• Is 70 Too Old for the UN?

  
  
  
  
  NEW YORK – As world leaders prepare to gather next week at the United Nations in New York to ratify the new Sustainable Development Goals (SDGs) and commemorate the UN’s 70th anniversary, for many a fundamental question has become inescapable. In the face of growing global disorder – including turmoil in the Middle East, waves of migrants flooding into Europe, and China’s unilateral moves to enforce its territorial claims – does the UN have a future?

  Grounds for pessimism are undeniable. Conflicts rage on, seemingly unaffected by upholders of world order. Despite more than two decades of talk, the Security Council’s permanent membership (China, France, Russia, the United Kingdom, and the United States) still reflects the geopolitical realities of 1945, not 2015. Denied accommodation in the Bretton Woods institutions (the World Bank and the International Monetary Fund) commensurate with its economic clout, China has established its own alternatives, which other countries have flocked to join. The G-20 seems more representative than the Security Council – and more imbued with common purpose.

  Yet the UN should not be written off. It continues to serve a vital purpose, and its history suggests that it can be revitalized to meet the needs of the twenty-first century.

  The UN began, in 1945, as a vision shared by the leaders of the victorious Allies, who were determined to ensure that the second half of the twentieth century did not play out like the first half. After two world wars, countless civil wars, brutal dictatorships, mass expulsions of populations, and the horrors of the Holocaust and Hiroshima, “never again” was not just a slogan: the alternative was too apocalyptic to contemplate.

  To this end, the Allies sought an alternative to the balance-of-power politics that had wreaked such havoc in the preceding five decades. Their idea – now called “global governance” – was to create an institutional architecture that could foster international cooperation, elaborate consensual global norms, and establish predictable, universally applicable rules, to the benefit of all.

  The hope that many placed in the UN Charter was soon dashed by the onset of the Cold War. And yet global statesmen made good use of the new organization as a forum to contain superpower tensions. Peacekeeping missions, not even mentioned in the Charter, were devised to contain conflicts around the world, and to prevent them from igniting a superpower conflagration. Thanks to the UN, World War III never happened.

  Moreover, the UN’s contribution to peace during the Cold War is not the whole story. Its decolonization efforts freed millions from the yoke of imperialist oppression. Economic and social development rose to the top of its agenda.

  As global governance has evolved, the UN system has become the port of call for innumerable “problems without passports”: the proliferation of weapons of mass destruction, the degradation of our common environment, epidemics, war crimes, and mass migration. Such problems require solutions without passports, because no country or group of countries can solve them alone.

  With universality comes legitimacy. Because all countries are members, the UN enjoys a global standing that gives its decisions and actions a degree of authority that no individual government enjoys beyond its own borders.

  The binary international order of the Cold War is long gone. Instead, the metaphor for today’s globalized world is that of the World Wide Web, in which we increasingly function through multiple networks. Sometimes those networks overlap, with common participants, and sometimes they are distinct; they all serve our interests in different ways and for different purposes.

  Many countries once felt insulated – by wealth, strength, or distance – from external dangers. But now they realize that local security forces are not enough to protect their citizens, and that the safety of people everywhere depends on internationally coordinated efforts to combat terrorism, pollution, infectious diseases, illegal drugs, and weapons of mass destruction, and to promote human rights, democracy, and development.

  The UN has not fully succeeded in turning recognition into reality. But at its best and its worst, the UN is a mirror of the world. As the legendary Secretary-General Dag Hammarskjöld famously put it, “The United Nations was not created to take mankind to heaven, but to save humanity from hell.”

  I believe strongly that the UN needs reform, not because it has failed, but because it has succeeded enough to be worth investing in. As the agreement on the SDGs demonstrates, there is much that can be accomplished with the UN as the lynchpin of our system of global governance.

  Moreover, the UN has proved a remarkably adaptable organization; it would not have survived so long if it was not. While it must be reformed to accommodate today’s world, all that is needed is a smidgen of the statesmanship shown seven decades ago, when world leaders subordinated their immediate short-term interests to a long-term vision of the kind of world they wanted their children to inhabit.

  The UN remains the source of laws and norms that countries negotiate together and agree to uphold as the “rules of the road.” And it remains the pre-eminent forum where sovereign states can come together to share burdens, address shared problems, and seize common opportunities.

