18th May

• ‘No profiteering at the cost of farmer’
  The Supreme Court has declared land a “scarce natural resource” and forbidden the government from using its powers of compulsory land acquisition to strip poor farmers of their livelihood only to transfer such land to private builders to feed their business interests.
  What has the court said?
  • Land, acquired in the name of residential or commercial projects, should revert to its rightful owner — the farmer — in case the project does not take off. No third party has any rights on the land.
  • There is no objection to acquisition of land for a compelling public purpose or regulated development of colonies, but release of land to a builder who comes into the picture after acquisition notification tantamounts to acquisition for a private purpose.
  • It amounts to transfer of resources of the poor for the benefit of the rich. It amounts to permitting profiteering at the cost of livelihood and existence of a farmer.
  • If the law allows the State to take land for housing needs, the State itself has to keep the title or dispose of land consistent with Article 14 after completion of acquisition. If after initiation of acquisition, process is not to be completed, land must revert to the owner and not to anyone else directly or indirectly.
  Background:
  These observations were made by the court during a landmark ruling which quashed the transfer of 280 acres of land acquired by Haryana government from farmers in Rohtak to a private builder in 2006 for developing a residential colony.
  • In 2002, the Haryana Urban Development Authority (HUDA) proposed to acquire around 850 acres of land in Rohtak. However, in April 2003, only 441 acres were acquired. The state later released about 280 acres of the acquired land to Uddar Gagan Properties Limited in June 2006.
  Sources: the hindu.
  N.K. Singh to head panel to review FRBM Act
  The government has announced the constitution of a panel under Former Revenue Secretary and Rajya Sabha MP N.K. Singh to review the Fiscal Responsibility and Budget Management (FRBM) Act of 2003.
  Details:
  • The committee will review the working of the Act in the context of the uncertainity and volatility of global economy and suggest changes that are in tune with the broad objective of fiscal consolidation.
  • The committee will examine whether a broad fiscal deficit range should be adopted in place of specific target. It will also examine the need and feasibility of aligning the fiscal expansion or contraction with credit contraction or expansion, respectively in the economy.
  • The committee will also provide an assessment of the impact of its recommendations on the government deficit and FRBM parameters.
  Background:
  The decision to form the committee was announced by Finance Minister Arun Jaitley during the presentation of Union Budget 2016-17.  
  Sources: the hindu.
• SBI begins merger with associate banks
  The State Bank of India (SBI), the country’s largest lender, has kick-started the process of merging its five associate banks with itself at one go. The merger is expected to be completed by the end of the current financial year.
  • The merger move comes after the government announced a road map for bank consolidation during the budget.
  • The five associate banks are State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore.
  Key facts:
  • The merged entity will have one-fourth of the deposit and loan market, as the SBI’s market share will increase from 17% to 22.5-23%.
  • The total business of the merged entity will be over Rs. 35 lakh crore.
  • Also, SBI’s staff strength will increase by 35-49% while branch network will increase by 6,000. At present, the SBI alone has more than 15,000 branches in the country.
  Benefits of merging:
  • The merger will make it a bigger bank and will bring in a lot of efficiencies.
  • Now there are a lot of overlaps among associates. Merging is expected to end these overlaps.
  • This might also be helpful in funding the huge infrastructure financing needs of the country.
  • If the merger goes through, the combined entity will be ranked as the 45th largest bank globally in terms of assets, up 7 ranks from its current 52nd position.
  • Post the merger, the cost-to-income ratio will come down by 100 basis points a year. The cost-to-income ratio is nothing but the company’s costs in relation to its income. To get the ratio, operating cost of a company has to be divided by its operating income.
  Way ahead:
  • The SBI will have to create and expand its present structure to ensure smooth operations of the merged entity.
  • The SBI has to create a post-merger structure. Controlling the branches will be crucial.
  Previous mergers:
  SBI first merged associate State Bank of Saurashtra with itself in 2008. Two years later in 2010, State Bank of Indore was merged.
  Sources: the hindu.
• The J&K Wildlife Department has recorded its first ever sighting of a group of eight Himalayan brown bearsin Kargil’s Drass Sector. This is a rare record. In the recent past, no such sighting has ever been reported from J&K, Himachal Pradesh and Uttarakhand, where these animals are distributed. The sighting of such relatively large numbers of Himalayan brown bears in just one wildlife zone out of four major areas of Suru, Zanskar, Drass and Kargil in the Ladakh region is a positive indication. Brown bear is on the International Union for Conservation of Nature and Natural Resources’ list of vulnerable animals.   

• May 16, 2016 marks the 100 years since the signing of the Sykes-Picot Agreement, the secret Anglo-French pact reached during the First World War that proposed splitting the Middle East up into zones of foreign control. Also known as the Asia Minor agreement, Sykes-Picot defined the borders of the modern states of Syria and Iraq, handing the former over to the French and the latter over to the UK. The impact of the agreement is still being felt today. Most recently, the Islamic State militant group has made the elimination of the borders defined by Sykes-Picot a crucial part of its propaganda. The agreement was concluded in secret partly because it represented a betrayal of promises the British government had already made to Hussein bin Ali, the sharif of Mecca. The Arab leadership, under the command of Sharif Hussein, was promised complete independence following the war, in exchange for supporting the allies against the Ottomans.