What’s in today’s article?

• Why in News?
• What is CLSA (Credit Lyonnais Securities Asia)?
• CLSA Shifts Focus Back to India Amid US-China Trade Tensions
• Why CLSA Bets on India?
• CLSA Highlights Key Risks for Indian Equities

Why in News?

In a strategic shift, Hong Kong-based brokerage CLSA increased its India allocation to 20% overweight, reversing its October stance favoring China. This change follows Donald Trump’s US Presidential victory and escalating US-China trade tensions, with Trump proposing up to 60% tariffs on Chinese imports during his campaign.

Despite China's recent $1.4 trillion stimulus measures, CLSA downgraded China to "equal weight," citing underwhelming economic packages and trade uncertainties. Meanwhile, Indian equities are expected to outperform, even as net foreign investor selling in India reached $14.2 billion since early October, nearly offsetting prior gains.

What is CLSA (Credit Lyonnais Securities Asia)?

• CLSA (Credit Lyonnais Securities Asia) is a leading Hong Kong-based brokerage and investment group known for its equity research, sales, and trading services.
• Established in 1986, it provides financial advisory and capital markets expertise across Asia-Pacific and global markets, focusing on delivering insights to institutional investors.

CLSA Shifts Focus Back to India Amid US-China Trade Tensions

• India’s Resilience to Trump’s Trade Policies
  • CLSA highlighted India’s relative insulation from Trump’s aggressive trade policies compared to China, making Indian equities a safer bet.
  • Experts believe Trump’s actions would not significantly impact India’s exports. Despite India's high valuations, CLSA finds them "a little more palatable" now.
• Reversal of China Strategy
  • CLSA expressed skepticism about China's equity rally sustainability.
  • It reversed its October decision to increase China exposure, reducing its allocation back to benchmark weight.
  • This shift comes amid underwhelming Chinese stimulus efforts, which reflect risk management rather than growth-oriented policies.
• China’s Economic Challenges
  • China faces growing headwinds from escalating trade tensions and subdued stimulus measures.
  • Trump's proposed 60% tariffs and hawkish cabinet appointments signal more aggressive containment policies, potentially disrupting Chinese exports and equity markets.
  • Despite Beijing’s $1.4 trillion stimulus package, CLSA doubts its adequacy to ensure economic outperformance.

Why CLSA Bets on India?

• Market correction in India
  • India’s equities have corrected nearly 12% since September, creating an attractive buying opportunity for investors seeking scalable growth in emerging markets.
  • CLSA believes India's structural growth potential and limited trade exposure to Trump’s policies make it a compelling choice for long-term investments.
• Robust Forex Reserves Shield the Rupee
  • The Reserve Bank of India’s $700 billion forex reserves serve as a strong buffer for defending the rupee through active interventions, enhancing economic resilience amidst external shocks.
• Resilient Corporate Earnings Outlook
  • While Q2 FY25 earnings momentum has softened, the outlook for Indian corporates remains strong, supported by a domestically driven equity market.
  • CLSA noted a consistent link between India’s corporate earnings growth and economic output changes, unlike in other emerging markets.

CLSA Highlights Key Risks for Indian Equities

• Sensitivity to Energy Prices
  • India's heavy reliance on energy imports—86% of oil, 49% of natural gas, and 35% of coal—makes it vulnerable to global energy price volatility.
  • CLSA expressed concerns over potential supply disruptions due to Iran-Israel tensions, which could lead to a risk premium in oil prices.
• Risks from Record Primary Issuances
  • The Indian equity market faces a key risk from the acceleration in primary issuances, including IPOs and secondary offerings, which totaled $66 billion in October.
  • These issuances, now 1.5% of market cap, approach levels historically linked to peaks in secondary market momentum, potentially dampening investor sentiment in the near term.
  • An acceleration in primary issuances, like IPOs and secondary offerings, can dilute existing share values, divert investor funds from secondary markets, and saturate market supply.
  • This often dampens demand, affecting overall market momentum and valuations negatively.
• Appetite of retail investors
  • India has a strong and growing appetite for retail investors, driven by several factors such as:
    • Increasing Participation due to easier access through online trading platforms and mobile apps.
    • Systematic Investment Plans (SIPs)
    • Rising Financial Awareness
    • Government Reforms: Initiatives like tax incentives on equity-linked savings schemes (ELSS) and dematerialization of securities have boosted retail investor confidence.
    • Pandemic Shift - During the pandemic, low interest rates and surplus liquidity prompted many first-time investors to explore stock markets, leading to record Demat account openings.
  • An excessive influx of retail investors often leads to speculative trading, inflated valuations, and increased market volatility.
  • Such behavior can destabilize the market, creating price bubbles and misalignments that may not reflect fundamental economic or corporate performance, posing risks to long-term stability.

