IASbabas Daily Current Affairs 1st September,

2016

ECONOMICS

TOPIC:
General Studies 3

Inclusive growth and issues arising from it; Banking

General studies 2

Government policies and interventions for development in

various sectors and issues arising out of their design and
implementation; Governance

A Cashless India
Cashless Economy: A cashless economy is a system where flow of cash or
physical currency is non-existent and all monetary transactions are done
electronically via internet enabled banking or wallets, and debit or credit
cards, at most abolishing or at times reducing physical presence between
two transacting parties.
Constituents of Cashless Transactions: Purchases, bill & utility payments
and clearances or transfers
Benefits of a cashless economy for India
Economic:

Increase in tax compliance and decrease in money laundering and

black money transactions, as more and more enterprises begin to
integrate digital payments into their business

Reduction in money idling

Reduced cost of minting currency

 Reduced Operation Cost for banks for ATMs, staffs, computers, logistics
etc.

And, if a full transition to a digital payments economy happens in the right

manner, it will rebuild the reputation of the Indian legal system as being
consistent and predictable
Statistical & Policy importance:

Much accurate data shall improve GDP, GNP calculation

Better policy & planning by monitoring consumption and expenditure

patterns

Ecological benefits:

Less use of paper, plastic, metals through decreased use of forms,

documentations, minting, cheques, receipts etc.

Lesser movement of individual and cash means lesser fuel

consumption

Individual benefits:

Reduced transaction time

Shortened queues

No cash-flow worries during holidays or strikes

Safety of an individual minimal cash handling and thus, lesser crimes

Social Benefits: Schemes like DBT ensures no leakage and disregards

corruption
But, of all the transactions in Indian economy, cashless transaction
accounts to only 5%

Lack of universal banking

Infrastructure shortage like PoS terminals at shops in small towns and

villages

Illiteracy and digital illiteracy

 Lesser internet penetration

Aversion to electronic transaction due to of fear of Cyber fraud etc.

Launch of the Unified Payment Interface (UPI)

Optimistic Statistics:

More than 650 million debit cards in circulation in the country today

In 2015, the Reserve Bank of India reported a 63% increase in the use
of debit cards at point of sales (PoS) terminals

With an estimated 30 million retail merchants in the country, there are

just 1.2 million PoS machines in operation

So, which one is the real bottleneck Consumers or Retailers?

The real bottleneck is the merchants who are either unwilling or unable to
accept payments in any form other than cash.
What should be the correct strategy then: Shifting the focus from
customers to the merchants and on bringing the merchants on board.
Woes of the Merchants:

With an already thin margin, they are reluctant to share their meagre
profits with the card company (even though they recognize that accepting
card payments could boost the volumes of their sales) (merchants (and
not customers) shoulder the cost of the transaction. Each time a
customer swipes his card to purchase a product, the merchant pays a
percentage of the sale (the Merchant Discount Rate or MDR) to the card
company)

High price of a PoS machine and thus, the total cost to the merchant
particularly for those who deal in low-value, high-volume products could
be very high

Way Ahead: Need to devise solutions that offer cheaper PoS machines and
charge lower transaction fees
Implementation of UPI in a correct manner

Its deep integration with the Aadhaar authentication framework should

be acknowledged and should be devised in a way that it becomes
possible to adapt a smartphone equipped with an iris camera to function
as a PoS terminal (Work of card-based PoS machine- scan the information
 stored on the chip embedded in the card, compare it against the records
maintained by the issuer bank and confirm that you are who you say you
are) Smartphones that can biometrically authenticate you against the
Aadhaar database will be able to do a good job at thisand, at the same
time, eliminate the risk of cloned cards and identity fraud.

With the authentication of the purchaser, UPI allows the merchant to

directly pull the sum owed from out of the customers bank account and
credit it to the merchants account. Given UPIs relatively low transaction
charges, even vendors who operate with the narrowest of margins will not
object to coming on board.

IASbabas Views
No solution is a perfect solution and with time and efforts, few established
regulations and widespread adoption among the merchant community,
consumers will willingly change the way they shop leading the UPI
mechanism to become a norm.
Connecting the Dots:

Does there exist a direct correlation between a developed economy

and a cashless economy? Justify your stand

Read:
Unified Payment Interface

ENVIRONMENT/ NATIONAL

TOPIC:
General Studies 3

Conservation, environmental pollution and degradation,

environmental impact assessment.

