Current Affairs summary 9 Sept

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1. Centre sets up panel of secretaries to look into e-commerce issues

• With concerns being raised on some proposals of the draft e-commerce policy, the government has set up a group of secretaries to look into the issues. The group will be chaired by the secretary in the department of industrial policy and promotion.

• The other members of the group include secretaries of the ministry of electronics and information technology and department of commerce.

• Representatives of the Niti Aayog and department of economic affairs are also members of the group.

• The initial draft e-commerce policy has suggested several steps to promote the growth of the fast-growing sector.

• It said online retail firms may have to store user data exclusively in India in view of security and privacy concerns.

• The draft stated that any group company of an online retailer or marketplace may not be allowed to directly or indirectly influence the price or sale of products and services on its platform, a move that could completely restrict e-tailers from giving deep discounts.

• The draft has also suggested introduction of pre-set timeframe for offering differential pricing or deep discounts by e-commerce players to customers.

• Further, the draft recommended permitting 49 percent foreign direct investment in inventory-based business-to-customer e-commerce model. Currently FDI in such businesses is prohibited and it is allowed only in the marketplace model.

• The department of industrial policy and promotion has reportedly ruled out FDI in inventory-based e-commerce.

• Besides, it discussed about adopting a common definition of e-commerce for the purpose of domestic policy making and international negotiations as currently there is no commonly accepted definition.

• In the context of international trade negotiations, policy space for granting preferential treatment and imposing customs duties on e-transmission to digital items created in India will be retained.


2. Department of Posts to set up insurance firm in 2 years

• The Department of Posts (DoP) is working to set up an insurance company after launching of a payments bank and the parcel directorate, communications minister Manoj Sinha said.

• DoP is now reincarnating itself. After diversifying its business with parcel directorate and payments bank, the department has decided to set up insurance firm as a special business unit in two years.

• The request for proposal to appoint a consultant for setting up insurance unit will be floated in the coming week.

• PM Narendra Modi launched India Post Payments Bank (IPPB) on 1 September that aims to take banking to the doorstep of every citizen by arming three lakh postmen and ‘Grameen Dak Sewaks’ with digital aids to deliver financial services.

• IPPB, which will be available through 650 branches and 3,250 access points immediately, scaled to all 1.55 lakh post offices by December 2018, is like any other bank but with a smaller scale of operations and without involving any credit risk.

• The freshly-minted payments bank will accept deposits of up to ₹1 lakh, offer remittance services, mobile payments/transfers/ purchases and other banking services like ATM/debit cards, net banking and third-party fund transfers.


3. Government may announce Rs 10,000 crore scheme to ensure MSP to oilseed growers

• With growing import dependence on cooking oils the government is likely to announce a over Rs 10,000 crore scheme under which oilseeds farmers will be compensated if the rates fall below the minimum support price. The agriculture ministry has prepared a cabinet note proposing a new mechanism ‘Price Deficiency Payment’ on the lines of MP government’s Bhavantar Bhugtan Yojana to protect oilseed farmers.

• Under the proposed scheme, the government will pay to farmers the difference between the MSP and monthly average price of oilseeds quoted in major wholesale markets.

• India imports around 14-15 million tonnes of edible oils annually, which is around 70 per cent of the domestic demand.

• In the budget this year, the government had announced that it will put in place a fool-proof mechanism to ensure MSP to farmers. It had asked think-tank to suggest mechanism in consultation with the Union agriculture ministry and states.

• However, the states will have an option to choose either a PDP or the existing Price Support Scheme. The new scheme will be implemented for up to 25 percent of the oilseed production of the state.

• Under the PSS, the central agencies procure commodities covered under the MSP policy when prices fall below the MSP.

• The Centre also implements Market Intervention Scheme (MIS) for procurement of those commodities, which are perishable in nature and are not covered under the MSP policy.

• Under the MSP policy, the government fixes the rates of 23 notified crops grown in kharif and rabi seasons.

• MP, Rajasthan and Gujarat are major oilseed growing states in the country.

• Total Oilseeds production during 2017-18 is estimated at 31.31 million tonnes as against 31.28 million tonnes during 2016-17, as per the official data.


4. Indian wage disparities worry UN body

• India’s state governments often set their minimum wages lower than the recommended national minimum wage, decided by the Union labour ministry, a report by the International Labour Organisation has said.

• It has added that the minimum wages often show large inter-state variations, unrelated to the cost of living, for the same kind of job. This is because the Minimum Wages Act of 1948 does not say on what basis the minimum wages should be fixed or revised.

• The India Wage Report, released last month by the UN body, has highlighted what it considers flaws in the way minimum wages are determined in India.

• It has recommended that wage revisions be linked to the cost of living, GDP growth and rise in labour productivity.

• Santosh Mehrotra, chairperson of JNU’s Centre for Informal Sector and Labour Studies, said that any rise in labour productivity — the workers’ output in propelling growth — should be rewarded adequately with a rise in wages.

