The Union Cabinet recently approved the Production Linked Scheme for White Goods such as Air conditioners and LED lights. The main objective of the scheme is to make manufacturing in India globally competitive. This is to be achieved by creating economies of scale, removing sectoral disabilities and ensuring efficiencies. The scheme will make India an integral part of the global supply chain.
PLI Scheme for White Goods
The budget allocated for the scheme is Rs 6,238 crores. The amount has been approved by the cabinet.
The scheme will help to facilitate additional investments of Rs 7,920 crores.
It will create four lakh jobs.
The scheme will generate direct and indirect revenues of Rs 49,300 crores.
The scheme will provide incentive of 4% to 6% to the companies engaged in the manufacturing of Air Conditioners and LED lights.
The incentives are to be provided for a period of five years.
The scheme is expected to increase production worth Rs 1,68,000 crores and exports worth Rs 64,000 crores.
What are White Goods?
Generally large home appliances such as refrigerators, dish washers, washing machines, air conditioners are referred to as white goods. Traditionally the household goods were available in white colour and hence the name.
What are brown goods?
The Consumer Electronics such as computer, Television, games consoles, radios are referred to as brown goods.
Other Schemes approved
Along with the PLI Scheme for Air Conditioners and LED lights, the PLI Scheme for high efficiency Solar PV module called the “National Programme on High Efficiency Solar PV Modules” was also approved.
The Union Cabinet recently approved the Production Linked Incentive Scheme called the “National Programme on High Efficiency Solar PV Modules”. PV stands for Photo Voltaic. They are units that convert light energy into electrical energy.
National Programme on High Efficiency Solar PV Modules
The programme aims to achieve manufacturing capacity in Giga Watt scale in high efficiency solar PV modules.
The total outlay of the scheme has been estimated as Rs 4,500 crores.
The programme aims to bring additional 10,000 MW capacity of integrated solar PV manufacturing units in India.
It will bring in direct investment of Rs 17,200 crores in solar Photo Voltaic manufacturing projects.
The demand for “Balance of Materials” is expected to touch Rs 17,500 crores in five years after the launch of the scheme.
It will bring indirect employment of 1,20,00 and direct employment of 30,000.
It will stimulate research and development that will achieve higher efficiency in solar PV modules.
What is the plan?
The solar Photo Voltaic manufacturers are to be selected through transparent competitive bidding process. The scheme will reward manufacturers with higher efficiencies of solar Photo Voltaic modules. Also, they will be incentivised for sourcing their material from the domestic markets.
Why is the scheme important?
The solar capacity addition in the country largely depends on imported solar Photo Voltaic Cells and modules. The National Programme on High Efficiency Solar PV Modules will help to reduce the dependence on imports of solar PV cells and modules. Also, it will support Atma Nirbhar Bharat initiative.
The main objective of PLI Scheme is to make manufacturing in India globally competitive. The scheme will generate large scale employment opportunities and will enhance exports substantially.
Other Schemes approved
Apart from this scheme, the union cabinet has also approved the Production Linked Scheme for White Goods-LED Lights and Air Conditioners.
The Global energy and industrial majors have joined together to form a new coalition called the India H2 Alliance. The initiative to form the alliance was begun by the Reliance industries and Chart Industries. The India H2 Alliance, IH2A mainly focuses on commercialising hydrogen technologies. It will work towards boosting the hydrogen economy and supply chain in India.
About India H2 Alliance
The IH2 alliance will mainly focus on industrial clusters such as refineries, steel, cement, fertiliser, ports and logistics and heavy-duty transport use cases. It will also create standards for storage and transport of hydrogen in pressurised and liquefied form.
The following are the main objectives of IH2A:
To build hydrogen economy and supply chain in India
To help develop blue and green hydrogen production and storage
To build hydrogen-use industrial clusters
To increase hydrogen-powered fuel cells-based transport
What are the major works of India H2 Alliance?
The India H2 Alliance will closely work with the Government of India on the following five areas:
To develop National Hydrogen Policy and roadmap 2021-30.