Q.1. Why did CLSA shift focus to Indian equities amid US-China trade tensions?

CLSA increased its India allocation due to India's resilience to Trump's trade policies, relative insulation from tariffs, and the recent market correction. Despite high valuations, CLSA believes India offers scalable growth, making it an attractive long-term investment.

Q.2. What are the key risks for Indian equities highlighted by CLSA?

CLSA identified risks such as India's reliance on energy imports, potential supply disruptions from geopolitical tensions, and the acceleration of primary issuances like IPOs, which could dilute existing share values and dampen market momentum. Additionally, the growing appetite of retail investors poses risks to market stability.

News: Hong Kong-based brokerage firm CLSA goes ‘overweight’ on India, reverses call on China after Trump | CLSA | Times of India

What’s in today’s article?

• Why in News?
• Jeevan Pramaan
• Pensioners in India
• Generation of Digital Life Certificates (DLCs)
• Campaign Takeaways

Why in News?

Pensioners, including retirees from government, Defence, Railways, PSUs, and educational institutions, must submit a life certificate annually in November to continue receiving pensions.

Since 2014, Digital Life Certificates (DLCs) via the Jeevan Pramaan system allow online submission without visiting banks or post offices.

The Department of Pension and Pensioners’ Welfare (DoPPW) is running its third DLC campaign from November 1-30, with 1,900 camps to assist pensioners. Physical submission of life certificates at banks or post offices remains an option for those who prefer it.

Jeevan Pramaan

• About
  • Jeevan Pramaan is a digital life certificate initiative launched by the Government of India in 2014.
  • It allows pensioners to submit their life certificates online, eliminating the need for physical visits to pension-disbursing authorities.
• Nodal Ministry
  • The initiative is overseen by the Ministry of Personnel, Public Grievances, and Pensions through the Department of Pension and Pensioners’ Welfare (DoPPW).
• Features:
  • Convenience: Enables pensioners to submit life certificates from anywhere.
  • Digital Access: Certificates are directly sent to pension-disbursing authorities via a digital platform.
  • Wide Reach: Facilitates submission at banks, post offices, and through biometric devices.
  • Campaigns: Annual campaigns (e.g., in November) with camps to assist pensioners in generating DLCs.
• Challenges:
  • Digital Divide: Limited access for pensioners in rural or remote areas lacking digital literacy or internet connectivity.
  • Technical Glitches: Biometric authentication failures due to age-related issues like faded fingerprints.
  • Awareness: Some pensioners are unaware of the digital system and continue with physical submissions.

Pensioners in India

• Number
  • As of March 31, 2024, there were 64.88 crore central government pensioners.
  • This includes 10.09 lakh civilian pensioners, 31.92 lakh Defence pensioners, 15.25 lakh Railways pensioners, 4.56 lakh telecom pensioners, and 3.04 lakh postal pensioners.
• Jeevan Pramaan numbers
  • During last year’s Digital Life Certificate (DLC) campaign, 1.47 crore certificates were generated, including 45.46 lakh from central government pensioners.
  • This year, over 50 lakh central government pensioners are expected to participate in the November campaign camps.

Generation of Digital Life Certificates (DLCs)

• Authentication Methods
  • The Jeevan Pramaan portal uses Aadhaar for biometric authentication, which can be done by pensioners on their own or at a camp.
  • Since 2021, face authentication has been introduced as an alternative.
  • To generate a DLC, pensioners need a linked Aadhaar, mobile number, and Aadhaar registration with the pension disbursing authority.
  • If using the app or website independently, a biometric device is required.
• Campaign and Participation
  • Camps are being held in 800 cities across India and at Indian missions abroad, with post offices and banks also organizing their own camps.

Campaign Takeaways

• Face Authentication: In the first 11 days of the campaign, 31.02% of pensioners opted for face authentication, a significant increase from less than 20% last year.
• DLC Generation: Between November 1-11, 48.10 lakh DLCs were generated, with 63% using fingerprint authentication.
• Age-wise Distribution: In the first week, 45% of DLCs were generated for pensioners aged 60-70 years, 28% for those aged 70-80, and 21% for those below 60.
• Regional Distribution: The highest number of DLCs were generated in Maharashtra, followed by Tamil Nadu, West Bengal, Uttar Pradesh, and Karnataka.
• Impact: The campaign's success marks significant digital empowerment for pensioners, reducing the need for physical visits to pension offices every November.

Q.1. What is Jeevan Pramaan, and how does it help pensioners?

Jeevan Pramaan is a digital life certificate initiative launched in 2014, allowing pensioners to submit their certificates online. It eliminates the need for physical visits to banks and post offices, providing a convenient, digital solution for pensioners across India.

Q.2. What challenges does the Jeevan Pramaan system face?

