bharat ias - Will Aadhaar help the poor become cashless

Will Aadhaar help the poor become cashless

 Context An Aadhaar-centered apparatus of digital inclusion is not suited to shield the poor from the effects of demonetisation  How can Aadhaar help? the potential of an Aadhaar-centered financial inclusion system to help unbanked communities (mainly poor) deal with demonetisation, and ease their transition to a “cashless” economy.  Problems Because  of following  three constraints, such a system seems unsuitable to include the poor in the digital economy  1) Technology ownership §  More than Aadhaar is needed: Aadhaar provides users with a digital identity, so they can exist in a cashless ecosystem: but to transact in it, two more items are needed, namely, a space to deposit digital money and a means to exchange it. Due to technology ownership constraints, neither of the two is easy to obtain meaning if someone’s savings are stored in cash, to operate in a cashless world they first need to be deposited in a bank or post office account. §  Problems for the poor §  A Complex task: To the unbanked poor this means long queues at banking facilities. Opening a bank account is no simple operation, and requires paperwork that many vulnerable citizens do not know how to get. Exposed to conflicting and incomplete information, many of the poor are unable to deposit their money §  Poor penetration of smartphones: Besides, a cashless economy involves exchanges of digital money. This is not only transacted through bank cards, but also and increasingly through so-called digital wallets, which require a smartphone device to work. Smartphones, however, are owned by only 17% of the Indian population: To clarify, Paytm and Mobikwik are not similar to M-Pesa, the Safaricom mobile money service that runs on basic mobile phones. In the absence of bank accounts and digital means to transact, chances for the unbanked poor to join a cashless economy are limited  2) Access to informational networks Access to the digital space is another requirement to enter the new system. However, this is dependent on access to the Internet, which in India is geographically limited  3) ICT index: The International Telecommunications Unit (ITU) calculates an ICT (information and communications technology) Development Index (IDI) for 175 countries. Based on India’s IDI data, it is ranked 138 worldwide, behind nations such as Gabon, Nigeria and Zimbabwe, which rank significantly lower on economic and human development   §  Digital inequity: Cities in India are computerized leaving the rural and tribal communities in stark isolation making it harder for them to enter the digital space §  Lack of access to information: Access to operational information on how to handle the current cash crisis is also limited for the poor. Recent ethnographies reveal widespread confusion among the marginalized, especially on how to first approach a bank and handle the practicalities of opening a new account  Infrastructural readiness An Aadhaar-based identity, operating as a substitute for physical documents, would allow the many undocumented poor to become visible to the State. But for that the right infrastructure should be in place. Current infrastructural readiness, however, seems suboptimal for such a purpose. §  Absence of technological infrastructure: Technology-enabling digital transactions should be in place nationally. But 24% of the Indian population lives without electricity (compared, for example, to 0.2% in China), and gaps in electrical and mobile coverage are concentrated in rural and tribal areas. Hence construction of a cashless economy cannot be based on an existing backbone, but would need to take place largely from scratch, in a short time, given the suddenness of the government’s move §  Unreliable digital infrastructure: Once established, digital infrastructure needs to be reliable. But recent precedents, particularly the use of Aadhaar for the identification of social scheme beneficiaries, cast doubt on this. Recent studies show beneficiaries being turned down due to technology failure, and hence being denied the food rations they are entitled to. If this is a serious concern for a food security programme, it would be even worse for a cashless economy, as technology failure would then prevent users from even carrying out basic day-to-day transactions  Conclusion The constraints illustrated in this article reveals that the current Aadhaar-based system does not protect the poor from the backlash of demonetisation. While such a system provides enrolled users with a digital identity, operating in a cashless economy requires devices, access to networks, and a support infrastructure that the system does not provide. As a result, the poor are still unshielded from the consequences of cashlessness.Digitality is hence to be combined with other means to help those who bear the most severe burden of demonetisation.    ...

Publishes on : 20-Jan-2017 10:35 AM
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bharat ias - Looking towards a greener future