To create National H2 Task Force and Mission in a PPP model
To identify National Large H2 Demonstration Stage Projects
To create a National India H2 Fund
To create a good hydrogen linked capacity. This includes production, distribution, storage, industrial use-cases, standards and transport use-cases.
What is Blue Hydrogen?
Blue Hydrogen is produced from the splitting of natural gas into carbon dioxide and hydrogen. This is achieved by Steam Methane Reforming or Auto thermal Reforming.
What is Green Hydrogen?
Green Hydrogen is made from non-fossil sources.
The Reserve Bank of India recently made three main changes to the Prepaid Payment Instruments.
What are Prepaid Payment Instruments?
The Prepaid Payment Instruments or PPI are means through which purchase of goods and services shall be made against the value stored in such instruments. The Prepaid instruments shall be used as magnetic stripe cards, smart cards, internet accounts, mobile accounts, online wallets, paper vouchers or any other instrument used to access a prepaid amount.
What are the three changes RBI made in prepaid instruments (PPI)?
In 2018, the PPIs were provided the option of becoming interoperable. Under this option, the customers of one company shall send funds to the customers of other company or bank or PPI. RBI provided this option only to those cases where a complete KYC is done. Even after two years, the migration towards KYC PPIs has not been achieved. KYC is Know Your Customer.
Thus, to increase the migration of PPIs to full KYC, the following changes have been introduced
The limit of outstanding balance in PPIs is to be increased from the current level of Rs 1 lakh to Rs 2 lakhs.
The facility of cash withdrawal is to be permitted for full KYC PPIs of non-bank PPI issuers.
The membership to RBI-operated Centralised Payment Systems (NEFT and RTGS) are to be opened to non-banks such as the Central bank regulated payment system operators.
What are the categories of PPIs used in India?
The following are the categories of Prepaid Payment Instruments used in India:
Closed System Payment Instruments
Semi-Closed System Payment Instruments
Semi-Open System Payment Instruments
Open System Payment Instruments Mobile Prepaid Instruments
The Closed System Payment Instruments are issued by a person. They are issued to facilitate purchase of goods from him or her.
The Semi-Closed System Payment Instruments are redeemable only at a group of identified merchants. They do not permit cash withdrawal or redemption by the holder.
The Semi-Open System Payment Instruments can be used at any card accepting merchant sale terminals. They do not allow cash withdrawal or redemption.
The Open System Payment Instruments allow cash withdrawals at ATMs and can be used for purchase of goods.
The Mobile Prepaid Instruments are issued by the mobile service providers.
In January 2021, Bird Flu was confirmed among the migratory water birds at Pong Dam Lake Wildlife Sanctuary. The disease then killed more than 5,000 birds. It was contained in February 2021. However, it has resurfaced since late March.
What is the issue?
Recently, around 99 birds were found dead at Pong Dam Lake. The officials of National Institute of High Security Animal Diseases have confirmed that the recent death of birds is due to the presence of H5N8 Avian Influenza. However, this strain is different from the previous outbreak. Previously the outbreak was due to H5N1. The bird fatalities are higher during days of adverse weather as it is when the geese tend to flock together instead of flying out.
Pong Dam Lake Wildlife Sanctuary
The Pong Wetland is an international Ramsar site. It extends up to 220 square kilometres during wet season.
The Pong wetland becomes home to flocks of migratory waterfowl every winter.
Several birds migrate here as the wetlands in Europe, North and Central Asia become frozen during winter.
More than one lakh migratory water birds of different species arrive at the lake. This includes 40,000 bar-headed geese as well.
The bird flu or Avian Influenza has been reported in Rajasthan, Kerala, Himachal Pradesh, Madhya Pradesh, Gujarat and Uttar Pradesh in the recent days. The two main virus types causing the recent outbreaks are H5N1 and H5N8. They belong to the category of Highly Pathogenic Avian Influenza (HPAI).
The Centre issued an alert to the states to stick to the National Action Plan for Prevention, Control and Containment of Avian Influenza.
The HPAI outbreaks have been identified in other countries such as Ukraine, UK and Russia. This has led to a loss of more than 4.8 million birds by December 2020.