  In other words, the UN’s foundations, laid down in 1945, remain strong. But they must be buttressed if they are to withstand the ongoing shifts in countries’ strategic weight. As the UN turns 70, it is time to reaffirm its founders’ guiding vision – a vision born of devastation that remains a source of universal hope for a better world.

B. Fouzia Taranum, IRS, ACIT, Circle 5(2)(1), Bangalore

B. Fouzia Taranum, IRS, ACIT, Circle 5(2)(1), Bangalore

Rank – 31, CSE – 2014

I do not know how helpful this brief write up is going to be, but since many had asked, and I have benefitted from similar write ups of seniors, here goes.

I started preparing for UPSC in December 2010, having quit my job as a Business Analyst with Tata Consultancy Services Ltd. In CSE 2011, I cleared with AIR of 307, thereby joining the IRS (IT). The attempt in 2012 didn’t see me improve my rank/service. I was under training in NADT, Nagpur, and decided to go ahead and settle into the service, which I was beginning to like, understand and enjoy.

However once posted, from June 2014, I started feeling the difference in service – IAS and IRS – and the job profiles. I felt that I should try one last time for my dream service, and give one last attempt. So a few weeks before the prelims of 2014, I jumped into preparation mode. It helped that I was posted at my hometown, so I had the support of my parents in this venture. In fact, the result was a surprise to my family/relatives/friends, as not many people other than my parents, sisters and my IRS batch mates knew that I was giving another attempt!

I reread the standard books, along with the sources available online like Insights on India. I think a big part of the improvement in rank to AIR 31 this year was due to me growing as a person, becoming more mature, having seen more of this world, and a creeping sense of practicality and realism in approach, compared to an over-idealistic one earlier. UPSC is actually looking for more rounded personalities with problem solving approach and an analytical mind. The UPSC journey should be looked at in this light, and not merely reading of books.

Work + Study

It was very important for me that I do not compromise on my present work, while I gave this attempt. I had to be more than justifying the salary that I was taking home.

At office, I would concentrate on work, and at home on preparation efforts and personal obligations. While it was difficult and often tiring, I hope I did justice to both, my aspiration to be in IAS through my preparation efforts, along with the requirements of my job as an Assistant Commissioner of Income Tax.

The balance came from management of time. There will never be enough time, rather we have to make time for everything.

General Strategy

• No leave before prelims (no proper study before prelims either, thanks to strength in CSAT)
• Focussed preparation after getting a fair idea that I will clear the prelims (having checked with various answer keys available online)
• 30 days leave before mains
• 5 days leave for interview
• Studying atleast 2 hours a day (working days) – depending on my work day either early morning or late night – August to December 2014. Also managed to take a few Fridays off after the prelims results, so as to get 3 days of continuous reading done, or to compensate for the days when I had not prepared due to obligations at work.
• Finishing weekly newspapers (piled up) and studying for about 4 hours a day (during weekends/holidays)
• A general study, unlike the crazy detailed study of 2011-12
• Focussed on revising my strong areas (economy, geography, etc) and re-preparing for my weak areas (history, culture, sociology, etc) along with preparing for the newly introduced topics.
• Focussed on current events and ensured that connected GS related gyan was revised (e.g: LS elections were on – read up all election related polity).
• Chose Sociology as optional because pub ad wasn’t performing too well, socio takes lesser time to prepare in comparison and enjoyed reading this subject more, even though I have never studied this subject academically.
• Didn’t read too many books, so as to not feel lost at the end of it all – stuck to the books (or the particular sections in the books) that I really enjoyed reading.
• Use of YouTube videos for World History, as this was newly introduced.
• Ethics – GS Paper 4 – Just read up a few solved papers on the Vision website and realised that our “UPSC orientation” is sufficient – Looked up definitions on all the terms used in the syllabus and made short notes. Didn’t read anything beyond that. Scored 113/250, and was largely just giving “true” answers to most situational questions/case studies.
• Couldn’t practise writing due to lack of time – I know that if I had, I could have really upped my game.
• Gave many examples in my answers, and tried to keep them interesting to whoever was to read them.

Use of Time

There is a dire need for short, productive periods of reading through the day. For instance, reading up the news feeds after returning from lunch at office, listening to the news/saved videos while travelling to and from office, etc. Such reading of 15 minutes in short bursts 4-5 times a day really adds up and contributes immensely to our efforts.