Inclusive growth and issues arising from it.

General Studies 2
 Government policies and interventions for development in
various sectors and issues arising out of their design and
implementation.

NGT and implementation of Biodiversity Act, 2002

In news: A plea filed with NGT which alleges that various States and union
territories had failed to pay attention to the unique biodiversity of the
country.
This article deals with:

Environment vs. Development debate

NGT vs. Government

Degradation of Biodiversity

Misuse by government authorities or concerned departments

Poor implementation of Biological Diversity Act, 2002 and Biological

Diversity Rules, 2004

Background

The Biological Diversity Act 2002 aims at preserving biological

diversity in India.

The Act provides mechanism for equitable sharing of benefits arising

out of the use of traditional biological resources and knowledge.

It seeks to set up Biodiversity Management Committees

(BMCs) at the local level in every state under Section 41 of the Act. BMCs
promote conservation, sustainable use and documentation of biological
diversity.

There is also a Peoples Biodiversity Register (PBR) which records

the diversity of flora and fauna.

RTI: 15 states which revealed the status of implementation of the act

showed that together these states have 61,000 panchayats and
municipalities but only 1400 PBRs have been set up.

Biodiversity crisis
India is facing massive biodiversity loss

On an average, 333 acres of forest are legally diverted under Forest

(Conservation) Act, 1980, each day.

This does not include forests which are illegally felled or encroached.

For construction of Amravati, Andhra Pradeshs state capital, 130

sq.km of forest is being diverted.

The Himalayas have become worlds mountain range with most

number of dams.

SC has called for species best interest standard completely new

standards for endangered species

o It includes the most threatened species like the Great Indian

Bustard (GIB), the Bengal Florican, Manipur Brow-antlered deer,
dugong and wild buffalo.

Yet, in 2015, one rhinoceros was killed almost every two weeks in the
Kaziranga National Park.

About 30 or less genetically pure wild buffaloes exist in central India.

Great Indian Bustards are only now 150 in number

Thus, India is in the midst of an unacknowledged biodiversity crisis. But, it is

ironic that Biodiversity Act is the most neglected of Indias environmental
laws as well as one of the least implemented.

The governments approach has been with apathy.

There is very limited judicial pronouncement and interpretation of

environmental laws.

Action by civil society is not much visible.

Most of the Indian Forest Service Officers dont consider biodiversity as

a lively area and desire for a more mainstream post.

Scope of the act

 The act has immense potential to safeguard Indias threatened
biodiversity.

It provides for both centralised and decentralised institutional

mechanisms for conservation and sustainable use of biodiversity.

The National Biodiversity Authority at the apex level, State Biodiversity

Board and BMC at the local level.

Thus, it can be a potent tool in helping to conserve wildlife and wildlife

habitat.

However, the problem is not at the constitution of biodiversity

authorities at central or state level but at the BMC which has to perform
diverse and critical functions.

Violations and opacity in Environment Impact Assessments (EIA)

The Biodiversity act mandates impact assessment studies for activities

like construction of dams, mining sites or diversion of land, which are
likely to have an adverse impact on biodiversity, irrespective of the nature
and scale of the proposed project.

Yet, many projects in ecologically sensitive areas are able to

circumvent the EIA process.

It has been observed that either EIAs are fraudulent or they are below
the threshold limit.

Arunachal Pradesh:

A riverine area was proposed for the construction of a dam.

The Monpa community of Tawang district struggled for three years to

prove that it is one of the two wintering sites of the black-necked crane, a
protected species held sacred by Buddhists.

The environmental consultant had deliberately avoided a reference to

the species.

Himachal Pradesh:

A series of hydropower projects are coming up in Himachal Pradesh.

 The tribals of Kinnaur are struggling to protect the last
remaining chilgoza (pine nut) trees from being lost in these development
projects.

Forest Department records do not mention the significant role the tree
species plays in providing livelihood security to people.

