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DAILY NEWS ANALYSIS

Monthly DNA

12 May, 2021

76 Min Read

China’s population growth slows to slowest rate in decades

GS-II : International Relations China

China’s population growth slows to the slowest rate in decades

  • China’s once-in-a-decade population census has recorded a slowing population growth rate that will likely see China’s population peak — and be overtaken by India’s — by as early as 2025, experts said, with the number of births falling for the fourth consecutive year.
  • The seventh census, released by the National Bureau of Statistics (NBS) in Beijing, noted that 12 million babies were born last year, the lowest number since 1961, a year when China was in the midst of a four-year famine unleashed by Mao Zedong’s Great Leap Forward policy in 1958 that devastated the farm sector and claimed millions of lives.
  • China’s population was 1.41 billion in 2020, according to the census, increasing by 72 million since the last census in 2010, recording a 5.38% growth in this period. The average annual growth was 0.53%.
  • The slowing growth rate, a consequence of China’s stringent family planning rules over decades — known as the “one-child policy” but involving a range of varying restrictions across urban and rural areas — has evoked concerns of a rapidly ageing society and the impact on China’s labour force, and fears that China will, as some experts have said, “get old before it gets rich”.
  • The census recorded 264 million in the age group of 60 and over, up 5.44% since 2010 and accounting for 18.70% of the population. Those in the 15-59 age group were 894 million persons, down by 6.79% since 2010 and accounting for 63.35% of the population.
  • Chinese experts acknowledged the seriousness of the problem, without linking it directly to the history of the Communist Party’s harsh family planning policies, at a time when it is planning to mark its 100th anniversary in July.
  • In the lead-up to the anniversary, China’s Internet regulator said it had deleted more than 2 million posts containing “harmful” discussions of history, the South China Morning Post reported, with the party clamping down on any adverse commentary about its present or past.
  • China loosened family planning rules and allowed couples to have two children in 2016, but that has failed to mark a boom amid changing lifestyles and declining preferences, particularly in urban areas, for larger families.
  • The impact on the labour force and healthcare is a particular concern. China’s workforce in the 15-59 age bracket peaked at 925 million in 2011, the Ministry of Human Resources and Social Security said previously. That number was down to 894 million in this census and would drop to 700 million by 2050, according to the Ministry.
  • The census did not offer a specific year for the population to peak, but experts said that could happen by 2025. “China’s population will peak in the future, but there remains uncertainty as to when specifically it will happen,” Ning Jizhe of the National Bureau of Statistics said. “For the next stage, we should continue to pay attention to changes in population growth and respond actively to risks and challenges in demographic development,” he said.
  • The findings from the census were not entirely dire. The census also shed light on China’s increasingly educated workforce and its rapid pace of urbanisation.
  • The number of people with university education was 218 million, up to 15,467 per 100,000 of the population compared with 8,930 in 2010.
  • The average number of years of schooling for 15 and above increased from 9.08 years to 9.91 years and the illiteracy rate dropped from 4.08% to 2.67%, in part due to policies for nine years of compulsory and free education.
  • The urban population touched 901 million, accounting for 63.89%, up from 49.68% in 2010 with an increase of 236 million urban residents in the last decade.

Source: TH

Pakistan government to set new rules to meet FATF requirements

GS-III : Internal security FATF

Pakistan government to set new rules to meet FATF requirements

  • Pakistan, keen to exit from the grey list of the FATF, is set to introduce new rules relating to anti-money laundering cases and change the prosecution process to meet its remaining tough conditions.
  • Pakistan was put on the grey list by the Paris-based Financial Action Task Force (FATF), the global watchdog for money laundering and terror financing in June 2018 and the country has been struggling to come out of it.
  • The Dawn newspaper reported that the changes being made also include the transfer of investigations and prosecution of anti-money laundering (AML) cases from police, provincial anti-corruption establishments (ACEs) and other similar agencies to specialised agencies.
  • This is part of two sets of rules, including the AML (Forfeited Properties Management) Rules 2021 and the AML (Referral) Rules 2021 under the “National Policy Statement on Follow the Money” approved by the federal Cabinet meeting a few days ago, the report said.
  • These rules and related notifications for certain changes in the existing schedule of the Anti-Money Laundering Act 2010 (AMLA) would come into force immediately, to be followed by the appointment of administrators and special public prosecutors for implementation.
  • Based on these measures, the FATF would conclude if Pakistan has complied with three outstanding benchmarks, out of 27, that blocked its exit from the grey list in February this year.