Also, I used to take up a subject I like and enjoy when I felt like I have a lost cause in my hands and was feeling depressed. This really helps make our efforts more productive. However, we need to be cautious that we do not let other subjects suffer from neglect. Be judicious in the time you allot to various “sub-subjects”.

Writing style

• Short, to the point, bullet points, covering as many dimensions and aspects as possible
• Didn’t focus on word limits too much – some answers I looked for more space and for some I just jotted down half a page
• Didn’t really fill pages, wrote as much as I knew
• Interlinking of topics
• Use of diagrams/charts
• Underlining of important points as I write
• Points in the margin (like a summary box, to help me and the evaluator)

Booklist:

GS (scored 405):

• History – Bipin Chandra, Spectrum
• World History – Norman Lowe, YouTube Videos, Online resources
• Geography – NCERT (11^th and 12th), G C Leong, Atlas
• Art and Culture – Insights on India questions and answers, NCERT History pdfs online
• Polity – Lakshmikanth, Online resources
• Economy – Newspapers, Frank ISC Economics (11th and 12th), Economic Survey
• Environment – Newspapers, ICSE Text book, Online/Wiki for all the various protocols, committees, etc.
• Ethics – Just read up definitions online and read some answer scripts put up on Vision IAS website.
• Current Affairs – Newspapers, Insights on India Daily Current Events (daily + revision 2 weeks before Mains), Vision IAS monthly Current affairs notes, Sriram IAS summary Current affairs notes, general reading online on relevant topics
• Newspapers – The Hindu, Times of India, Editorials from Economic Times
• Magazines – None this year due to paucity of time (used to read Frontline and Wizard in 2011-12)

Sociology (Scored 257 L)

Paper 1

1. C N Shankar Rao – Intro to socio
2. Crack IAS notes – ppr 1
3. Haralambos – very important book according to me (understood Mead thanks to this book!)
4. IGNOU BA Notes – selectively. (Did all units on thinkers thoroughly)
5. Ritzer for Thinkers
6. Upendra Notes – for thinkers and introduction only
7. Collins Dictionary for Sociology – for concept clarity

Paper 2

1. C N Shankar Rao – Indian socio
2. Crack IAS notes – ppr 2
3. IGNOU BA Notes  – selectively
4. Nagla for Indian Thinkers
5. Upendra Notes – for movements only
6. Nadeem Hasnain – Tribal India selectively
7. Ram Ahuja – very few topics
8. Year Book for programmes/schemes
9. Spectrum History – for national movement
10. Online resources for few topics
11. Newspaper articles/editorials on social issues

In conclusion

A lot of resources available online, have a look and settle for what works best for you, but don’t waste time on the internet unnecessarily.

Never lose focus, never lose faith. Stay consistent in your efforts. Believe in yourself! Don’t forget to keep learning and to keep improving!

Though a certain amount of luck is required, hard work does pay! I have not studied in big “Ivy League” institutions, nor do I have any civil servants in my family. I come from a very simple, ordinary, loving household, where education has never been very important. Still thanks to my parents’ support and my efforts, I could make it. So can anyone who sets her mind to it.

All the best for Prelims 2015 and the journey ahead! I hope you realize all your dreams.

