Pradhan Mantri Jan ArogyaYojana (PM-JAY)
GS Prelims and Mains GS-II – Health
Ayushman Bharat-Pradhan Mantri Jan ArogyaYojana (PM-JAY) has completed one year and has recorded 46.4 lakh hospital treatments worth ₹7,500 crore
60% of the amountunder the scheme is being spent on tertiary care.
PM-JAY is the flagship scheme of the government with an aim to bring quality healthcare to around 50 crore poor and vulnerable Indians.
The scheme gives annual healthcare benefits of up to ₹5 lakhs for every entitled family.
The scheme has resulted in saving of over ₹12,000 crores to the beneficiary families.
Currently, 32 States and Union Territories are implementing the scheme and more than 10 crore beneficiary cards have been issued.
PM-JAY aims to ensure improved healthcare delivery, through a combination of government hospitals and strategic purchasing of services from private hospitals, in health care deficit areas.
Social stock exchanges
GS Prelims and Mains GS-II- Economy
SEBI has constituted a working group on Social Stock Exchanges (SSE) under the chairmanship of Ishaat Hussain.
The working group shall examine and make recommendations with respect to possible structures and mechanisms, within the securities market domain, to facilitate the raising of funds by social enterprises and voluntary organizations
In 2019-20 Union Budget, Finance Minister had proposed a social stock exchangewithin the ambit of SEBI, for social enterprises and voluntary organisations working for social welfare to help them raise capital through debt, equity and mutual fund.
A social stock exchange, broadly, is understood as a platform that allows investors to buy shares in a social enterprise that has been vetted by the exchange.
In London, similar type of platform acts more as a directory connecting social enterprises with potential investors.
While in Canada the SVX is an online platform where even retail investors can invest in funds or companies with social impact.
Participatory Guarantee Scheme (PGS)
GS Prelims and Main GS-III – Food processing
PGS is a process of certifying organic products, which ensures that their production takes place in accordance with laid-down quality standards. The certification is in the form of a documented logo or a voluntary statement.
PGS is a “quality assurance initiative that is locally relevant, emphasize the participation of stakeholders, including producers and consumers, and (which) operateoutside the framework of third-party certification”.
Four pillars of PGS :The government’s 2015 PGS manual underlines that the system in India is based on “participatory approach, a shared vision, transparency and trust”.
The advantages of PGS over third-party certification
Procedures are simple, documents are basic, and farmers understand the local language used.
Because peer appraisers live in the same village, they have better access to surveillance; peer appraisal instead of third-party inspections also reduces costs
Mutual recognition and support between regional PGS groups ensures better networking for processing and marketing.
Unlike the grower group certification system, PGS offers every farmer individual certificates, and the farmer is free to market his own produce independent of the group.
The limitations of PGS are:
Individual farmers or group of farmers smaller than five members are not covered under PGS. They either have to opt for third party certification or join the existing PGS local group.
PGS ensures traceability until the product is in the custody of the PGS group, which makes PGS ideal for local direct sales and direct trade between producers and consumers.
10 public sector banks to be merged into four
Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Inclusive growth and issues arising from it.
Finance Minister Nirmala Sitharaman announced consolidation of public sector banks: 10 public sector banks to be merged into four.
Under the scheme of amalgamation, Indian Bank will be merged with Allahabad Bank (anchor bank – Indian Bank); PNB, OBC and United Bank to be merged (PNB will be the anchor bank); Union Bank of India, Andhra Bank and Corporation Bank to be merged (anchor bank – Union Bank of India); and Canara Bank and Syndicate Bank to be merged (anchor bank – Canara Bank).
In place of 27 public sector banks in 2017, now there will be 12 public sector banks after the latest round of consolidation of PSU banks.
Benefits of Merger
The consolidation of PSBs helps in strengthening its presence globally, nationally and regionally.
Gives capital but also give good governance.
It has the potential to reduce operational costs due to the presence of shared overlapping networks. And this enhanced operational efficiency will reduce the lending costs of the banks.
All merged banks in a particular bucket share common Core Banking Solutions (CBS) platform synergizing them technologically.
Core Banking Solutions (CBS) can be defined as a solution that enables banks to offer a multitude of customer-centric services on a 24×7 basis from a single location, supporting retail as well as corporate banking activities.(UPSC prelims )
Larger banks have a better ability to raise resources from the market rather than relying on State exchequer.
The loan tracking mechanism in PSU banks is being improved for the benefit of customers.
Monitoring would become easier for the government.
The burden on the central government to recapitalize the public sector banks again and again will come down substantially.
The potential benefits would take several years to show up and, meanwhile, the turbulence in the banks could take a toll on the real economy.
The merger move demonstrates once again the lackadaisical approach of policy planners in implementing sensible banking reforms in Public Sector Banks (PSBs), first mooted by the Narasimham Committee
Narasimham committee had cautioned against merging weak banks, the government has ended doing precisely that.
The consolidation should have been a gradual and calibrated exercise resulting in a smaller number of well-capitalised and professionally managed PSBs with a sound governance structure..
Ex: SBI had managed the ABs over the years with its own senior team, and all associates had already been functioning on common technology platform
A key concern about merging the ten PSBs into four in one stroke is a lack of clear articulation of the rationale behind bringing disparate and weak banks together, some of whom were still under the Reserve Bank of India’s Prompt Corrective Action (PCA).
Merger announcements generally trigger confusion, anxiety and insecurity in staff, leading to a slowdown in business.
The post-merger scale economies that large international banks seek to achieve with ruthless measures are not feasible in India.
Prompt Corrective Action or PCA is a framework under which banks with weak financial metrics are put under watch by the RBI. The PCA framework deems banks as risky if they slip below certain norms on three parameters — capital ratios, asset quality and profitability.
What should have been done?
reverse the decline in the PSBs’ Return on Equity (RoE) after investing considerable sums in bringing them on a common technology platform
introducing better risk management measures.
The merged entities should become agile and capable of meeting the challenges in retail and mass market segments from private players and open banking sources.
Measures to smoothen the mergers:
it needs to be ensured that there is no leadership vacuum in the anchor banks.
The technical skills needed for integration planning, transforming business support functions and value build-up have to be cultivated.
culturally integrate the expanded workforce through sustained training initiatives.
The practice over the years of shuffling senior executives from one PSB to another has done more harm than good.(which must be stopped)
Recruit professionals from the market in key areas of technology, HR and risk management, in all of which PSBs are grossly under-equipped.
A buoyant exercise of recruitment and training is vital.
the government should actively plan steps to offset a possible slow expansion in bank credit in the near term.
Non-Banking Financial Institutions (NBFCs), which have a better understanding of the market needs, need to be tapped to ensure better credit flow
the government should resolve the tangles in the ownership of the merging PSBs in insurance, asset management and other ventures.
the government should consider converting a few ‘weak’ PSBs outside the merger into regional banks.(one of the recommendation of narasimham committee)
Narasimham committee (1991 and 1998) suggested merger of strong banks both in public sector and even with the developmental financial institutions and NBFCs.
Khan committee in 1997 stressed the need for harmonization of roles of commercial banks and the financial institutions.
While such consolidation can result in handsome productivity gains, what matters is the quality of execution by a stable and committed leadership, aided by a shrewd and benign ownership.
Mergers should be carried out with right banks for the right reasons since the bad loan problem has plunged many public sector banks in an unprecedented crisis.
Along with merger the focus should be on adequate reforms in governance and management of these banks.