The Forbes recently released its list of wealthiest people in the world. Forbes is an American business magazine owned by the Integrated Whale Media Investments and the Forbes family.
Forbes list of India’s ten richest billionaires
The following are the top ten richest billionaires in India according to Forbes:
Mukesh Ambani. Net Worth: 84.5 billion USD
Gautham Adani. Net Worth: 50.5 billion USD
Shiv Nadar. Net Worth: 23.5 billion USD
Radhakishan damani. Net Worth: 16.5 billion USD
Uday Box. Net Worth: 15.9 billion USD
Lakshmi Mittal. Net Worth: 14.9 billion USD
Kumar Birla. Net Worth: 12.8 billion USD
Cyrus Poonawalla. Net Worth: 12.7 billion USD
Dilip Shanghvi. Net Worth: 10.9 billion USD
Sunil Mittal and family. Net Worth: 10.5 billion USD
Of the ten richest billionaires in India, only two earned their spot owing to investments in healthcare sector. They were Cyrus Poonawala of Serum Institute and Dilip Shanghvi of Sun Pharmaceutical.
Forbes list of richest World Billionaires
Jeff Bezos. Net Worth: 177 billion USD
Elon Musk. Net Worth: 151 billion USD
Bernard Arnault. Net Worth: 150 billion USD
Bill Gates. Net Worth: 124 billion USD
Mark Zuckerberg. Net Worth: 97 billion USD
The headquarters of Forbes is located in New Jersey. It has an international edition in Asia and also Forbes editions are produced under license in 27 countries. In 2014, Forbes was sold to a Hong Kong based investment group Integrated Whale Media Investments.
Other popular Forbes lists
Forbes is well known for the following lists:
Forbes 400: It lists top 400 richest Americans.
Forbes Global 2000: Annual ranking of top 2000 public companies in the world
Forbes list of World’s Most Powerful people
The motto of Forbes magazine is “Change the World”.
The Ministry of Finance recently announced that nearly Rs 15 lakh crores have been sanctioned under Pradhan Mantri MUDRA Yojana (PMMY).
What are the achievements of PMMY?
More than 28 crore 68 lakh loans have been sanctioned since the launch of Pradhan Mantri MUDRA Yojana.
Of the total loans provided, 68% were provided to women entrepreneurs.
51% of the total loans provided under the Pradhan Mantri MUDRA Yojana were provided to SC, ST and OBC borrowers.
The Pradhan Mantri MUDRA Yojana has helped to generate 1 crore 12 lakh net additional employment between 2015 and 2018. Of this, women accounted for 62%.
Pradhan Mantri MUDRA Yojana
The PMMY was launched in 2015.
The full form of MUDRA is Micro Units Development and Refinance Agency Limited.
The main objective of Pradhan Mantri MUDRA Yojana was to refinance collateral free loans given by the lenders to small borrowers.
The scheme shall lend between Rs 50,000 and Rs 10 lakhs.
The PMMY loans are available to non-agricultural activities up to Rs 10 lakhs.
PMMY loans are available for agricultural activities as well. This includes Poultry, Dairy, Bee Keeping and farming.
Interest Subvention Scheme for PMMY
In June 2020, the Government of India approved a 2% interest subsidy scheme for Shishu loan account holders under Pradhan Mantri Mudra Yojana. Shishu loans are those loans that provide funds upto Rs 50,000 under PMMY. The other two categories are Kishor and Tarun. The fund limit of Kishor loans is between Rs 50,000 and Rs 5 lakhs. Tarun loans are those loans that provide funds upto Rs 10 lakhs.
The Interest Subvention Scheme was launched to help small businesses survive the difficulties created by lockdown due to COVID-19.
The scheme was implemented through Small Industries Development Bank of India (SIDBI).
The estimated cost of the scheme was Rs 1,542 crores.
The scheme was to run for a period of one year.
The Ministry of Rural Development recently announced that under the Pradhan Mantri Awas Yojana-Gramin (PMAY-G), 92% target has been achieved in the first phase of the scheme. Pradhan Mantri Awas Yojana is a flagship scheme (that is, GoI gives utmost importance to the scheme) of Government of India. This achievement has been made between 2016 and 2019.