India-Kazakhstan: Common heritage paves way for promising future

India-Kazakhstan: Common heritage paves way for promising future

The relationship between India and Kazakhstan goes past many centuries. Mirza Muhammad Haidar Dughlat Beg, the author of historical work, Tarikh-i-Rashidi, which describes the founding of Kazakh Khanate in 1465, lived and is buried in India. In recent years, India has made impressive socio-economic progress and contribution to global peace and stability. Relations between India and Kazakhstan have also exhibited considerable dynamism and momentum over the periods. India was one of the first countries to recognize Kazakhstan as a free, sovereign State after the break-up of the Soviet Union in 1991. President Nazarbayev chose India to be the first country outside the former Soviet block for a State visit in February, 1992 after the independence of Kazakhstan in December, 1991. This decision demonstrated the deep respect and admiration in which President Nazarbayev and the people of Kazakhstan hold India as a country endowed with a glorious past, having a vibrant present and blessed with a bright future. This visit was followed by a regular exchange of visits and meetings at the highest political level as well as at Ministerial and official levels. Both the countries relations have been growing steadily and were upgraded to the level of strategic partnership during the landmark visit of President Nazarbayev to India as the chief guest on the occasion of the 60th Republic Day of India in January 2009. Kazakhstan is India's largest trade and economic partner in Central Asia. India achieved a significant milestone in 2014 with bilateral trade crossing 1 billion dollar. The inauguration of Kazakhstan-Turkmenistan-Iran railway link is a major breakthrough in connectivity that will open new possibilities of further expansion of trade and economic ties between India and Kazakhstan. While petrochemicals and uranium are of key strategic interests to India, building momentum in other sectors is hindered mainly by lack of adequate information available in both countries about the business potential and prospects. Ashok Sajjanhar, former Ambassador of India to Kazakhstan, has mentioned that there is a huge �information divide' between the two countries and Indian businessmen and entrepreneurs are not fully aware of Kazakhstan's attractive investment climate. Language barrier is an additional cause of hesitation on the part of Indian business enterprises. According to World Bank report on global economic prospects, India's GDP crossed the 2 trillion dollar mark in 2014. India registered a real growth of 5.6 per cent in 2014, and is forecasted to grow at the rate of 6.4 per cent in 2015 and 7 per cent each in 2016 and 2017. The positive economic outlook is based on a series of economic reforms initiated by the present government coupled with a national programme, Make in India, launched in September 2014. Make in India programme is aimed to attract business from around the world to invest and manufacture in India with strong emphasis on fostering innovation, infrastructure creation, industrial development and promotion of tourism. Indian Technical and Economic Cooperation Programme, ITEC constitutes one of the fundamental pillars of India's foreign policy. Over 140 countries and ten multilateral organisations are India's partners in the programme. Harsh Kumar Jain, Ambassador of India to Kazakhstan on occasion of Republic Day of India on 26th January 2015 has said Kazakhstan is India's ITEC partner since 1992. Till January 2015, over nine hundred civilian and defence personnel from Kazakhstan have benefitted under the programme in the last 23 years. Given the current state of affairs and the high rating of Kazakhstan's FDI potential, looking beyond energy and mineral sectors in Kazakhstan is important to India for two reasons. First, in order to ensure a better stake in Kazakhstan's energy resources, a wider presence in other sectors is necessary. Expansion of business ties in sectors like banking and infrastructure will help to enhance the ease of doing business not only in Kazakhstan but also in other fast growing and resource rich countries in Central Asia. Secondly diversification being a pressing priority of the Kazakh economy, lucrative opportunities are fast emerging in a number of non-energy sectors such as agri-business, fertilizer, logistical and other business service and information technology (source: 1983-2008 25 years CUTS International). Today, Kazakhstan accounts for more than half of India's trade with the Central Asian countries and the trade has seen a rapid expansion as India is sourcing mineral fuels from the country. This landmark visit to the central Asian countries will revitalise India's ancient links with the region. It is estimated that trade with these countries can grow manifold from the small base of 1.4 billion dollar currently. India has two dozen operating nuclear units with five more, including a fast breeder, under construction. On the other hand, Kazakhstan which has the 2nd largest world's uranium reserves is positive in re-engagement with India on energy trade. Earlier, India has imported some over 8 hundred tonnes of uranium including 300 tonnes of natural uranium from Kazakh nuclear company KazAtomProm. Prime Minister's visit coincides with the drilling for oil in the Satpayev block in the North Caspian Sea, in which Indian company ONGC has 25 per cent stake. His visit would boost in kicking off the multi-modal North South Transport Corridor project which aims to connect Mumbai with St. Petersburg in Russia, while touching Iran's Bandar Abbas port. The five central Asian countries are also looking for Iran's Chabahar port to be upgraded fast by India and made operational, so that connectivity to their region could be boosted. Kazakhstan is supportive of India's permanent membership to UN Security Council. Kazakhstan also cooperates with India in the field of counter terrorism and had condemned the Mumbai attacks in 2008. India and Kazakhstan actively cooperate under the aegis of Multilateral Fora including Conference on Interaction and Confidence-Building Measu

Ancent history - Tamizhakam [The Sangam Age]

Tamizhakam [The Sangam Age]

                                      