• A fair wages committee made up of employers, employees and government representatives was formed in 1948 to recommend a framework for fixing minimum wages. The committee defined three levels of wages: the living wage, the fair wage and the minimum wage.

• The living wage was the highest and covered the cost of the family’s food, clothing and shelter and the education of its children as well as the expenditure on health and old-age insurance.

• The minimum wage was defined as subsistence wage plus “standard” wage, the latter being left undefined. The fair wage fell indeterminately somewhere between the living wage and the minimum wage.

• The Constitution, adopted in 1950, proposed a “living wage” as an objective the State should try to achieve. But the Centre and the state governments have chosen to stick to the minimum wage, the UN report says.

• The Minimum Wages Act 1948, which aims to protect both the regular and casual workers in the organised and unorganised sectors, empowered the states to set a variety of wages and revise them at intervals not exceeding five years.

• Such regular revision is expected to ensure that the wage in each state remains in line with its socio-economic realities. But the UN report says the minimum wages have often been revised “somewhat arbitrarily, without full consultation with social partners”.

• The Centre has separate minimum-wage rates for 45 categories of jobs, including agriculture, mining and oil extraction, under its purview while the various states cumulatively have separate minimum-wage rates for 1,709 job categories.

• Minimum wages are meant mostly to ensure that private employers don’t short-change the workers they hire. They apply to an estimated 66 per cent of the country’s workers, who are employed in a list of scheduled jobs, whose number has risen from 13 in 1948 to 376.

• Workers in non-scheduled employment have their wages determined through collective bargaining.

• The national minimum-wage rate, which is not binding on the states, was introduced in 1996. This rate is revised taking inflation into account. It was last revised from Rs 160 to Rs 176 a day in July last year. The wage code bill, introduced in Parliament, seeks a binding national minimum wage.

• The UN report quotes an estimate to say that nearly a third of the country’s workers were paid less than the national minimum wage in 2009-10, and women were in general paid less than men.

• It notes that the minimum wage for agricultural labour ranged from Rs 80 in Arunachal Pradesh to Rs 92 in Odisha, Rs 170 in Mizoram and Rs 178 in Haryana in 2011.

• In 2013, the minimum wages for farm labourers ranged from Rs 80 in Arunachal to Rs 126 in Odisha (revised) and Rs 269 in Karnataka.

• In Maharashtra, the minimum wage for agricultural labour, which occupies the highest share of workers, was just 73 per cent of the national minimum wage in 2013, the report says.

• It adds that the difference between the highest and lowest minimum wages within a state ranged from a factor of 1.4 in Karnataka to one of 4.8 in Andhra Pradesh, representing huge disparities.

• “Minimum wage revisions based only on price inflation will not improve the purchasing power of the wage earners, and will not ensure that the fruits of economic growth will be shared equitably,” the report says.

• “For it to be effective, wages need to be revised on a regular basis while taking into consideration changes in the cost of living, GDP growth and growth in labour productivity.”

• The report quotes government data to say that of the country’s 195 million wage earners, 74 million (38 per cent) are regular or salaried employees and 121 million (62 per cent) are casual workers.

• Mehrotra said the government should give workers social security and focus on job creation in the non-farm sectors.

• “The higher the number of jobs, the higher the likelihood of the minimum wage going up. Minimum wage policies must go hand in hand with social security for the unorganised sector and job growth in the non-agriculture sector,” he said.

• “Social security should cover old-age pension and life insurance, as well as maternity benefits for women workers.”


5. Growth of small savings flattens to nil in 2017-18

• Falling interest rates and the success of government and RBI efforts to wean savers away from the instrument to remove the distortion to monetary transmission has seen the rate of growth of small savings flatten to zero in 2017-18.

• The latest data on Indian household savings in various financial assets shows fresh investment in small savings schemes like postal savings schemes, senior citizen savings scheme and public provident fund has remained almost nil as per the RBI report.

• However, gross financial savings touched 11.9% in 2017-18 from 9.1% in 2016-17, while the contribution from savings dipped from 0.4% to nil.

• Money was moving to equity fund and other mutual fund schemes in the last year as returns on mutual funds were higher compared to other instruments, including real estate and gold.

• Traditionally, whenever interest rates on bank deposits fell, Indian households naturally shifted towards small savings. Bankers often complained that the rigidity in small savings rate was proving to be an obstacle for transmission of monetary policy rates.

• But for the first time in the latest cycle the shift away from both banks deposits as well as small savings as bank were marked as deposit rates were falling.

• The government in the previous year decided to link the rates on small savings schemes to the benchmark 10-year government bond yield. But the rate revision in the latest cycle was not in the same proportion as the rise in bond yields. In the October quarter, when the yield started rising, the government did not match the hike in small savings rate in proportion to the benchmark G-sec yields.

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