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Daily Current Affairs 02.01.2023 (India asks Pakistan to free prisoners, says ready to solve humanitarian matters, Thousands visit Bhima-Koregaon war memorial, Unemployment rate rises to 8.3% in Dec., highest in 16 months, Higher turnout is worth striving for, but not without sufficient safeguards, Bad loans share at a decadal low in Indian banks)

Daily Current Affairs 02.01.2023 (India asks Pakistan to free prisoners, says ready to solve humanitarian matters, Thousands visit Bhima-Koregaon war memorial, Unemployment rate rises to 8.3% in Dec., highest in 16 months, Higher turnout is worth striving for, but not without sufficient safeguards, Bad loans share at a decadal low in Indian banks)

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1. India asks Pakistan to free prisoners, says ready to solve humanitarian matters.

India is committed to addressing “all humanitarian matters, including those pertaining to prisoners” with Pakistan, the External Affairs Ministry said in a statement after New Delhi and Islamabad exchanged lists of prisoners on Sunday. The exchange takes place in accordance with the 2008 Agreement on Consular Access every year on January 1 and July 1.

“The Government has called for early release and repatriation of civilian prisoners, missing Indian defence personnel, and fishermen along with their boats, from Pakistan’s custody,” a press note released by the Ministry said. India also asked to fast-track the release and repatriation of 631 Indian fishermen and two Indian civilian prisoners “who have completed their sentence and whose nationality has been confirmed and conveyed to Pakistan”.

The Ministry said that the Indian side had sought “immediate” consular access to the “remaining 30 fishermen and 22 civilian prisoners in Pakistan’s custody, who are believed to be Indian”.

Delhi has shared lists of 339 Pakistani civilian prisoners and 95 Pakistani fishermen who are in India’s custody. Pakistan was also asked to confirm “nationality status” of 71 Pakistani prisoners, including fishermen, whose repatriation is pending as Islamabad has not yet confirmed their citizenship status.

List of nuclear facilities

The two sides also exchanged lists of their nuclear facilities on Sunday as part of a 1988 pact that is aimed at preventing attacks targeting nuclear installations in each other’s territory.

The exchange of the list took place under the provisions of the agreement on the prohibition of attack against nuclear installations and facilities, the Ministry said. It was done simultaneously through diplomatic channels in New Delhi and Islamabad.

The exchange of the list came amid continuing strain in ties between the two countries over the Kashmir issue as well as cross-border terrorism.

Indian side sought immediate consular access to 30 fishermen and 22 civilian prisoners

2. Thousands visit Bhima-Koregaon war memorial.

A victorious past: A huge crowd at the Bhima-Koregaon war memorial on the 205th anniversary of the battle, on Sunday. 

The 205th anniversary of the Bhima-Koregaon battle passed without incident as lakhs of Ambedkarites from across Maharashtra and the country congregated near the Ranstambh (victory pillar) at Perne village in Pune on Sunday under heavy security cover.

Crowds have been steadily milling in Bhima-Koregaon since Saturday evening to pay floral tributes to the bravery of the Mahar soldiers who fought against the Peshwa forces in the 1818 battle.

Vigilant police

Keeping an ever-vigilant eye to avoid any recrudescence of the violence during the bicentenary celebrations of the battle in 2018, the Pune Rural Police strictly monitored social media, deleting over 100 posts found to contain provocative content with the possible aim of rupturing peace. Around 7,000 security personnel were deployed in the area.

Several prominent politicians, including Vanchit Bahujan Aghadi (VBA) chief Prakash Ambedkar, Union Minister of State for Social Justice and Empowerment Ramdas Athawale, and NCP MLA Jitendra Awhad visited the site.

“Lakhs of followers visit this place every year… It is important that this heritage is preserved and this history is cherished. Expansion of the memorial premises is needed and for that, the acquisition of an additional 100 acres is required. We are taking efforts in this direction and a preliminary plan has been prepared,” Mr. Athawale said.