What is FATF?

  • The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog.
  • The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society.
  • As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
  • With more than 200 countries and jurisdictions committed to implementing them.
  • The FATF has developed the FATF Recommendations, or FATF Standards, which ensure a coordinated global response to prevent organised crime, corruption and terrorism.
  • They help authorities go after the money of criminals dealing in illegal drugs, human trafficking and other crimes. The FATF also works to stop funding for weapons of mass destruction.
  • The FATF reviews money laundering and terrorist financing techniques and continuously strengthens its standards to address new risks, such as the regulation of virtual assets, which have spread as cryptocurrencies gain popularity.
  • The FATF monitors countries to ensure they implement the FATF Standards fully and effectively, and holds countries to account that do not comply.

Functions of FATF

  • The Financial Action Task Force (FATF) was established in July 1989 by a Group of Seven (G-7) Summit in Paris, initially to examine and develop measures to combat money laundering.
  • In October 2001, the FATF expanded its mandate to incorporate efforts to combat terrorist financing, in addition to money laundering.
  • In April 2012, it added efforts to counter the financing of proliferation of weapons of mass destruction.
  • Since its inception, the FATF has operated under a fixed life-span, requiring a specific decision by its Ministers to continue. Three decades after its, creation, in April 2019, FATF Ministers adopted a new, open-ended mandate for the FATF.

Objectives of FATF

  • The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
  • FATF monitors countries' progress in implementing the FATF Recommendations; reviews money laundering and terrorist financing techniques and counter-measures; and, promotes the adoption and implementation of the FATF Recommendations globally.

UN Security Council Resolutions 1267 and 1373

  • The UNSC resolution 1267 was adopted unanimously on October 15, 1999.
  • It is a consolidated list of people and entities that UN has determined as being associated with Al Qaeda or the Taliban, and laws which must be passed within each member nation to implement the sanctions.
  • The UNSC Resolution 1373 was adopted on 28th September 2001.
  • It declares international terrorism a threat to international peace and security and imposes binding obligations on all UN member states.

Source: TH

1.5 Lakh units of Oxycare Systems to be procured through PM CARES

GS-III : S&T COVID-19

1.5 Lakh units of Oxycare Systems to be procured through PM CARES

Background:

  • In India, the spread of coronavirus has been increasing and is posing serious challenges for the health and economic security of millions of people.
  • There have been calls for citizen donations to support the government in the wake of this emergency with people from all walks of life expressing their desire to donate to India’s war against COVID-19.

Details:

  • Catering to the need for having a dedicated national fund with the primary objective of dealing with any kind of emergency or distress situation, and providing relief to the affected, a new fund has been set up.
  • The fund will be a public charitable trust under the name of the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund).
  • Prime Minister is the Chairman of this trust and its Members include Defence Minister, Home Minister and Finance Minister.
  • The new fund will not only cater to the immediate crisis posed by COVID-19 but also similar distressing situations if they occur in the future.
  • PM-Cares Fund accepts micro-donations too.

Contribution to PM - CARES Fund will Qualify as CSR Expenditure

  • The Ministry of Corporate Affairs has clarified that contributions by companies towards the PM-CARES Fund will count towards mandatory Corporate Social Responsibility (CSR) expenditure.
  • Under the Companies Act, 2013, companies with a minimum net worth of Rs 500 crore or turnover of Rs 1,000 crore, or net profit of Rs 5 crore are required to spend at least 2% of their average profit for the previous three years on CSR activities every year.
  • The term "Corporate Social Responsibility" in general can be referred to as a corporate initiative to assess and take responsibility for the company's effects on the environment and impact on social welfare.

Existing Similar Fund: Prime Minister’s National Relief Fund (PMNRF)

  • This fund was instituted in 1948 by then Prime Minister Jawaharlal Nehru, to assist displaced persons from Pakistan. The fund is currently used primarily to tackle natural calamities like floods, cyclones and earthquakes. The fund is also used to help with medical treatment like kidney transplantation, cancer treatment and acid attack.
  • The fund consists entirely of public contributions and does not get any budgetary support. It accepts voluntary contributions from Individuals, Organizations, Trusts, Companies and Institutions etc.
  • The corpus of the fund is also invested in various forms with scheduled commercial banks and other agencies. Disbursements are made with the approval of the Prime Minister.
  • The fund is recognized as a Trust under the Income Tax Act and the same is managed by the Prime Minister or multiple delegates for national causes.
  • Contributions towards PMNRF are notified for 100% deduction from taxable income under section 80(G) of the Income Tax Act, 1961.

