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Critical Topics and Their Significance for the UPSC CSE Examination on October 10, 2024
Daily Insights and Initiatives for UPSC Exam Notes: Comprehensive explanations and high-quality material provided regularly for students
On protests against Vizag steel plant sale
For Preliminary Examination: Current events of national and international importance
For Mains Examination: GS II - Polity & Governance
Context:
Ever since Finance Minister Nirmala Sitharaman announced the 100% strategic sale of the Rashtriya Ispat Nigam Limited (RINL), the corporate entity of the Visakhapatnam Steel Plant (VSP), in January 2021, employees of the plant affiliated to various unions such as AITUC, CITU and INTUC, have protested against the move and stalled all plans of takeover by any private company. The VSP is the only shore-based steel making public sector unit (PSU) in the country.
Read about:
Rashtriya Ispat Nigam Limited (RINL)
What is public sector unit (PSU)?
Key takeaways:
Since Finance Minister Nirmala Sitharaman's announcement in January 2021 about the 100% strategic sale of Rashtriya Ispat Nigam Limited (RINL), the corporate entity of the Visakhapatnam Steel Plant (VSP), plant employees affiliated with unions such as AITUC, CITU, and INTUC have been protesting and halting any takeover attempts by private companies. VSP is the only public sector steel-making unit located by the shore in India.
Current Status of the Plant:
Due to the ongoing protests, neither the Legal Committee nor the Assessment Committee has been able to access the plant, delaying the government’s efforts to issue an Expression of Interest for the sale. As a result, the sale plans have been postponed, and the Union Government has withdrawn its support for the plant.
In the last three years, the plant has faced significant financial losses, and production has dropped sharply, with only one out of three blast furnaces operational. Employee benefits have been reduced, and salaries are delayed by 20 to 30 days each month. The plant is also so financially strained that it cannot even procure imported coking coal for its coke oven from nearby ports. The plant currently employs around 12,600 permanent staff and 14,000 casual workers.
Why is VSP Considered a Legacy Plant?
- VSP has a strong emotional connection with the people of Andhra Pradesh. The struggle for its establishment began in 1963 when Chidambaram Subramaniam, a senior Congress leader, announced plans for a shore-based steel plant in Visakhapatnam.
- On July 1, 1966, the State Assembly, led by Chief Minister Kasu Brahmananda Reddy, passed a unanimous resolution in favor of the plant.
- However, the project saw no progress until Amrutha Rao, a leader from Guntur, started a fast unto death at the Visakhapatnam District Collector’s office in October 1966. This act intensified protests, with students across Andhra Pradesh joining the cause, resulting in state-wide strikes and the tragic loss of 32 lives in November.
- The slogan "Visakha Ukku Andhrula Hakku" (Visakha Steel: The Right of the People of Andhra) resonated across the country, pressuring the Congress-led central government. On April 10, 1967, Indira Gandhi announced in Parliament the decision to establish a steel plant in Visakhapatnam. Land was acquired from 68 villages, and the plant’s first blast furnace was inaugurated on March 20, 1990.
Why Did the Centre Decide to Sell?
- VSP possesses a large land bank of approximately 20,000 acres, valued at around ₹1 lakh crore, which employees claim has drawn interest from private entities for its real estate potential.
- The plant is technologically advanced and has the capacity to expand to 20 million tonnes. It produces high-quality steel and has a strong market presence, with two major ports within a 20 km radius.
- However, the plant has not been allocated captive iron ore or coal mines, a necessity under the Mines and Minerals Act for the sustainability of steel plants. Without this, VSP spends an additional ₹4,000 crore on iron ore at higher prices.
- This financial strain, combined with interest payments on loans amounting to ₹18,500 crore, has weighed the plant down. Despite repeated requests, the Union Government has not granted the plant access to a mine, according to former VSP Chairman Y. Sivasagar Rao.
What Lies Ahead?
- Protesters have two primary demands. First, they want the plant to be granted a captive mine. CPI(M) leader Ch. Narasinga Rao suggests that instead of selling the plant, the Union government should allocate captive mines and write off the loans, given that VSP has already paid over ₹58,000 crore in taxes to the Centre.
- Second, they propose that VSP be merged with the Steel Authority of India Limited (SAIL), which is planning a 20 million tonne expansion requiring ₹6,000 crore in investment.