A conspicuous absence on the occasion was that of Pune district Guardian Minister Chandrakant Patil, who recently endured an “ink attack” by his detractors.

While he paid his respects to Ambedkar at his residence, Mr. Patil, in a press statement, said, “I have received the threat of an ink attack if I visit the memorial. I am walking on the path of Dr. Babasaheb Ambedkar’s thoughts, thus, I am even ready to take bullets on my chest. However, some people wish that there should be an untoward incident or communal riots there. As scores of people go there with lot of devotion, their safety and security is important for me. So, I have decided not to go there.”

While the outcome of the Koregaon-Bhima battle was inconclusive, Babasaheb Ambedkar’s visit to the spot on January 1, 1927, revitalised its memory for the Dalit community, making it a rallying point and an assertion of pride.

The 2018 clashes, which heightened social tensions across the State while its reverberations were felt throughout the country, resulted in massive destruction of property belonging to Ambedkarite members.

The Pune Rural Police strictly monitored social media, deleting over 100 posts found to contain provocative content with the possible aim of rupturing peace

3. Unemployment rate rises to 8.3% in Dec., highest in 16 months.

Upward curve: The urban unemployment rate rose to 10.09% in December from 8.96% in the previous month. 

India’s unemployment rate rose to 8.3% in December, the highest in 16 months, from 8% in the previous month, data from the Centre for Monitoring Indian Economy (CMIE) showed on Sunday.

The urban unemployment rate rose to 10.09% in December from 8.96% in the previous month, while the rural unemployment rate slipped to 7.44% from 7.55%, the data showed.

Mahesh Vyas, managing director of the CMIE, said the rise in the unemployment rate was “not as bad as it may seem,” as it came on top of a healthy increase in the labour participation rate, which shot up to 40.48% in December, the highest in 12 months.

“Most importantly, the employment rate has increased in December to 37.1%, which again is the highest since January 2022,” he told Reuters.

The unemployment rate had declined to 7.2% in the July-September quarter compared to 7.6% in the previous quarter, according to separate quarterly data compiled by state-run National Statistical Office .

In December, the unemployment rate rose to 37.4% in Haryana, followed by 28.5% in Rajasthan and 20.8% in Delhi, the CMIE data showed.

Meanwhile, Congress leader Rahul Gandhi on Saturday said that India needs to move from a single focus on GDP growth to growth with employment, skilling of youth and creating production capacities with export prospects.

4. Editorial-1: Ayes and nays

Higher turnout is worth striving for, but not without sufficient safeguards.

Given the regional variations in demographic trends and economic opportunities, India has a high rate of migration, which doubled in the census decade of 2001-2011. Migrants often see their political and economic rights compromised at their place of origin and residence. The Election Commission of India (ECI) has now proposed a mechanism to facilitate remote voting for domestic migrants. The Remote Electronic Voting Machine (EVM) prototype can be used for up to 72 constituencies simultaneously from a single, remote polling booth. The ECI has invited political parties for a demonstration of the prototype on January 16. A concept note by the Commission takes into account the legal, operational, administrative and technological challenges at hand. Voter participation is comparatively high in India; yet, in 2019, one in three voters did not turn up. Going by the 2017 Economic Survey, there are around 14 crore internal migrants in the country, and they have to cross many hurdles to be able to vote. Anything that advances their rights must be welcomed. But a hurried move will only do more damage to the integrity of the electoral process, which many fear is eroding, and for valid reasons. The ECI’s recent conduct, including in the 2022 Gujarat Assembly elections, has been less than reassuring.

