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The Hindu Editorial Analysis | 2nd November ’21 | PDF Download

E-Rupee A Gamechanger? | ToI

  • When you hold a hundred rupee note in your hand, you will see a pledge by the RBI Governor: “I promise to pay the bearer the sum of one hundred rupees.” What does this pledge mean when you are actually in physical possession of the currency note?
  • Like most people, I too never bothered to probe this until I became governor and it became part of my job to understand the import of a promise I was making.

  • I was told that this meant the governor is guaranteeing that the note is legal tender, and cannot be refused as a means of payment.
  • A conscientious governor will also see this as a reminder of his duty to preserve the purchasing power of the rupee by keeping inflation low and steady.
  • How will the governor make this promise with the digital e-Rupee that RBI is reportedly planning to issue?
  • Why are RBI and nearly a hundred other central banks around the world contemplating issuing digital versions of their national currencies – central bank digital currencies (CBDCs)?
  • The basic motivation seems to be fear that their money will be displaced by private cryptocurrencies that are gaining currency.
  • In fact, central banks were quite nonchalant when bitcoin and its many clones emerged a dozen years ago.
  • Notwithstanding their libertarian charter of freeing people from the tyranny of fiat currencies issued by central banks, this first wave of cryptocurrencies failed to replace traditional money largely because their values fluctuated widely.
  • But when Facebook announced in 2017 that it was going to issue a cryptocurrency ‘Libra’ – since renamed Diem – central banks were jolted.
  • Unlike the bitcoin which had no intrinsic value, the proposed Diem will be backed by a reserve asset such as the US dollar.
  • Beyond fear, central banks also see an opportunity in issuing CBDCs.
  • The reality is that cash is on its way out because of digital payments that developed over the last two decades quite independently of cryptocurrencies.
  • In Sweden today, it’s hardly possible to see a Kroner currency bill, while in China many people are not even aware that there are means of payment beyond WeChat and Alipay.
  • What’s heartwarming is that it’s the low-income segments who are switching to the digital mode more readily and enthusiastically.
  • Our workers in the Gulf, for example, still pay hefty fees in remitting money back home to their families.
  • By offering a universal payment platform, CBDCs will have the potential to bring prices down across the board.
  • A big downside is the potential impact of CBDCs on commercial banks.
  • Commercial banks are in the business of financial intermediation.
  • The fear is that with CBDCs providing accounts for everyone with the central bank – people will move their deposits from commercial banks to their accounts in the central bank.
  • A CBDC account with the central bank will make it that much easier and tempting for people to move money and trigger bank runs.
  • Another downside of CBDCs – one that we can all relate to – is loss of privacy.
  • A cash transaction is anonymous.
  • One way of getting around this is to continue to issue cash even after CBDCs come into play.
  • In fact, in a country like ours where connectivity may not be available all the time and everywhere, it’s inconceivable that cash will just disappear any time soon.

Time for action | TH

  • G20: COVID-19 pandemic, climate change, a major tax agreement, and steps to address concerns regarding global economic growth and stability.
  • On coordinated efforts to mitigate the pandemic, the focus was on vaccine production and distribution, with assurances of support to WHO’s target of inoculating 40% or more of the global population against COVID-19 by 2021.
  • At least 70% by mid-2022.
  • The implicit assumption in this commitment by G20 leaders is that initiatives to boost the supply of vaccines in developing countries will succeed, and cooperation will help the world overcome supply and financing constraints.
  • On climate change, the Group leaders recommitted their nations to providing $100 billion a year toward adaptation, mitigation, and green technologies, focusing on the needs of developing countries.
  • However, in this sphere, a divergence of views still exists across developing and developed nations: ahead of this summit and the 2021 climate conference in Glasgow, India had rejected the call to announce a target of zero emissions.
  • Prime Minister Narendra Modi appears to have scored a victory in this regard as the post-summit communiqué commits the G20 to limiting global warming to 1.5° C and identified sustainable and responsible consumption and production as “critical enablers”.
  • Unsurprisingly, given the rising inflation, spiking energy prices, and alarming supply chain bottlenecks, G20 leaders were quick to affirm that national stimulus policies would not be removed prematurely.
  • Even so, it would remain a challenge to walk the tightrope between preserving financial stability and fiscal sustainability.
  • Perhaps in a bid to avoid potentially debilitating wobbles in global finance, the G20 leadership agreed to slap multinationals with a minimum 15% tax to create “a more stable and fairer international tax system”.
  • This OECD-led reform enjoys the support of 136 countries, which account for more than 90% of global GDP, and is likely to enter into force in 2023 or after.
  • The G20 meeting has come at a critical moment for the global political economy.
  • If it results in timely, effective, coordinated action across major nations, hope for recovery will remain afloat.