Uttarakhand:

The Lakhwar-Vyasi hydroelectric project is almost the size of the Tehri

hydroelectric project. (1000 MW)

It means that an EIA is necessary for this project as it will have huge
impact on land, people and biodiversity. One of the major impact will be
stemming the flow of more than 50 km of the Yamuna River.

However, an EIA is exempted here because: the project was proposed

in 1987 before the EIA Act of 2006!

Himalayas and the Western Ghats:

There are a series of dams existing and coming up in these areas.

They can have an adverse impact on aquatic biodiversity.

Hence, new projects should be carried out after EIA is done.

However, the EIA law requires that only projects above 25 MW should
undergo EIA studies and thus, most mini-hydel power projects in India are
of 24.99 MW capacity!

In an attempt to circumvent such laws, the cumulative impact of these

projects on Indias biodiversity becomes substantial, at times irreversible.
Conclusion- Strengthening PBR

PBR records biodiversity that comes under the BMC jurisdiction.

Hence, it can be an effective tool to counter false and misleading

statements given in forest diversion proposals and EIA reports.

Also, it can help a community present the facts before the decision
maker to highlight the real value of the ecological entity proposed to be
sacrificed.
 They can save areas from being valued based on rapid assessment
done by institutions of questionable integrity and methodology or project
proponents, whose goals are only to take projects through.

The rationale of anthropocentrism, i.e. protecting the biodiversity for present

and future generation should not be the sole reason. There exists moral,
legal and ethical rights to not destroy something not created by human
beings.
Connecting the dots:

The real protection of biodiversity takes place at local level. Examine

why India should implement Biodiversity Act, 2002 to balance its
economic development with ecological protection.

TOPIC: General Studies 3

Conservation, environmental pollution and degradation,

environmental impact assessment.

Is IUCN still relevant?

In News: IUCN World Conservation Conference (WCC) is in Hawaii over 1-10
September. Some 9,000 delegates from 190 countries, including heads of
state, government officials, scientists, indigenous people and business
leaders, will share, debate and act on the latest issues in conservation and
sustainable development, to define a global path for nature conservation for
the future.

The International Union for Conservation of Nature and Natural

Resources(IUCN) is an international organization working in the field
of nature conservation and sustainable use of natural resources. It is
involved in data gathering and analysis, research, field projects,
advocacy, lobbying and education.
 IUCN is the only environmental organization that holds a place in
the United Nations General Assembly, giving it an important and
unique passport to international discussions on environment and
development.

Its single most important contribution to natural sciences is the

development of the Red Listthe worlds most comprehensive inventory
of the global conservation status of biological species.

WCC this year goes through an exhaustive process like UNFCCC

(United Nations Framework Convention on Climate Change) for a number
of motions that all member countries must vote on, the question is: will
the countries be penalized if they dont follow what they commit to?

For instance, if a member country says yes to a motion on respect the

rights of indigenous people in biodiversity-rich areas but at the same
time allows a thermal power plant to come up on the same piece of land,
what can this international body do?

In the era of globalization and faster development, most emerging

economies of the world that are incidentally also rich in biodiversity are
facing this dilemma: How to modernize while keeping habitats intact for
species.

Critique of the IUCN:

IUCN may present itself as a knowledge-based body but its beliefs of

cause and effect have not been adequately challenged.

IUCNs history is one of adding new goals without addressing their

coherence with existing ends.
 The IUCN goal, for instance, of advocating protected areas without
examining if protected areas actually help in biodiversity protection.

For all its grand history, is IUCN, still relevant in a globalizing world?

Way Ahead:

IUCN has to reinvent itself and move away from its emphasis on fences
and fines.

It must recognize the economic forces, the models of dirty growth

that are threatening biodiversity hotspots around the world. These are the
forces this grand body of conservation must take on.

There are individual sessions by scientists presenting papers on

threatened species and effects of mining and other activities on their
habitats, which should make their way into mainstream policies of
member countries.

In India, for instance, IUCN should be coming out with white papers on
species at risk because of the rapid scale of development that is ripping
our habitats apart.

Connecting the dots:

How far IUCN, as an international body, helped many countries to

prepare national conservation strategies, identify areas rich in biodiversity
for protection and influenced policymakers?