The ECI proposes to have remote voting for migrants as early as this year. While there is no technical basis for allegations of fraud in the current, single-constituency, non-networked EVMs, public trust in them has never been lower than it is today. Public trust is the only strength of any electoral process. With EVMs, the voter has no way to see whether the vote is recorded as it is cast. The ECI’s ambitious plan comes against this backdrop of public scepticism about its own impartiality and, less justifiably, about the reliability of the EVMs. The proposed plan will add more questions to the mix, including some fundamental ones such as about the correlation between citizenship and territoriality. In an era of unprecedented human mobility, the idea of portable voting rights is worth considering, but it will have far-reaching ramifications that should be accounted for. Defining a migrant who is eligible to vote remotely is going to be controversial — for instance, when does a migrant at a place become a resident? Even the ECI had expressed doubts about the practicality of remote voting rights for migrants in the past. Meanwhile, there is also an active demand for voting rights for Non-Resident Indians. Higher turnout is worth striving for, but not without sufficient safeguards.

5. Editorial-2: Bad loans share at a decadal low in Indian banks.

While fresh accretion of bad loans declined, writing off loans from the bank’s books also helped

DATA POINT

In September 2022, the gross non-performing assets (GNPA) ratio of all Scheduled Commercial Banks (SCBs) was at a seven-year low, the latest data from the Reserve Bank of India showed. GNPA ratio is the proportion of gross non-performing assets in gross loans and advances. The GNPAs are bad loans which the borrower is not in a position to repay at the moment. A loan turns bad or becomes an NPA if they are overdue for over 90 days.

In September, the net non-performing assets (NNPA) ratio was at a ten-year low. NNPA ratio is the proportion of net non-performing assets in net loans and advances. Banks have to set aside (or provision) a part of their profit as a buffer for potential losses that may arise from the NPAs. Thus, NPAs reduce a bank’s available capital to lend fresh loans. The NNPA deducts these provisions from GNPA and so is a better indicator of the bad loans in a bank’s books. Chart 1 shows the NNPA ratio of all SCBs.

These two data points show that the issue of non-performing assets, which was a major headache for banks after the RBI carried out an expansive asset quality review in 2015, is not that troubling anymore.

One important factor that led to the reduction of the NPAs is the drop in slippage ratio of SCBs. The slippage ratio indicates fresh accretion of NPAs in a year and is plotted in chart 2. Slippage ratio is arrived at by dividing fresh NPAs by standard advances at the beginning of the period. The slippage ratio is around 2% in September 2022 for SCBs, which is the lowest since at least 2015.

While fresh accretion of NPAs reduced, another way to reduce bad loans is to write them off from the bank’s books. Banks voluntarily choose to write off NPAs to maintain healthy balance sheets. In the first half of FY23, the loan write-offs as a ratio of GNPAs slightly increased to 22.6% after declining for two consecutive years. So, a combination of both declining slippage and increasing write-offs brought the bad loans to its lowest point in many years.

As noted before, banks have to “provision” a part of their profit depending on the value and years an NPA exists. Additionally, due to the moratorium during the pandemic, banks had to also set aside some profits as a contingency measure. Both factors affected their net profits. However, with reducing NPAs, provisions declined, with moratorium lifted, contingencies were relaxed. These two meant that net profit of both public and private banks soared as shown in chart 3.

Due to the above factors, the profitability of the banks improved. Bank profitability is gauged by measuring a bank’s Return on Assets (RoA = net profit by average total assets). An RoA of >=1% is generally considered good. As shown in chart 4, RoA of all scheduled commercial banks had dipped to negative territory in September 2019. By September 2022, it was back to 0.8%, levels last seen in 2014-15.

Another factor that led to all the changes mentioned above is the drastic shift in the sectors which the banks funded. In 2016, 40% of all outstanding credit went to industries, whereas just 20% was given out as retail loans. However, by 2022, retail loans’ share surpassed industry credit, as shown in chart 5.

This was due to the very high share of bad loans in the industry sector till 2018, as shown in chart 6. The NPA in the industry sector has been brought down since, by a combination of recovery mechanisms such as insolvency and bankruptcy code and also by issuing fewer fresh loans to the industries. On the other hand, bad loans are barely there in the retail sector.

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