Looking towards a greener future

India’s green bond market has witnessed many milestones, but its full potential remains untapped.  Issue: Green Bonds  Green Bonds Green bonds, which finance environmentally friendly businesses and assets, have emerged as one of the key financing mechanisms driving the global economy’s transition to a greener future. Penetrating markets across developed and emerging economies, green bonds have seen extensive participation from corporates and financial institutions, including sovereign and municipal bodies.  First green bond First green bond was issued in in 2007 by two multilateral development banks (World Bank and European Investment Bank)  2015: A groundbreaking year for green bonds Global markets witnessed Currency green bonds and issuance of maiden green bonds by various economies §  Growing in strength: Issuance of Green bond doubled to $81 billion in 2016 from $42 billion in 2015  Green Bonds in India India’s green bond market has witnessed a number of critical milestones following Yes Bank’s and India’s first green infrastructure bonds issued in February 2015. §  Masala green Bond: India also witnessed its award-winning first green masala bond (rupee-denominated bond), with the International Financial Corporation raising an off-shore rupee bond on London Stock Exchange for investing in Yes Bank’s green bond, demonstrating how innovations in emerging markets have the potential to capture global attention §  Increase in Issuance: Green bond issuance in the country witnessed a 30 per cent year-on-year increase in 2016, cumulatively amounting to about Rs.18131 crore (equivalent to $2.7 billion) and making India the seventh largest green bond market globally §  Contributing to India’ sustainable growth: Green bonds have been crucial in increasing financing to sunrise sectors like renewable energy §  Distribution of green bonds: About 62 per cent of the green bond proceeds have been allocated to renewable energy projects, followed by the low carbon transport sector and low carbon buildings accounting for 17.5 per cent and 14 per cent of the proceeds, respectively. §  Regulating green bond market: Indian regulators have been proactive and visionary in recognizing the value of green bonds in financing India’s climate change targets. They have guided the bond market through necessary policies and reforms. §  SEBI’s guidelines: In January 2016, the Securities and Exchange Board (SEBI) of India published its official green bond guidelines and requirements for Indian issuers, placing India amongst a select set of pioneering countries who have developed national level guidelines §  Reforms by RBI: The Reserve Bank of India passed regulatory reforms aimed at strengthening and expanding India’s corporate bond market. The extent of partial credit enhancement  provided by banks has been increased to 50 per cent from 20 per cent of the bond issue size, while also permitting banks to issue masala bonds are some key moves that will bolster the Indian green bond market  Conclusion collective participation of regulators, policymakers, corporate and financial institutions is going to be crucial in pushing frontiers of green bonds further, unleashing new opportunities in addressing climate change.    ...

Publishes on : 20-Jan-2017 10:28 AM
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bharat ias -  Beyond Odd-Even Scheme

 Beyond Odd-Even Scheme

Context Car pool lanes can help fight pollution and complement public transport. Issue: Tackling air pollution Car Pool Lane implementing Odd-Even formula again in Delhi might not be effective unless further options are explored. the concept of Car Pool Lane (CPL)  need to be used Historical background This system was first applied, though not exactly as an alternative to the odd-even formula, in the US in 1969 HOV: Called the high occupancy vehicle (HOV) facility, it continues to be in place in a number of other countries such as Canada, parts of Europe, Australia, New Zealand, Indonesia and China These countries have adopted the CPL to suit their varying needs; they have gradually evolved over time Methodology of CPL Fastest lane reserved for vehicles with multiple passengers: The CPL formula reserves one lane, the fastest, on selected roads for cars carrying more than one occupant. Single occupant cars are thus confined to the remaining lanes. The greater number gets priority. Not the affluent, opulent, single fellow traveler  Advantages of CPL More passengers per vehicle encouraged: The CPL encourages both even and odd numbered cars to carry more people and ensures them a speedier journey. Hence, a reduced number of cars on the road Encouraging car–pooling & car-sharing: It also encourages willing participation of car owners, thus promoting happy sharing and car-pooling  Interesting data A 2005 compilation in the US revealed interesting data: The HOV facility in the morning peak hours carried nearly 32,000 people in 8,600 vehicles when other lanes carried 23,500 people in 21,300 vehicles. The travel time was 29 minutes in the CPL as against 64 minutes in the other lanes Encourages civilized driving culture:  In road-unsafe cities like in India, where unruly criss-cross driving is more of a rule, the car pool lane can provide a significant incentive toward cultivating a more civilized driving culture. Implementation of CPL implementing CPL in India is indeed a humongous task but ways can be explored and CPL can be out in place selectively For example Making a beginning in traffic dense cities: In some of the more dense traffic cities, and in some of their zones covering important services and institutions, a beginning can be made. The nitty-gritty of such a system will need to be worked out: :Whether the CPL should be enforced 24×7, or only on working days, or during certain designated hours? :Whether to fix the minimum number of occupants in a car at two or more? Which other vehicles, like bikes, emergency vehicles, chartered buses can use the CPL? Strict implementation: The US and other countries impose very heavy fines on violators of the CPL. As the CPL will be applied to limited areas, monitoring arrangements through technology and manual checks can be effectively mounted Public transport can be made free of charge: To further facilitate the CPL and odd-even working, as well as fighting pollution, use of public transport can be made free of charge for a limited period when pollution attains uncontrollable levels, as Paris did recently.  ...