Finding a way out of India’s deepening water stress | TH

  • The complexity and scale of the water crisis in India calls for a locus specific response, that can galvanise and integrate the ongoing work of different Ministries and Departments through new configurations.
  • Such an integrated approach must necessarily cut across sectoral boundaries and not stop at the merger achieved between the two Ministries of Water Resources, River Development and Ganga Rejuvenation and the Ministry of Drinking Water and Sanitation, which led to the formation of the Ministry of Jal Shakti in 2019.
  • In the rural areas, 80%-90% of the drinking water and 75% of the water used for agriculture is drawn from groundwater sources.
  • In urban areas, 50%-60% of the water supply is drawn from groundwater sources, whereas the remaining is sourced from surface water resources such as rivers, often located afar, in addition to lakes, tanks and reservoirs.
  • Composite Water Management Index: 21 major cities (including Delhi, Bengaluru, Chennai, Hyderabad) were on the brink of exhausting groundwater resources, affecting about 100 million people.
  • The study also points out that by 2030, the demand for water is projected to be twice the available supply.
  • The Chennai example: in 2019 parts of the city went without piped water for months
  • Lack of rainfall
  • Chief among these is that the city has been built by incrementally encroaching floodplains and paving over lakes and wetlands that would have otherwise helped the process of recharging groundwater.
  • This was further exacerbated by the loss of green cover (which would have otherwise helped water retention) to make way for infrastructure projects.
  • There is also the example, in Mumbai, in 2019, when 2,141 trees were felled at the Aarey colony, amid massive protests, to make space for a shed for the Mumbai Metro Rail Corporation Limited.
  • If the Government is serious about addressing the water crisis in urban areas, the Ministry of Water Resources must reconfigure its relationship with other Ministries and Departments (Urban Development, Local Self-Government and Environment).
  • This would be for enhanced integration and coordination through effective land and water zoning regulations that protect urban water bodies, groundwater sources, wetlands and green cover while simultaneously working to enhance waste water recycling and water recharge activities targeting aquifers and wells through rainwater harvesting.
  • In rural areas, the situation is no different, as the acute water crisis in Punjab shows.
  • The draft report of the Central Ground Water Board concluded that Punjab would be reduced to a desert in 25 years if the extraction of its groundwater resources continues unabated.
  • Cultivation of water intensive crops such as paddy have further aggravated water depletion, even turning water saline.
  • At the sectoral level, the Ministries and Departments of water resources must coordinate efforts with their counterparts in agriculture, the environment and rural development for greater convergence to achieve water and food security.
  • Again, the importance given to groundwater conservation should not ignore surface water conservation including the many rivers and lakes which are in a critical and dying state due to encroachment, pollution, over-abstraction and obstruction of water flow by dams.
  • Water connections to every household in India by 2024
  • Instead the aim should be towards protecting and conserving water resources on the one hand and minimising and enhancing efficiency of water usage on the other.
  • As the expert committee constituted under the Union Water Resources Ministry drafts a new National Water Policy, one hopes it would be rooted in locus specific realities and allows greater flexibility for integrating the insights and work of multiple departments and disciplines making way for new configurations to sustainably manage the country’s water resources.


  • India to achieve net-zero carbon emissions by 2070; India is only major economy to have delivered on Paris agreement, PM Modi tells COP26 Summit
  • PM Modi meets his UK counterpart Boris Johnson in Glasgow on the sidelines of COP26
  • India administers first dose of Covid vaccine to 78 percent of its eligible population and second dose to 35 percent
  • Australia recognises India’s Covid vaccine- Covaxin; To allow visitors jabbed with it; PM Modi thanks his Australian counterpart
  • Counting of votes begins for three Lok Sabha and 29 assembly constituencies
  • ED arrests Maharashtra’s former Home Minister Anil Deshmukh in money laundering case
  • Home Minister Amit Shah inaugurates elevated corridor between Ahmedabad and Gandhinagar
  • Beijing tightens measures as Covid-19 cases spike, raises concerns over zero-virus policy
  • France President says Australia PM lied over submarine deal
  • Oct Production, Other Indicators Herald Brisk H2
    • The manufacturing sector posted its best performance in eight months in October, helped by robust festive demand and solid exports, a private survey showed.
    • Several other indicators released on Monday, such as goods and services tax (GST) collections, rail freight, fuel demand and mobility indicators for October pointed to a strong start to the second half of the financial year.
    • A coal shortage, high oil prices and supply disruptions emerged as drags on growth, but experts expect the economy to remain firm.
    • The IHS Markit Purchasing Managers’ Index (PMI) rose to 55.9 in October, from 53.7 in September, riding strong demand and higher output.
    • This is the highest since 57.5 in February.
  • Former SBI Chairman Pratip Chaudhuri Held
    • Former State Bank of India (SBI) chairman Pratip Chaudhuri was arrested by the Rajasthan police on Monday on complaints from a loan defaulter sending shock waves in the banking industry that was just limping back to normalcy after years of fear of being implicated criminally on trumped up charges.
    • There was reportedly no notice or formal summons in a decade-old soured-loan case which has shaken the banking sector, stoking concerns the incident could delay decision making in multi-billion-dollar recovery initiatives of several lenders.
    • The case refers to the ‘Garh Rajwada’ hotel project in Jaisalmer, financed by SBI in 2007. Since the project was not completed for three years and a key promoter passed away in April 2010, the account slipped into the non-performing asset (NPA) category in June 2010.
    • As the country’s biggest mass lender didn’t succeed in reviving the project, SBI sold the loans to the Alchemist Asset Reconstruction Co (ARC) in March 2014.
    • To be sure, it is unclear whether Chadhuri was arrested because of his role as SBI chairman or because he was later chairman of Alchemist ARC, which bought the assets from the bank.

Q.) Which bank has reported over Rs 266 crore worth of fraud to the Reserve Bank, relating to three NPA accounts?

  1. Axis Bank
  2. Yes Bank
  3. SBI
  4. Indian Bank


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