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DAILY CURRENT AFFAIRS CIVILS360

JULY 31, 2017

It’s Sankalp Parva on August 15: PM

  • Prime Minister Narendra Modi on Sunday urged Indians to celebrate August 15 this year as Sankalp Parva , or Day of Resolve, to do something constructive for the country, with a deadline of August 2022 as the time of Siddhi , or attainment of that ideal.
  • Modi termed August the “month of revolutions”, given its association with important events in India’s struggle for Independence.
  • Referring to the floods in various parts of the country, Mr. Modi said the situation in flood-affected States, including Assam, Gujarat, Rajasthan and West Bengal, was being monitored and several agencies like the Army, the IAF, the National Disaster Response Force and paramilitary forces were engaged in rescue and relief operations.

SC allows two firms to settle loan dispute

  • The Supreme Court used its extraordinary constitutional powers to allow two companies to withdraw from insolvency proceedings and settle their loan dispute, despite the case being admitted to the National Company Law Tribunal (NCLT).
  • Once the NCLT admits a case for initiating corporate insolvency resolution process under the Insolvency and Bankruptcy Code of 2016, it cannot be withdrawn even if the parties decide to settle the dispute between them.
  • However, a Bench of Justices Rohinton Nariman and S.K. Kaul used the Supreme Court’s powers to do “complete justice” under Article 142 of the Constitution to bring quietus to the financial dispute between Lokhandwala Kataria Construction Pvt. Ltd. and Nisus Finance and Investment Manager LLP, represented by Shiv Kumar Suri and Shikhil Suri.

SC summons officials on firecracker pollution

  • The Supreme Court has pointed out a lack of clarity on the pollutive impact of explosive substances used in firecrackers and ordered officials from the Central Pollution Control Board (CPCB) and Firework Research and Development Centre at Sivakasi in Tamil Nadu to be present in court.

Impact on air quality

  • The apex court said it wanted to know from these bodies the impact of firecrackers on the environment, the extent of change in the air quality and the safety standards in place.

 

New gold bond scheme may draw more investors

  • The Government announced a few changes in its Sovereign Gold Bond (SGB) Scheme
    • The primary change was the increase in the limit to 4 kg (from 0.5kg) for individuals, HUF and 20 kg for Trusts.
  • The basic premise is that most Indians believe in gold as a time-tested and safe asset class and prefer it over other forms of investment.
  • The sovereign gold bond initially introduced by the Government in 2015 has achieved only limited success, “mostly because of its unrealistic pricing pattern vis-a-vis the international price of bullion,” said James Jose, secretary, Association of Gold Refineries & Mints.
  • Bullion prices are highly sensitive to international geopolitical tensions, U.S. Federal rates and dollar upswings. They move in a price band of 5-10% year on year. Past SGB prices ranging from Rs. 3,150 per gm to Rs. 2,750 per gm was often not in parity with the market rate realities and this often led to the SGB consumers losing money, despite earning a 2.5% return on investments.

Pegged to import duty

  • Another factor diminishing the attractiveness of the SGB is its price being pegged to a 10% import duty, and any reduction in the import duty by the Government in the subsequent period would likely inflict severe loss of value to those who have already invested.
  • A remedy is that in case of physical delivery of bullion against SGB at a later date, import duty and IGST should be levied at the point of delivery, according to Mr. Jose. This will make the scheme much more attractive to the general public, thereby enabling substitution of expensive imports that impact the current account deficit (CAD).
  • While the Government introduced these bonds to help reduce India’s over dependence on gold imports, the move was also aimed at changing the habits of Indians from saving in physical form of gold to a paper form with Sovereign backing.
  • Annual consumption of gold in India is in the range of 700-800 tonnes, almost all of which is imported. Of this, approximately 500-600 tonnes is bought by consumers as jewellery for cultural reasons (mainly for weddings).
  • The balance is in the form of gold bars and coins for savings or investment purposes, which is what the Government hopes to convert to paper form so that both are served — investors are happy as long as they earn some returns and capital appreciation at the time of redemption, as well as it helps reduce an equivalent amount of physical gold imports.

‘More channels needed’

  • To ensure further success, the Government should allow mass channels such as gold loan Non-Banking Finance Companies (NBFCs) to also market it.
  • Further, offering gold loan against Sovereign Gold Bonds would help popularise the product from a consumer angle, according to him. For, it would then be perceived as being as liquid as physical gold.
  • Over time, it would also help reduce various risk factors, such as spurious quality gold, and operational costs linked to manual assessment of gold for gold loan NBFCs.

PRELIMS FACTS

What is NHB Residex?

  • NHB Residex from the National Housing Bank, designed by a technical advisory committee comprising Government representatives, lenders and property market players, is a set of benchmarks that aims to track housing price indicators across Indian cities.
  • It now sports enhanced city coverage (rising from 26 to 50, to be eventually raised to 100), a new base year (2012-13) and new data sources (with data from banks and home finance companies and market surveys).
  • The NHB Residex currently offers two sets of quarterly Housing Price Indices (HPIs) across the cities it tracks.