Publishes on : 19-Jan-2017 10:38 AM
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bharat ias - BHIM app safer than mobile wallets

BHIM app safer than mobile wallets

Context Tool uses three-factor authentication, making it easier to trace fraud.   What is BHIM? BHIM (Bharat Interface for Money)is a digital payments solution app based on the Unified Payments Interface (UPI) from the National Payments Corporation of India (NPCI), the umbrella organisation for all retail payments systems in India. If you have signed up for UPI-based payments on your bank account, which is also linked to your mobile phone number, you’ll be able to use the BHIM app to carry out digital transactions. Send or receive money: BHIM will let you send and receive money to other UPI accounts or addresses Send money via IFSC: You can also send money via IFSC (Indian Financial System Code) and MMID (Mobile Money Identifier) Code to users who don’t have a UPI-based bank account Create your own QR: There’s also the option of creating your own QR (Quick Response) code for a fixed amount of money, which the merchant can scan to make the deduction Security features BHIM uses a 3-factor authentication unlike e-wallets which use only a 1-factor authentication or like Net-banking or debit cards which use 2-factor authentication 1st Factor: Operational Mobile number 2nd Factor: Device Id 3rd Factor: UPI PIN (set by user and required for every transaction) When a user opens BHIM application for the first time, the application automatically binds itself to their device ID and phone number — both of which are unique. This means that the same UPI cannot be used from two phones The BHIM application will also not work on a phone which doesn’t have a SIM card. Advantages of BHIM No need for a payment wallet: One can send and receive money in real time very conveniently and securely. As the app is linked directly to the bank account, there is no need for an e-wallet now How BHIM works? Once the BHIM App is installed, the user can select her bank out of the 35 listed banks. The application, which already knows the phone number, runs a check to match the mobile number against the selected bank’s data base to automatically detect the account whose KYC details you have already filled in while opening the bank account. Situation before UPI For consumers, before UPI, there were three popular options of digital payments — net banking, mobile wallets or plastic cards. Net-banking: Net Banking allows a user to access the bank account without going to the bank, but a third party transfer even within the same bank takes a minimum of 30 minutes. E-wallets: “The entire net banking process is lengthy and complex… That is where e-wallets came in. They are far more convenient as they don’t even ask for a KYC. But convenience always comes at a cost and charges are levied Plastic cards:With cards, there is an issue of limited PoS terminals along with the physical logistics of manufacturing and delivering a card ...

Publishes on : 19-Jan-2017 10:29 AM
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bharat ias - Minigrids can power rural economic activity

Minigrids can power rural economic activity

 Context Mini grids can spur economic activity in rural areas and accelerate the process of expanding mobile phone network across the country due to their large capacities and the ability to connect to the national grid. Defining Mini Grid A mini grid, as defined by the Ministry of New and Renewable Energy, is an off-grid power system with a generation capacity of between 10 KW and 500 KW. A mini grid is a larger system that converts direct current (DC) to alternating current (AC) and it provides safety as per REC and CEA standards,” . “Usually, the power coming from the smaller off-grid solutions is DC energy. While it is good for lighting, it does not satisfy the community’s requirement to run any sort of business The power generated from a mini grid can be seamlessly transferred to the national grid Why, mini grid is preferable? There are a number of other solutions of smaller capacities that rural areas can use such as a solar lantern, a solar home solution, or even a community solution like a micro grid. But a mini grid is the only alternativethat provides the kind of electricity that can be used for business activities One of the deficiencies of the other off-grid power solution models is that while these solutions are good in moving households away from kerosene and providing them with reliable and clean energy, they do not provide the energy required to fuel enterprise or commercial activity. You will not be able to power equipment, motors, etc, Demand for mini grids Apart from commercial enterprises, rural banks or schools, a large part of the demand for mini grids came from telecom service providers for powering mobile towers. Mobile towers have a presence across rural India and all of them suffer from inadequate power and so have to use diesel. There is a national mandate to green 50–60 per cent of the telecom towers and also the cost of using diesel is very high and it (the risk) includes diesel theft and all the other nefarious activities that go along with it not to mention the pollution. The power demand of a telecom tower is 24/7 Flexible rules aiding mini grids Flexible rules for investor: Government regulations also provide complete flexibility to the investor, allowing them to compete with the grid, if they choose, sell their excess power to the grid or even exit by selling their assets to the distribution companies. Tariff flexibility:Tariff flexibility is also given such that the tariff for the power coming from a mini grid is decided between the provider and the community served. At the moment, the government has not set the upper limit on the tariffs and has left it to the market. It’s not as if people will buy power at any price. At the lowest tariff level, they would pay 5–6 rupees a day to light up their home or shop using a mini grid. That is a big saving over diesel or kerosene and the power comes with the benefit of being regular and standard ...

Publishes on : 16-Jan-2017 12:39 PM
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