Background:-

• The beginnings of the megalithic culture can be traced to circa 1000 BC., in deep south. In most cases, the megalithic phase lasted from about the fifth century to first century B.C.
• The Megaliths are found in all upland areas of the peninsula, but their concentration is found to be more in Eastern Andhra and in Tamil Nadu.
• The word "megalithic" mean the structures made of large stones, utilizing an interlocking system without the use of mortar or concrete, as well as representing periods of prehistory characterised by such constructions.
• People used various types of pottery including red ware, black and red ware.
• People had the practice of burying goods along with the dead bodies in graves. These goods, they thought that the dead would use in next world.
• The goods included arrowheads, spearheads, hoes and sickles made of iron. Agricultural implements were less when compared to the tools used for fighting and hunting.
• This indicates that people inhabiting upland areas are not yet familiar with advanced agriculture methods which were existing in northern parts of India.
• They cultivated rice and ragi but did not move to fertile low lands.
• Trident was also found in the megaliths.

 
State Formation in deep south:-


By third century Bc., the megalithic people had moved from the uplands into fertile river basins and reclaimed marshy deltaic areas. 
The state formation began to progress rapidly mainly due to these reasons:-

1. Interaction with northern part of India. 

The route to south was called Dakshinapatha and was valued by the northerners as the south provided gold, pearls and precious metals.
This also brought about cultural contacts between the north and deep south. For instance - The Pandya country was known to Megasthenes who lived in pataliputra which was the capital of Magadhan empire.


2. Impact of Jaina and Buddhist missionaries

3. Roman trade.


Tamizhakam 

Deep South or Tamizhakam - the  southern end of the Indian peninsula situated south of the krishna river was divided into three kingdoms namely, the Chola, the Pandya and the Chera.

The Pandyas

Capital :- Madurai

Geography : - 

The southern-most and the south-eastern portion of the Indian Peninsula. Modern districts of Tirunaelveli , Ramnad and Madurai in Tamil Nadu were part of Pandyan territory.

Early references :- 

The Pandyas were first mentioned by Megasthenes. Megasthenes said that the kingdom of the Pandyas was celebrated for pearls.
Megasthenes also spoke of Pandyas being ruled by a woman.

Economy:-

The Sangam literature refers to Pandya rulers and from the literature, it can be inferred that Pandya was economically rich and prosperous.
The Pandyas were engaged in trade with Roman empire and sent embassies to the Roman emperor Augustus.

The Cholas:

The Cholas ruled over Chola kingdom which was called Cholamandalam(Coromandel).

Capital :-Kaveripattanam (Puhar)

Geography:-It was situated to the North-East of the territory of Pandyas, between the Pennar and the Velar rivers.

Economy:-

• Cholas were engaged in cotton trade. Their chief center of political power lay at Uraiyur , a place famous for cotton trade.
• During the middle of second century BC., a chola King named Elara conquered Sri Lanka and ruled over it for nearly 50 years.
• Karikala, one of the greatest Chola rulers found Puhar and constructed 160 kms of embankment along the Kaveri river. This embankment is called Kallanai or the Grand Anicut.
• Cholas maintained efficent navy.

Downfall

• The Chola power rapidly declined under Karikala's Successors.
• Their capital Kaveripattanam was overwhelmed and destroyed.
• Their two neighbouring powers cheras and pandyas, extended at the cost of the cholas. What remained of the chola power was almost wiped out by the attacks of the pallavas from the north.

The Cheras:

Capital :-

Karur

Geography:-

It was situated to the west and north of the land of Pandyas. It included the narrow strip of the land between the sea and the mountains and covered portions of both Kerala and Tamil Nadu.

Economy:-

Roman trade was very significant for the Cheras.
The Romans set up two regiments at Muziris identical with Cranganore in the Chera country to protect their interests. It is said that they also built there a temple of Augustus.

Greatest Ruler:-

Senguttuvan was the greatest ruler among the Cheras.
It is said that he invaded the north and crossed the Ganga.
His navy was the best in the world during his time.


Common aspects of the kingdoms of Tamizhakam:-

• The three kingdoms grew many spices specially pepper had a great demand in the western world.
• Their elephants supplied Ivory , which was highly valued in the west.
• Pearls were obtained from the sea.
• The Tamizhakam had rich mines which produces precious stones.
• The three kingdoms produces muslin and silk.

