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17th September Part-3: Daily News Analysis
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Rishab Arora
Graduate in Economics. Gold medal in Dissertation, Prepared various documents on Demonetisation and GST, Share-trading and many more

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  1. CIC wants break-up of how MPLADS funds are utilised (GS-2) Noting that 12,000 crore of the Members of Parliament Local Area Development Scheme (MPLADS) funds remains unspent, the Central Information Commission (CIC) has asked the Lok Sabha Speaker and the Rajya Sabha Chairman to come out with a legal framework to ensure its transparency and hold parliamentarians and political parties accountable for their obligations under the scheme. The MPLADS allots 5 crore per year to each Member of Parliament (MP) to be spent on projects of their choice in their constituency. The scheme is funded and administered through the Union Ministry of Statistics and Programme Implementation (MoSPI). Projects are to be recommended to and implemented by the district-level administration. Central Information Commissioner Sridhar Acharyulu issued interim orders on Sunday in two cases where petitioners had requested details on MPLADS, but were told by the MoSP that the Centre does not maintain constituency-wise, and work-wise details.

  2. Prof. Acharyulu noted that a recent MoSPI report showed that in February 2018, funds allotted to MPLADS but unspent stood at 4,773.13 crore, while 2,920 instalments of 32.5 crore were yet to be released. That resulted in a total backlog of R12,073.13 crore, it said. The CIC's orders asked the leaders of the two Houses of Parliament to consider providing the "necessary legal frame" for the scheme, which would make all Parliamentary parties and MPs answerable and accountable for MPLADS funds as public authorities under the RTI Act to prevent MPLADS irregularities." Transparency must' The framework should make transparency a legal obligation, with all MPs and parties required to present the public and Parliament with a comprehensive report on the number of applications received for their constituency, works recommended, works rejected with reasons, progress of works and details of beneficiaries. Liabilities for any breach of duties should also be imposed, said the order. Further, the framework should prohibit and prevent MPs using the funds for their private works, or diverting them to private trusts or to their own relatives. District administrations must provide regular information-work-wise, MP-wise, and year-wise details on progress which are to be compiled by the MoSPl and made available to the public, sald the order

  3. Centre's steps may not stop rupee sliding: economists The measures announced by Finance Minister Arun Jaitley on Friday to address widening current account deficit and attract inflows to stabilise the currency may not yield result immediately and the rupee could be under further pressure. The steps were primarily aimed at easing conditions related to external commercial borrowings, hedging conditions for infrastructure loans, and relaxing restrictions on masala bonds. The government believes these measures could lead to additional capital flows to the tune of $5 billion-$10 billion and limit currency pressures to some degree. We are doubtful about the impact of such measures in the immediate future," Abheek Barua, chief economist, HDFC Bank said in a note. The rupee went close to 73 per dollar last week, weakening by about 13% in 2018 on the back of rising oil prices and widening current account deficit. Concerns over trade wars have also made emerging market currencies vulnerable, along with the strengthening dollar.

  4. The capital account measures announced are unlikely to result in any significant shift in fund flows in the immediate future since these are better suited when the sentiment in the global market is positive towards emerging markets and when it is relatively easy for emerging market corporates to raise money abroad, Mr. Barua added. Currency experts, while appreciating that the Centre avoided any knee jerk reaction since the primary source of the rupee weakening is coming from external sources, said the rupee could depreciate again and test the 73-to-a-dollar mark. 'Will attract inflows' "It is good that there was no knee-jerk reaction from the government, like NRI deposits schemes etc. because the main reason for the rupee's weakness is coming from external sources. The steps... will help attract inflows in the long run," said Anindya Banerjee, currency strategist at Kotak Securities

  5. The rupee, which had strengthened in the last two trading sessions in anticipation of the measures, could start weakening again. On Friday, it closed at 71.86 to a dollar, appreciating 0.3% over its previous close. "Rupee may depreciate as long as the external factors are in play. It may touch 73 a dollar levels. We expect announcement of the separate dollar window for oil marketing companies which may help the [rupee]" Mr. Banerjee said. The $400 billion of foreign exchange reserves is a source of comfort for the currency but reserves have depleted in the last few months.

  6. 'States may miss FY19 fiscal targets' (GS-3) Funding of farm loan waivers, poll-related spending and other populist measures are likely to ensure that States are set to miss their fiscal consolidation targets budgeted at the beginning of the year, says a report. "Given the factors such as funding of crop loan waivers, election-related spending and the flood relief will see the States miss their fiscal consolidation targets," ICRA wrote in a note. * The States' fiscal deficit is primarily financed by issuing State development loans (SDLs) In April-August of FY19, gross issuance of SDL contracted by 3.4% to 1.32 trillion, primarily led by a sharp decline in issuance by Uttar Pradesh, Maharashtra and Gujarat. * However, excluding these three States, total SDL issuance by the remaining States has grown 14.7% in the first five months of FY19.

  7. Redemption of SDLs The agency also estimates that 1.3 trillion of SDLs are scheduled to be redeemed in FY19, much higher than 50.8 trillion redeemed in FY18. * "Given the sharp rise in the redemption amount, and assuming an annual growth of 10- 20% over the net SDL issuance of 3.4 trillion in FY18, gross SDL issuance may rise to 5- 5.3 trillion in FY19 from 74.2 trillion in FY18," says the report Recently, the Reserve Bank of India had estimated that fiscal deficits of all the 29 States might decline to 2.6% of their gross State domestic product (GSDP) citing their FY19 Budget estimates, from 3.1% in FY18