What is the news?

  • 1.5 Lakh units of Oxycare Systems to be procured through PM CARES
  • PM-CARES Fund to procure 1,50,000 units of Oxycare System at a cost of Rs 322.5 Crore.
  • Comprehensive system developed by DRDO to regulate oxygen being administrated to patients based on the sensed values of their SpO2 levels.
  • DRDO has transferred the technology to multiple industries in India who will be producing the Oxycare Systems for use all across India.
  • Oxycare system reduces the work load and exposure of healthcare providers by eliminating the need of routine measurement and manual adjustments of Oxygen flow.

Source: PIB

PLI scheme “National Programme on Advanced Chemistry Cell Battery Storage”

GS-III : S&T S&T

Production Linked Incentive scheme “National Programme on Advanced Chemistry Cell Battery Storage”

  • The Cabinet has approved the proposal of the Department of Heavy Industry for the implementation of the Production Linked Incentive (PLI) Scheme 'National Programme on Advanced Chemistry Cell (ACC) Battery Storage’ for achieving manufacturing capacity of Fifty (50) Giga Watt Hour (GWh) of ACC and 5 GWh of "Niche" ACC with an outlay of Rs.18,100 crore.
  • Advanced Chemistry Cell (ACCs) are the new generation of advanced storage technologies that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required.
  • The consumer electronics, electric vehicles, advanced electricity grids, solar rooftop etc. which are major battery consuming sectors are expected to achieve robust growth in the coming years.
  • While several companies have already started investing in battery packs, though the capacities of these facilities are too small when compared to global averages, but there still is negligible investment in manufacturing, along with value addition, of ACCs in India.
  • ACC battery Storage manufacturers will be selected through a transparent competitive bidding process. The manufacturing facility would have to be commissioned within a period of two years. The incentive will be disbursed thereafter over a period of five years.
  • Each selected ACC battery Storage manufacturer would have to commit to set-up an ACC manufacturing facility of minimum five (5) GWh capacity and ensure a minimum 60% domestic value addition at the Project level within five years.

Benefits

  • All the demand of the ACCs is currently being met through imports in India. The National Programme on Advanced Chemistry Cell (ACC) Battery Storage will reduce import dependence.
  • It will also support the Atmanirbhar Bharat initiative.

The outcomes/ benefits expected from the scheme are as follows:

  • Setup a cumulative 50 GWh of ACC manufacturing facilities in India under the Programme.
  • Direct investment of around Rs.45,000 crore in ACC Battery storage manufacturing projects.
  • Facilitate demand creation for battery storage in India.
  • Facilitate Make-ln-lndia: Greater emphasis upon domestic value-capture and therefore reduction in import dependence.
  • Net savings of Indian Rs. 2,00,000 crore to Rs.2,50,000 crore on account of oil import bill reduction during the period of this Programme due to EV adoption as ACCs manufactured under the Programme is expected to accelerate EV adoption.
  • The manufacturing of ACCs will facilitate demand for EVs, which are proven to be significantly less polluting. As India pursues an ambitious renewable energy agenda, the ACC program will be a key contributing factor to reduce India's Green House Gas (GHG) emissions which will be in line with India's commitment to combat climate change.
  • Import substitution of around Rs.20,000 crore every year.
  • Impetus to Research & Development to achieve higher specific energy density and cycles in ACC.
  • Promote newer and niche cell technologies.

Source: PIB

Sovereign Gold Bonds

GS-III : Economic Issues Gold investment

Sovereign Gold Bonds

  • This scheme is for those individuals who intend to purchase gold for investment.
  • These bonds are issued by RBI on behalf of Govt on payment of Rs denominated in gms of Gold.
  • The interest not fixed (unlike G-secs): given on the prevailing price of Gold.
  • Like G-secs, they are backed by a Sovereign guarantee.