 

Social classes:

• The Brahmanas first appear in the Tamil land in the sangam age.
• Many brahmanas funcioned as poets, and in this role they were generously rewarded by the king.
• Karikala is said to have given one poet 1,600,000 gold pieces but this seems exageration.
• The Tamil Brahmanas took meat and wine. The kshatriyas and vaishyas appear as regular varnas in the Sangam texts.
• But the class of warriors was an important element in the polity and society.
• Captains of the army were invested with the title of 'enadi' at a formal ceremony.
• Civil and military offices were held under both the Cholas and the Pandyas by 'Vellalas'  or rich peasants who were the masters of the soil. Uzhavars were the ploughsmen who cultivated the land.
• The ruling class was called 'Arasar', and its members had marriage relations with Vellalas.

Tamil Language and Sangam Literature:

• The Sangam was a college or assembly of Tamil Poets held unde royal patronage.
• It is stated in a Tamil commentary of the middle of the eight century A.D that three Sangams lasted for 9,990 years.
• They were attended by 8,598 poets, and had 197 pandya kings as patrons.
• A Sangam was held under royal patronage in Madurai.
• The available Sangam literature, which was produced by these assemblies, was compiled in circa A.D 300-600.
• The Sangam literature was roughly divided into two groups, narrative and didactic.
• The narrative texts are called Melkannakku or Eighteen Major works. They comprise eighteen major works consisting of Eight anthologies and ten idylls.
• The didactic work are called Kilkanakku or Eighteen Minor Works.

    


Social aspects of Tamizhakam understood from the Sangam texts and other literary sources:-

• The traces of early megalithic life appear in the Sangam texts.
• The texts suggest that war booty was an important souce of livelihood.
• They also state that when a hero dies he is reduced to a piece of stone.
• It may have led to the later practice of raising hero stones called 'virarkal' in honour of the heroes who died fighting for kins and other objects.
• The didactic texts cover the early centuries of christian era and prescribe a code of conduct not only for the king and his court but also various social groups and occupations.

Other literary sources:-

Tolkkappiyam 

It deals with grammar and poetics. 
Written by Tholkappiyar.

Tirukkural
It is the Tamil text that deals with philosophy and wise maxims.
Written by Thiruvalluvar.

The twin Tamil epics  - Silappadikaram and Manimekalai:-

They were composed around sixth century A.D. 

Silappadikaram:-

• Written by Ilango Adigal.
• It is considered to be brightest gem of early Tamil literature.
• It deals with a love story in which a merchant, Kovalan from Kaveripattanam prefers a courtesan called Madhavi to his wife Kannagi.
• Kannagi loses her husband after a set of events and Kannagi curses to destroy the city of Madurai (Capital of Pandyas) as Pandya ruler was responsible for her husband's death.

Manimekalai:-

Written by Sattanar.
It deals with the adventures of the daughter born of the union of Kovalan and Madhavi.

Civaka Cintamani:-

It is a Jain religious epic penned by Tirutakkadevar.

 Source - Targetcivils

Will the Euro survive? Without a big haircut in Greece, the chances are poor - Economy , World News

Will the Euro survive? Without a big 

haircut in Greece, the chances are poor 

- Economy , World News

Now that the Greeks have voted overwhelmingly against the austerity measures – the final result was a 61% no as opposed to opinion polls which suggested a very close finish – both sides need to act calmly; sacking Greek finance minister Yanis Varoufakis augurs well for negotiations given how polarising a figure he was.

Indeed, the magnitude of the ‘no’ vote comes as a surprise given the disaster that awaits Greece. With the banks running on the goodwill of the European Central Bank (ECB) and running out of cash, it is just a matter of time before no more withdrawals will be possible. A lot now depends on how the ECB reacts, certainly Greece’s default of a 3.5 billion euro repayment on July 20 will harden its stance. Were the ECB to not extend credit to Greek banks, the drachma will have to be reintroduced to capitalise banks and, more likely, ordinary Greek depositors will have to take a haircut to recapitalise the banks. Reintroduction of the drachma will be accompanied by hyperinflation and the lack of faith in the currency will almost certainly mean a shortage of goods that Greece imported such as petroleum products. If the Greeks voted ‘no’ despite this, it means they were convinced the future was worse with the austerity measures – not surprising, perhaps, given the economy has already collapsed a fourth since 2008.

