank and Chiplima, at 22 km downstream of the dam.
    • Flood Control: The project provides flood protection to Mahanadi basin including 9500 sq. km
      of delta area in districts of Cuttack and Puri.
  • Wildlife Sanctuary:
    • ​The Debrigarh wildlife sanctuary is located near Hirakud dam. It is bounded on the east and north by the huge Hirakud reservoir.
      • It is one of the select few sanctuaries in the state supporting both terrestrial and aquatic biodiversity.

Daily Topic

MSMEs for Resilient National Economy

The Prime Minister’s dream of a USD 5-trillion Indian economy by 2025 along with effective financial inclusion and sustainable economic outcomes is premised on investment from both domestic and foreign investors. Government expenditure can only provide a stimulus, but cannot alone take India to PM’s goal.

For domestic private investments to happen, the role of timely, adequate and quality (low cost) credit
cannot be overstated, particularly during the current times when Covid-19 induced stress is maximum on almost all industries.

With the recent change in the definition, more than 95 per cent of Indian companies are bought under the definition of MSMEs. However, the need of the hour is to identify the issues MSMEs face today and rectify urgently.

Issues With MSMEs

• Issues of Access to Credit: Most of the MSMEs are in rural and semi-urban areas where access to credit is extremely limited.
  • They are vulnerable to predatory moneylenders and often fall into a cycle of debt.
  • Lack of access to finance and timely credit support in business has been a long-standing issue for these MSMEs.
• Under Severe Debt: Due to difficulties faced in seeking loans and working capital from banks and delay in receiving government payments and tax refunds, most of the MSMEs are under severe debt.
• Dependence on Informal Sources: According to a study, there is an overall debt demand of Rs.69.3 trillion of which 84% is financed by informal sources such moneylenders, family, friends, chit funds.
  • Formal sources such as commercial banks, NBFCs and government institutions cater to a mere 16%.
• Majority of Firms are Small: More than 80% of these MSMEs are in the micro and small category.
  • The benefits of the government’s emergency line credit, stressed asset, relief, equity participation and fund of funds operation are not able to reach them.
• Issue of Credit Assessment: Banks employ various methods to limit risk by better assessment of the creditworthiness of individuals or firms, MSMEs included.
  • While determining creditworthiness, there are two errors that are common - False Acceptance of a bad applicant and False Rejection of a good applicant.
    • The former error is detrimental for banks and increases risk while the latter impacts financial inclusion and economic growth itself.
  • To keep NPAs down, many credit worthy individuals are denied loans by banks.
• Lack of Paperwork or Digital Footprint for small MSMEs a factor which holds them back from being integrated into the formal economy and deprives the MSMEs to take advantage of the formal credit system.
• Technological Disruption: India‘s MSME sector is based on obsolete technology, which hampers its production efficiency.
  • The emergence of new technologies like Artificial Intelligence, Data Analytics, Robotics and related technologies (collectively called as Industry Revolution 4.0) is a bigger challenge for MSMEs than for organized large-scale manufacturig.

Way Forward

• Focused Regulatory And Structural Changes: It will improve access, ease the transition to the formal sector and increase consumer education and protection.
  • In the long term, once these regulatory issues are addressed, sanctioned loans will be disbursed more easily and private investment will be boosted, creating a virtuous cycle for MSMEs in the country.
• Minimize the False Rejections of Good Applicants: Routine audits of all loan applications on random sampling basis must be undertaken by RBI and administrative action taken against malafide omissions resulting in unethical denial of loans to deserving MSMEs.
• Creation of Independent Regulator: Given the growing importance of the data economy, it is paramount that the government creates an independent body which can advise and provide consultancy to MSMEs and enable them to grow in this new, digital world.
• Use of Technology: The traditional bank lending system by banks is based on financial statements and collateral of the borrower. With increased availability of data from several sources, including GSTN, income tax, credit bureaus, etc., it is now possible to appraise  he MSME loan proposals expeditiously by doing due diligence online.
• Upgrade Infrastructure Utilities: There is an urgent need to upgrade infrastructure utilities (like water, power supply, road/rail) for any enterprise to run its operations successfully.
  • Moreover, entrepreneurs need to develop quality conscious mindsets embedded in the organisational culture.
  • Sensitisation and handholding of MSMEs at different and upgraded levels of certification is the need of the hour.

Conclusion

MSMEs are the backbone of a resilient national economy. Prioritising their development is critical to
the future of the country. The government has come out with a variety of enabling mechanisms over
the last few years.

India needs more such measures, especially in the current environment. The next decade will be the
metamorphosis of India from an emerging power to an established economic powerhouse and MSMEs
will be an important cog in the wheel on this journey.