Gold Monetization Scheme, 2015

  • The scheme was launched in November 2015 along with sovereign gold bonds and India gold coins.
  • It facilitates the depositors of gold to earn interest on their metal accounts. Once the gold is deposited in a metal account, it starts earning interest on the same.
  • Under the scheme, a depositor gets 2.25% interest annually for a short-term deposit of one year to three years. Medium- and long-term deposits get a 2.5% interest rate.
  • Objective: To mobilize the gold held by households and institutions in the country to put this gold into productive use and in the long run to reduce the current account deficit by reducing the country’s reliance on imports of gold to meet the domestic demand.
  • Along with GMS, a Sovereign Gold Bond Scheme (an alternative to purchasing metal gold) and the development of the Indian Gold Coin, were also announced.
  • Banks may accept the deposit of gold at designated branches, especially from larger depositors.

Click here for the analysis of the Gold Monetization Scheme

Source: PIB

Money Laundering UPSC

GS-III : Internal security Money laundering

Money Laundering

What is Money Laundering?

  • Money Laundering refers to converting illegal earned money into legitimate money.
  • The government does not get any tax on the money because there is no accounting of the black money.
  • So Money Laundering is a way to hide illegally acquired money.
  • The term "money laundering" originated from the Mafia group in the United States of America. Mafia groups have made huge amounts of extortion, gambling, etc. and this money is shown as legal money.
  • In India, "money laundering" is popularly known as Hawala transactions.
  • According to the IMF, global Money Laundering is estimated between 2 to 5% of World GDP.

Components of Money Laundering:

It involves three steps: placement, layering and integration.

  • Placement puts the "dirty money" into the legitimate financial system.
  • Layering conceals the source of the money through a series of transactions and bookkeeping tricks.
  • In the case of integration, the now-laundered money is withdrawn from the legitimate account to be used for criminal activities.
  • Some examples of Money laundering are Smurfing, Shell companies, Round tripping, Gambling, etc.

Impacts of money Laundering:

  • Economic Impact:
  1. Undermines integrity of financial markets.
  2. Loss of control of economic policy
  3. Economic distortion and instability
  4. Loss of revenue
  • Social Impacts:
  1. Increased criminality
  2. Decreases human development
  3. Misallocation of resources
  4. Affects trust of local citizens in their domestic financial institutions.
  • Political Impacts:
  1. Initiates political distrust and instability
  2. Criminalisation of politics

The Legal Framework in India to deal with Money laundering:

In India, the specific legislation dealing with money laundering is the Prevention of Money-Laundering Act((PMLA), 2002

  • It forms the core of the legal framework put in place by India to combat Money Laundering.
  • The provisions of this act are applicable to all financial institutions, banks(Including RBI), mutual funds, insurance companies, and their financial intermediaries.
  • The law was enacted to combat money laundering in India and has three main objectives :
  1. To prevent and control money laundering.
  2. To provide for confiscation and seizure of property obtained from laundered money.
  3. To deal with any other issue connected with money-laundering in India.
  • Under the PMLA Act, the Enforcement Directorate is empowered to conduct a Money Laundering investigation.
  • Apart from the provisions of PMLA, there are other specialised provisions such as RBI/SEBI/IRDA anti-money laundering regulations.

PMLA (Amendment) Act, 2012

  • Adds the concept of ‘reporting entity’ which would include a banking company, financial institution, intermediary etc.
  • PMLA, 2002 levied a fine up to Rs 5 lakh, but the amendment act has removed this upper limit of Rs. 5 lakh.
  • It has provided for provisional attachment and confiscation of property of any person involved in such activities.

Other methods to control Money Laundering:

  • Narcotic Drugs and Psychotropic Substances Act, 1985: It provides for the penalty of property derived from, or used in illegal traffic in narcotic drugs.
  • Financial Intelligence Unit-IND: It is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister.
  • Enforcement Directorate (ED):
  1. It is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India.
  2. One of the main functions of ED is to Investigate offences of money laundering under the provisions of Prevention of Money Laundering Act, 2002(PMLA).
  3. It can take actions like confiscation of property if the same is determined to be proceeds of crime derived from a Scheduled Offence under PMLA, and to prosecute the persons involved in the offence of money laundering.
  • India is a full-fledged member of the FATF and follows the guidelines of the same.

Source: Aspire IAS Notes

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