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Daily Current Affairs – 2020

Topic: For Prelims and Mains

Long Term Reverse Repo Operation ( LTROs)

Why in News?

According to the Reserve Bank of India (RBI), the response to the Long Term Reverse Repo Operation (LTROs) has been highly encouraging.

Key Points:

  • Long Term Reverse Repo Operation (LTRO) is a mechanism to facilitate the transmission of monetary policyactions and the flow of credit to the economy. This helps in injecting liquidity in the banking system.
  • Funds through LTRO are provided at the repo rate. This means that banks can avail one year and three-year loans at the same interest rate of one day repo.
  • But usually, loans with higher maturity period (here like 1 year and 3 years) will have a higher interest rate compared to short term (repo) loans.
  • According to the RBI, the LTRO scheme will be in addition to the existing Liquidity Adjustment Facility (LAF) and the Marginal Standing Facility (MSF)
  • The LAF and MSF are the two sets of liquidity operations by the RBI with the LAF having a number of tools like repo, reverse repo, term repo

Benefits of the LTROs:

  • Enhance Liquidity:It will enhance liquidity in the banking system by Rs 1 lakh crore.
  • Bring down the cost of funds for banks:The introduction of long-term repo operations (LTRO) will bring down the cost of funds for banks without effectively cutting deposit rates. This decision is likely to make reverse repo rate as the operative policy rate over a point of time.
  • Boost Investment:It is a measure that is expected to bring down short-term rates and also boost investment in corporate bonds.
  • Ensure banks have durable liquidity:These efforts are being carried forward with a view to assuring banks about the availability of durable liquidity at a reasonable cost relative to prevailing market conditions.
  • Ensure credit flow to productive sectors:This should encourage banks to undertake maturity transformation smoothly and seamlessly so as to augment credit flows to productive sectors.

Preservation of Eastern & Western Ghats

Why in News? 

public interest litigation petition has been filed in the Madras High Court seeking a direction to the Centre and State government to constitute a permanent body for taking serious steps to safeguard the flora, fauna and other natural resources in the Eastern and Western Ghat areas in Tamil Nadu.

The petition is on the basis of the recommendations made by the Madhav Gadgil and Kasturi Rangan committees.

What’s the issue?

Petitioner contended that the natural resources abundantly available in this area are being properly utilised by other regions, except Tamil Nadu. They are being misutilised and mismanaged not only by the administrators but also by the public at large.

Besides, large-scale plantations of coffee, tea and orchards have been raised in the hills of Western Ghats. Aromatic and valuable trees like sandal are removed illegally. Despite the Wildlife Protection Act, hunting takes place in some pockets. The forests are getting degraded because of illicit collection of firewood, illicit grazing and illicit felling of trees.

What did the Gadgil Committee say?

  1. It defined the boundaries of the Western Ghats for the purposes of ecological management.
  2. It proposed that this entire area be designated as ecologically sensitive area (ESA).
  3. Within this area, smaller regions were to be identified as ecologically sensitive zones (ESZ) I, II or IIIbased on their existing condition and nature of threat.
  4. It proposed to divide the area into about 2,200 grids,of which 75 per cent would fall under ESZ I or II or under already existing protected areas such as wildlife sanctuaries or natural parks.
  5. The committee proposed a Western Ghats Ecology Authority to regulate these activities in the area.

Why was Kasturirangan Committee setup?

None of the six concerned states agreed with the recommendations of the Gadgil Committee, which submitted its report in August 2011.

In August 2012, then Environment Minister constituted a High-Level Working Group on Western Ghats under Kasturirangan to “examine” the Gadgil Committee report in a “holistic and multidisciplinary fashion in the light of responses received” from states, central ministries and others.

The Kasturirangan report seeks to bring just 37% of the Western Ghats under the Ecologically Sensitive Area (ESA) zones — down from the 64% suggested by the Gadgil report.

Recommendations of Kasturirangan Committee:

1.   A ban on mining, quarrying and sand mining.

2.   No new thermal power projects, but hydro power projects allowed with restrictions.

3.   A ban on new polluting industries.

4.   Building and construction projects up to 20,000 sq m were to be allowed but townships were to be banned.

5.     Forest diversion could be allowed with extra safeguards

Facts for Prelims

Shared economy:

The sharing economy, also known as collaborative consumption or peer-to-peer-based sharing, is a concept that highlights the ability of individuals to rent or borrow goods rather than buy and own them.

The ‘shared economy’ includes segments such as co-working (Awfis, WeWork India), co-living (Stanza Living, OYO Life, Oxford Caps), shared mobility (Uber, Ola, Shuttl) and furniture rental (Furlenco, Rentomojo.)

 

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