The main challenges include the digital divide in rural areas, where pensioners may lack internet access or digital literacy, and technical issues like biometric authentication failures due to age-related problems, such as faded fingerprints.

News: In ‘life certificate’ month, how Govt’s Jeevan Pramaan has been faring

What’s in today’s article?

• About Bandhavgarh National Park
• About National Green Tribunal
• Mandate of NGT
• NGT’s Power to Initiate Suo Moto Action
• News Summary

About Bandhavgarh National Park

• Bandhavgarh National Park, located in the Umaria district of Madhya Pradesh, is one of the country’s most renowned wildlife reserves.
• Known for its high density of Bengal tigers and rich biodiversity, the park is a major attraction for wildlife enthusiasts and conservationists.
• Geography and Terrain:
  • Location: Situated in the Vindhya Hills of Madhya Pradesh.
  • Area: Covers an area of approximately 1,536 square kilometres, including its buffer zones.
  • Landscape: Features a mix of rugged hills, dense forests, grasslands, and meadows, with the Bandhavgarh Fort perched atop a prominent hill.
  • Water Bodies: The park has several perennial streams and waterholes, ensuring a consistent water supply for its wildlife.
• Flora and Fauna:
  • Flora:
    • Predominantly covered with Sal forests, along with grasslands and bamboo stretches.
    • The park also boasts medicinal plants and diverse tree species such as Dhobin, Tendu, and Saja.
  • Fauna:
    • Tigers: Bandhavgarh is famous for its tiger population, with one of the highest densities in the world.
    • Other Mammals: Includes leopards, sloth bears, wild boars, jackals, and various species of deer like sambar and chital.
    • Birds: Home to over 250 bird species, including Indian rollers, crested serpent eagles, and paradise flycatchers.
    • Reptiles: Houses various snakes, lizards, and other reptiles.

About National Green Tribunal

• The National Green Tribunal (NGT) was established in 2010 under the National Green Tribunal Act, 2010.
• Objectives:
  • Effective and expeditious disposal of cases that are related to the protection and conservation of the environment, forests, and other natural resources.
  • To give relief and compensations for any damages caused to persons and properties.
  • To handle various environmental disputes involving multi-disciplinary issues.
• After Australia and New Zealand, India became the third country in the world to establish a specialized environmental tribunal.
• The Tribunal is not bound by the procedure laid down under the Code of Civil Procedure 1908, but shall be guided by ‘principles of natural justice'.
• An order/decision/award of the Tribunal is executable as a decree of a civil court.

Mandate of NGT

• The NGT has the power to hear all civil cases relating to environmental issues and questions that are linked to the implementation of laws listed in Schedule I of the NGT Act. These include the following:
  • Water (Prevention and Control of Pollution) Act, 1974
  • Water (Prevention and Control of Pollution) Cess Act, 1977
  • Forest (Conservation) Act, 1980
  • Air (Prevention and Control of Pollution) Act, 1981
  • Environment (Protection) Act, 1986
  • Public Liability Insurance Act, 1991
  • Biological Diversity Act, 2002
• This means that any violations pertaining only to these laws, or any order/decision taken by the Government under these laws can be challenged before the NGT.
• Importantly, the NGT has not been vested with powers to hear any matter relating to the Wildlife (Protection) Act, 1972, the Indian Forest Act, 1927 and various laws enacted by States relating to forests, tree preservation etc.
• NGT is mandated to make disposal of applications or appeals finally within 6 months of filing of the same.
• An appeal against order/decision/award of the NGT lies to the Supreme Court, generally within ninety days from the date of communication.

NGT’s Power to Initiate Suo Moto Action

• There is no specific provision in the National Green Tribunal Act, 2010 permitting the NGT to take up cases on its own.
• However, it can act on letters or communication addressed to it raising environmental concerns.

News Summary

• The National Green Tribunal has taken suo motu notice of the mysterious deaths of 10 elephants in Bandhavgarh Tiger Reserve, allegedly caused by the consumption of contaminated Kodo millet.
• Notices have been issued to key authorities, including the principal chief conservator of forests (Madhya Pradesh), the Wildlife Institute of India (WII), and the Indian Veterinary Research Institute (IVRI). These authorities have been directed to respond within a week.
• Key Findings and Concerns:
  • Cause of Death: Preliminary investigations suggest the elephants consumed Kodo millet contaminated with mycotoxins, likely due to fungal infestation during damp conditions. This contamination can lead to severe health risks, including liver and kidney damage, in both wildlife and livestock.
  • Legal Implications: The incident may violate the Forest Conservation Act, 1980, and the Environment Protection Act, 1986, raising questions about environmental compliance.
  • Broader Risks: The NGT expressed concerns about the implications of such contamination, noting its potential impact on other wildlife and livestock that come into contact with the tainted crop.
• Action Taken by the NGT:
  • The NGT has transferred the case to its Central Zonal Bench in Bhopal.
  • Authorities are required to submit affidavits addressing the issue and present findings from the forensic analysis of millet samples.
  • The NGT highlighted the seriousness of this matter, referencing a Supreme Court ruling that strengthens its authority to intervene in environmental matters.
• Significance:
  • This case underscores the critical need for stringent monitoring of wildlife habitats and food sources to prevent contamination-related fatalities.
  • It also highlights the broader implications of environmental non-compliance and its impact on biodiversity.

