Current Affairs – December 2016

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RBI opposes proposal to set up separate payments regulator

The Reserve Bank of India (RBI) has opposed a move to establish a separate entity to regulate payments and settlements as recommended by Ratan Watal Committee for Digital Payments.

The 11-member committee was notified in September 2016 by the Union Finance Ministry to review existing payment systems in country and recommend appropriate measures for encouraging Digital Payments.

 What is the issue?

One of the committee’s terms of reference was to study and recommend changes in the regulatory mechanism under various acts such as the RBI Act, Payments and Settlement Act, and the Information Technology Act among others. Based on it, the committee had recommended making regulation of retail payments independent from the function of RBI to give digital payments boost. It had called for establishing separate Payments Regulatory Board (PRB) as an independent body for retail payments and suggested that RBI’s regulation must be kept only for SIPS (systemically important payment system). 

What RBI says?

According to the global practice both the SIPS and retail payment systems are under the central bank for a variety of reasons including issues of inter-connectivity between the systems and the role of the central bank as the lender of last resort (LOLR). RBI has mooted a monetary-policy-committee-style structure for the PRB, where outcomes are decided independently, but implementation remains with the banking regulator.

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Asia Pacific nations adopt New Delhi Declaration for Urban Plus approach

The sixth edition of Asia Pacific Ministerial Conference on Housing and Urban Development (APMCHUD) held in New Delhi has adopted New Delhi declaration to adopt Urban Plus approach.

This was the first such meeting held to discuss ways of realising the New Urban Agenda that was finalised during the UN Conference on Housing and Sustainable Urban Development (also known as “Habitat III” conference) held in Quito, Ecuador in October 2016. Its theme of conference was ‘Emerging Urban Forms-Policy Reforms and Governance Structures in the Context of New Urban Agenda’. It was attained by representatives of Asia Pacific countries that account for over 55% of global urban population. It adopted Implementation Plan and New Delhi Declaration. The next biennial APMCHUD Conference will be hosted by Iran in 2018. 

New Delhi Declaration
  • Strongly advocated planning for urban and adjoining rural areas in an integrated manner instead of looking at them as independent entities.
  • Called for thorough review of existing policies and formulation of new policies to promote New Urban Agenda adopted at UN Habitat III Conference in Quito, Eucador in October 2016.
  • It stressed on the need for effective governance structures in urban areas noting that governance as the key to sustainable development.
Implementation Plan Recommends
  • Formulation of National Human Settlement Policies to promote inclusive, safe, resilient and sustainable city and human settlements.
  • Land regulation policy mechanisms such as land pooling to ensure inclusive and participatory planning, integration of land use and transportation planning across defined boundaries of cities.
  • Enforcement and incentivasation of timely execution of infrastructure projects, formulation of comprehensive urban parking policies and community participation in urban planning.
  • Adopt urban resilience as criteria for investment to withstand and absorb disasters and shocks and maintain normal services and quickly return to normalcy.

For background: 2016 APMCHUD

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Pradhan Mantri Garib Kalyan Yojana comes into effect

The Pradhan Mantri Garib Kalyan Yojana (PMGKY) notified along with other provisions of Taxation Laws (Second Amendment) Act, 2016 came into effect from 17 December 2016. It will remain open until March 31, 2017.

PMGKY is Union Government’s second income disclosure scheme (IDS) to allow tax evaders to come clean with unaccounted wealth. It provides for 50 per cent tax and surcharge on declarations of unaccounted cash deposited in banks.

Salient features of Scheme
  • Declaration under it can be made by any person in respect of undisclosed income in the form of cash or deposits in an account with bank or post office or specified entity.
  • Declarant of undisclosed income needs to pay 30% tax, 10% penalty and 33% Pradhan Mantri Garib Kalyan pradhan-mantri-garib-kalyan-yojanaCess on the tax, all of which add up to around 50%.
  • Besides, declarant must make mandatory deposit of 25% of undisclosed income in the zero-interest Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 with lock-in period of 4 years.
  • The income declared under it will not be included in the total income of the declarant under the Income-tax (IT) Act for any assessment year.
  • Besides, declarations made under it will be kept confidential and shall not be admissible as evidence under any Act (ex. Wealth-tax Act, Central Excise Act, Companies Act etc.).
  • However, declarant will have no immunity under Criminal Acts mentioned in section 199-O of the Scheme.
  • Non declaration of undisclosed cash or deposit in accounts under this Scheme will render tax, surcharge and cess totalling to 77.25% of such income, if declared in the return of income.
  • In case the same is not shown in the return of income a further penalty @10% of tax shall also be levied followed by prosecution.
Comment

The money or revenue generated from disclosure of unaccounted cash will be used for welfare schemes for the poor. It will be mainly used for projects in irrigation, infrastructure, primary education, primary health, housing, toilets and livelihood so that there is justice and equality.

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