- If SAIL takes over VSP, restarts all furnaces, increases production, and supplies iron ore from its mines, it would acquire a 7.3 million tonne steel-producing plant. This would benefit SAIL, VSP, and the government, according to VSP employees and union members.
- The strategic sale of VSP has become a political issue and was a significant topic in the 2024 elections. All political parties, including NDA allies like TDP and JSP, as well as the opposition YSRCP, vowed to save the plant and prevent its sale.
- A meeting on October 8 in Delhi, involving the Finance Minister, Steel Minister, and Chief Minister, reportedly discussed a potential revival package or merger with SAIL. However, this discussion has been ongoing for some time, and the future of RINL-VSP remains uncertain
Follow Up Question
1.Which of the following statements about Public Sector Units (PSUs) in India is/are correct?
- A PSU is a company in which the government holds at least 51% of the shares.
- PSUs are categorized into three groups: Maharatna, Navratna, and Miniratna, based on their financial performance and autonomy.
- The Steel Authority of India Limited (SAIL) is a private sector company.
Select the correct answer using the code given below:
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2, and 3
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Answer (A)
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Non-Banking Financial Companies (NBFCs) are financial institutions that provide various banking services but do not hold a banking license. They play a crucial role in the financial system by providing credit, investment, and financial services to businesses and individuals. Here are key features and functions of NBFCs:
Key Features of NBFCs:
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Financial Services: NBFCs offer a wide range of financial services, including loans and advances, asset financing, investment in shares and securities, leasing, and hire purchase.
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Regulation: In India, NBFCs are regulated by the Reserve Bank of India (RBI) under the Reserve Bank of India Act, 1934, but they are not allowed to accept demand deposits, unlike banks.
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Types: NBFCs can be categorized into various types based on their functions:
- Asset Finance Companies: Primarily provide financing for acquiring assets like vehicles, machinery, etc.
- Loan Companies: Provide loans and advances for consumption and other purposes.
- Investment Companies: Primarily engaged in buying and selling securities.
- Infrastructure Finance Companies: Focus on financing infrastructure projects.
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Access to Credit: NBFCs often cater to underserved sectors that may not have access to traditional banking services, providing loans to small and medium enterprises (SMEs), retail customers, and other borrowers.
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Flexibility: They generally have more flexible lending norms compared to banks, allowing them to serve a diverse clientele.
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Default: NPAs arise when borrowers fail to make interest or principal payments on their loans for a certain duration, commonly 90 days.
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Classification: Assets are classified as NPAs based on the following categories:
- Substandard Assets: Assets that are non-performing for less than 12 months.
- Doubtful Assets: Assets that are non-performing for more than 12 months.
- Loss Assets: Assets that are considered uncollectible and are written off or require significant provisioning.
- They cannot engage in the acquisition of securities issued by the government.
- They cannot accept demand deposits like Savings Account.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
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Answer (b)
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For Preliminary Examination: Current events of national and international importance
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The Jammu and Kashmir Reorganisation Act of 2019 established two Union Territories: Ladakh, which does not have a legislative assembly, and Jammu and Kashmir, which has one. This led to amendments in the First Schedule of the Constitution, which enumerates all states and Union Territories, as well as in Article 3, concerning the formation of new states and changes in existing ones.
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Article 239 governs the administration of Union Territories, indicating that "every Union Territory shall be administered by the President, acting through an administrator as deemed appropriate."
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Section 13 of the 2019 Act specifies that Article 239A, which allows for the establishment of local legislatures or councils of ministers for certain Union Territories, will also apply to Jammu and Kashmir.
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The 2019 Reorganisation Act fundamentally changed the governance structure, enhancing the role of the Lieutenant Governor compared to that of the state assembly. This is illustrated by two critical provisions. First, Section 32 outlines the legislative powers of the Assembly, stating that, “subject to the provisions of this Act, the Legislative Assembly may make laws for the whole or any part of the Union Territory of Jammu and Kashmir concerning matters listed in the State List, excluding those related to ‘Public Order’ and ‘Police,’ as well as certain items from the Concurrent List.” Second, Section 36 imposes a significant restriction on financial legislation, stating that any bill or amendment regarding financial obligations of the Union Territory government must receive the Lieutenant Governor’s recommendation before being introduced in the Assembly.
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The Union Territory of Jammu and Kashmir comprises 90 Assembly seats. According to the Jammu and Kashmir Reorganisation Act, 2019, the Lieutenant Governor may nominate two members to the Legislative Assembly to ensure adequate representation of women, based on his judgment.