Q1. What is the basic difference between Buffer Zone and Core Zone?

The main difference between a core zone and a buffer zone is that the core zone is the most protected area, while the buffer zone is less protected and allows some human activity.

Q2. What is a Biodiversity Hotspot?

A biodiversity hotspot is a biogeographic region with significant levels of biodiversity that is threatened by human habitation.

News: NGT Issues Notice to Madhya Pradesh, Centre on Bandhavgarh Elephant Deaths

What’s in today’s article?

• Why in News?
• What is the 74th Constitutional Amendment?
• Need for Robust ULBs
• Key Findings from the CAG Report on ULBs
• Call for Strengthening ULBs
• Conclusion

Why in News?

• The Comptroller and Auditor General (CAG) of India has flagged significant concerns about the health of urban local bodies (ULBs) in 18 states, which cater to 241 million residents.
• The report reveals systemic weaknesses in financial management, staffing, and functional autonomy, undermining the goals of the 74th Constitutional Amendment.

What is the 74th Constitutional Amendment?

• About: The 74th Constitutional Amendment Act of 1992 gave constitutional status to Urban Local Bodies (ULBs) and established them as the lowest unit of governance in cities and towns.
• Deals with: It established a framework for urban governance in India by decentralisation of powers and authority.
• Constitutional provisions:
  • The amendment added Part IX-A to the Constitution, which deals with municipalities and is made up of Articles 243-P to 243-ZG.
  • The amendment mandates the devolution of 18 functions to ULBs [Schedule 12 (Article 243W)], including urban planning, public health, and water supply.

Need for Robust ULBs:

• With 50% of India’s population expected to reside in urban areas by 2050, strong urban governance systems are essential.
• Empowered ULBs can play a pivotal role in ensuring economic, environmental, and democratic vibrancy in cities.

Key Findings from the CAG Report on ULBs:

• Incomplete devolution of powers:
  • The 1992 amendment aimed to decentralise 18 functions to ULBs, but only 4 functions have been devolved with complete autonomy after 30 years.
  • States have failed to comply with the "in-spirit reading" of the amendment, as observed in 393 ULBs across 18 states including Andhra Pradesh, Assam, Haryana, Himachal Pradesh, Odisha, MP, Maharashtra, etc.
• Financial gaps and dependency:
  • Urban local bodies face a 42% gap between their resources and expenditure.
  • Only 32% of revenue is internally generated, with the rest coming from Union and state government funding.
  • Property tax, a major revenue source, showed only 56% realisation of the total demand.
• Limited expenditure on development:
  • Merely 29% of ULB expenditure is directed towards developmental and programmatic work.
  • Insufficient investment in civic programs hampers urban growth and quality of life.
• Staffing issues:
  • Urban bodies face an average 37% vacancy rate in sanctioned staff positions.
  • Recruitment powers are restricted, with ULBs in 16 states having limited or no control over staffing.

Call for Strengthening ULBs:

• Recommendations by CAG:
  • Enhance financial autonomy: Grant ULBs control over taxation and user charges.
  • Improve revenue collection mechanisms: Streamline property tax and other revenue sources.
  • Focus on fund utilisation: Ensure optimal use of allocated funds for development.
  • Strengthen decentralisation: Revive the agenda of empowering ULBs politically and administratively.
• Call for collaboration: Since empowering ULBs is a national priority, cooperation between the government, academia, and civil society is essential to reaching this objective.

Conclusion:

• The CAG’s findings emphasise the urgent need to revamp the financial and administrative structures of ULBs.
• Empowering these "first-mile governments" is critical for sustainable urban governance and achieving the goals of the 74th Constitutional Amendment.
• Therefore, States must facilitate laws and policies to strengthen ULBs. Urban local bodies should be actively involved in planning and governance functions.

Q.1. What is the 73rd Amendment to the Constitution of India?

The 73rd Amendment to the Constitution of India, passed in 1992, strengthened the Panchayati Raj system and made it a part of the administrative process.

Q.2. What is the office of CAG in India?

The Comptroller and Auditor General of India is the supreme audit institution of India, established under Article 148 of the Constitution of India.

News: What is ailing urban local bodies in 18 states: CAG flags 42% resource-expenditure gap, 37% staff vacancy | ToI