For the troika, the path ahead is even more treacherous. For starters, to keep interest rates down in the PIIGS countries, the ECB will have to ratchet up its bond purchases, and there is no certainty that will do the trick since with Greece’s potential exit, there is no certainty that countries like Portugal and Italy will remain in the euro – in which case, interest rates may remain high despite bond purchases by the ECB.

The flipside is that bailing out Greece will not only give more ammunition to opposition parties within Germany, it will lead to demands to lessen austerity within countries like Portugal and Italy. But, as India’s then executive director to the IMF, Arvind Virmani had pointed out in May 2010, the proposed austerity measures were so large, ‘it is a mammoth burden that the economy could hardly bear …. there is concern that default/restructuring is inevitable’.

Indeed, most of the bailout money in 2010 was not used to lower Greece’s debt, it was used to bail out private creditors who should have known better and should have been forced to take haircuts. This time around, when negotiations start, the troika would do well to well to pay heed to the latest IMF report which says ‘given the fragile debt dynamics, further concessions are necessary to restore debt sustainability’ and then goes on to talk of a ‘full write-off of the stock outstanding in the GLF facility (53 billion euro) or any other similar operation’. The important thing for German politicians to keep in mind is that while it is true Greece has slipped up badly in terms of its work ethic – indeed, Greece should never have been admitted to the euro given its poor finances even then – Germany has also benefitted enormously from the euro since, without it, the German mark would have appreciated more and cut considerably into German competitiveness. No monetary union works without a fiscal one – that’s why, in the case of India, rich states like Gujarat and Maharashtra transfer considerable funds to poorer ones like Bihar and Jharkhand.

What is Deposit Insurance? How deposit insurance is made in India?

What is Deposit Insurance? How deposit

 insurance is made in India?

Protecting the deposits made by people in banks is very important to ensure confidence in the banking system. In Most countries, there are arrangements to protect the money deposited by the depositors. The common form of providing safety to depositors is deposit insurance. Deposit insurance is providing insurance protection to the depositor’s money by receiving a premium.

Here, when the bank fails, the depositors will get back their money. Insurance to deposits will be provided up to a limit. For getting the deposit insurance protection, the depositors should pay an insurance premium.

The first deposit insurance scheme was the Federal Deposit Insurance Corporation (FDIC), launched in the US during the Great Depression period when many banks failed and depositors lost their money. The FDIC was established in 1933 to restore public confidence in the US financial system and to protect small depositors.

In the later period, many central banks have set up deposit insurance institutions especially after 1960s. According to the International Association of Deposit Insurance (IADI) as of January 1, 2015, 113 countries have deposit insurance schemes.

Deposit Insurance in India

In India, the deposit insurance was started with the launch of the Deposit Insurance Corporation and Credit Guarantee Corporation (DICGC) of India in 1961.

DICGC is fully owned by the RBI. Deposit insurance is mandatory for all banks. The premium charged is on a flat rate basis which is 10 paise per Rs 100. The amount of coverage is presently limited to Rs one lakh.

A Deposit Insurance Fund (DIF) is built up from the premium received from insured banks and the coupon received from investment in central government securities.

           Deposit insurance extended by DICGC covers all commercial banks, including Local Area Banks (LABs) and Regional Rural Banks (RRBs) in all the States and Union Territories (UTs). All Co-operative Banks across the country except three UTs of Lakshadweep, Chandigarh, and Dadra and Nagar Haveli are also covered by deposit insurance.

In the event of a bank failure, DICGC protects bank deposits that are payable in India. The DICGC insures all deposits such as savings, fixed, current, recurring, etc.

Institutions covered under deposit insurance

1. All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks.
2. All Co-operative Banks across the country - State, Central and Primary cooperative banks, and urban cooperative banks.

But those in three UTs of Lakshadweep, Chandigarh, and Dadra and Nagar Haveli are not covered by deposit insurance. Primary cooperative societies are not insured by the DICGC.

What types of deposits are not insured by the DICGC?

 The following types of deposits are not covered under deposit insurance by DICGC

(i)           Deposits of foreign Governments; 

(ii)          Deposits of Central/State Governments

(iii)        Inter-bank deposits;

(iv)         Deposits of the State Land Development Banks with the State co-operative bank;

(v)          Any amount due on account of any deposit received outside India

(vi)         Any amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of India.