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In July 2023, an amendment to the Act permitted the nomination of three additional members to the Assembly: two from the Kashmiri migrant community (with one being a woman) and one from the group of “displaced persons from Pakistan-occupied Jammu and Kashmir.”
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The princely state of Jammu and Kashmir was established in March 1846 when the British sold Kashmir to Gulab Singh, the Dogra jagirdar of Jammu, for 7.5 million Nanakshahee rupees following the Treaty of Amritsar after the first Anglo-Sikh War.
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Maharaja Hari Singh, who ruled during India's independence, was a descendant of Gulab Singh. As the British prepared to exit India, princely states were given the choice to join either India or Pakistan or remain independent, although the last option was largely impractical. This independence option appealed to Hari Singh, who envisioned making Kashmir a neutral zone, akin to a “Switzerland of the East.”
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In June 1947, Viceroy Lord Louis Mountbatten visited Srinagar, advising Hari Singh’s prime minister to choose a country for accession. However, he was informed that the state wished to remain independent. Mountbatten also sought to meet with the king but was told at the last moment that Singh was unwell.
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It’s important to note the Boundary Commission’s ruling regarding Gurdaspur. Kashmir was linked to the rest of the subcontinent by three main routes: Rawalpindi-Baramula-Srinagar, Sialkot-Jammu-Banihal Pass, and a “jeepable” dirt road through Gurdaspur. The Gurdaspur district had a majority Muslim population and was anticipated to join Pakistan. If that had occurred, India would have lost significant land connectivity with Kashmir, effectively limiting Hari Singh’s choices.
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On September 27, 1947, Jawaharlal Nehru informed Sardar Patel that the situation in Jammu and Kashmir was “dangerous and deteriorating.” Nehru suspected that Pakistan intended to infiltrate Kashmir and take action when the region was isolated by the approaching winter. Shortly thereafter, on October 22, infiltrators crossed into Kashmir from the North-West Frontier Province.
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In response, Hari Singh requested military assistance from the Indian government. On October 25, top diplomat V.P. Menon traveled to Srinagar, advising Singh to seek safety in Jammu. The following day, Menon returned to Delhi, where a Defence Committee meeting was convened. During this meeting, Governor-General Mountbatten asserted that India should only intervene militarily after Hari Singh had signed the Instrument of Accession. Menon then went back to Jammu and returned with the signed Instrument of Accession
When did the Constitution of Jammu and Kashmir come into force? (UPSC CAPF 2016)
A.26th January 1957
B. 15th August 1947
C. 25th July 1956
D.14th November 1947
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Answer (A)
The Constitution of Jammu and Kashmir came into force on 26th January 1957, establishing the legal framework for the state. Here’s a bit more context:
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- Enactment: The Amendment was passed by the Parliament of India in December 2021 and received Presidential assent shortly thereafter.
- Objective: The Amendment aims to improve the accessibility of safe abortion services, address women's health concerns, and provide legal clarity on abortion-related issues
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Extended Gestational Limits:
- The Amendment allows for medical termination of pregnancy up to 24 weeks for certain categories of women, which includes:
- Survivors of sexual assault or rape.
- Minors.
- Women with physical disabilities.
- Any other vulnerable women as determined by the appropriate authority.
- Previously, the limit was set at 20 weeks
- The Amendment allows for medical termination of pregnancy up to 24 weeks for certain categories of women, which includes:
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Broader Access to Abortion:
- The Amendment aims to improve access to abortion services by allowing qualified healthcare professionals (such as obstetricians, gynecologists, and other medical practitioners) to perform abortions.
- It facilitates the provision of medical abortion services through telemedicine.
1.Which of the following statements regarding the Medical Termination of Pregnancy (MTP) Act, 1971, is/are correct?
- The MTP Act allows for the termination of pregnancy up to 20 weeks with the consent of the woman.
- The MTP Act mandates that only registered medical practitioners can perform the procedure.
- The Act does not allow for the termination of pregnancy in cases of fetal abnormalities.
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2, and 3
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Answer (a)
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| Subject | Topic | Description |
| History | Modern Indian History | Company rule and Crown rule 1773 - 1947 |
| History | Modern Indian History | Fall of Mughals |
| History | Modern Indian History | Establishment of British rule in India |
| History | Modern Indian History | Economic Policies of the British |
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