About the achievement
A target of 1 crore houses was set for completion in Phase I of the scheme. Of this, 92% target has been completed. This was mainly possible because of the timely release of funds required for the scheme. In 2020-21, Rs 19,269 crores was made available as budgetary support. Later an extra budgetary support of Rs 20,000 cores was provided. This is the highest budget allocation to the scheme in any year since its launch.
Permanent Wait List of PMAY
The Permanent Wait List of the Pradhan Mantri Awas Yojana was prepared based on the Socio-Economic Caste Census (SECC), 2011.
According to the census, 2.14 crores of beneficiaries were eligible to receive the benefits of Pradhan Mantri Awas Yojana.
To identify the beneficiaries those who are eligible and not included in the survey, the Awaas+ survey was conducted.
The Awaas+ survey was conducted by all the states and Union Territories to identify the beneficiaries not included in the Permanent Wait List. The survey identified 0.81 beneficiaries. They were included in the Permanent Wail List in July 2020. With this the Permanent Wait List of Pradhan Mantri Awas Yojana was ceiled at 2.95 crores.
India recently hosted the BRICS Finance Ministers Meet. This was the first BRICS meet under the chairmanship of India in 2021. As 2021 BRICS Chair, India aims to focus on strengthening intra-BRICS cooperation based on continuity, consolidation and consensus.
Discussions held at the meet
The following discussions were held by the leaders during the meet:
Global Economic Outlook and Response to COVID-19 pandemic
Activities of New Development Bank
Social Infrastructure Financing
Use of Digital Technologies
Cooperation on Customs related issues
International Monetary Fund reforms
Fintech for SMEs
BRICS Bond Fund
BRICS Rapid Information Security channel
India as BRICS host
India will host the BRICS meeting for the year 2021. The 2021 BRICS Summit is the thirteenth summit of the grouping. Also, 2021 marks the fifteenth anniversary of the international grouping. This is the third time India is hosting BRICS Summit. Previously India hosted BRICS Summit in 2012 and in 2016.
About 2021 BRICS Summit
The 2021 BRICS Summit will focus on three main pillars. They are:
Political and Security
The summit will discuss on reforms of multilateral system and counter terrorism cooperation
Economic and Financial relations
BRICS Economic Partnership Strategy 2020-25 is to be implemented.
BRICS Agriculture Research Platform operations are to be discussed
Digital Health and Traditional Medicine
Cultural and People to people relations
BRICS is the acronym of Brazil, Russia, India, China and South Africa.
The first BRICS summit was held in the year in 2009 in Russia.
In 2010, South Africa joined the BRICS grouping. Earlier to this, the grouping was called BRIC.
The association holds more than 40% of global population and 25% of global GDP.
In 2020, the New Development Bank of BRICS approved 1 billion USD. It was COVID-19 Emergency Programme Loan for supporting India’s Economic Recovery.
The Atal Innovation Mission, Centre for Innovations in Public Systems (CIPS) and NITI Aayog recently announced collaboration to reinforce entrepreneurship and innovation ecosystem in India.
What is the plan?
The CIPS and Atal Innovation Mission signed a Statement of Intent to promote innovation in the area of public system. This is to be achieved with the help of knowledge and experience of AIM and CIPS.
The CIPS and AIM will organise round tables involving local level administration officials. This is to create awareness about the innovative products and solutions. Also, it will help them understand the standard policies and processes around procurement. Ultimately, it will aid in quicker implementation of innovative solutions.
They will together host e-exhibitions supported by relevant startups. Through this their innovations are to be showcased.
Innovative Learning Management System is to be created. This is to ensure capacity building to teachers and mentors at grass root levels. It will promote innovative learning among the students.
Benefits of the partnership
The partnership will help to promote programmes launched by AIM.
The partnership will strengthen AIM Mentor of Change Programme.
The beneficiaries will be able to harness CIPS research capacities.
Centre for Innovation in Public System
It is an autonomous Centre for Administrative Staff College of India. It was established by Government of India in 2010. It was established based on the recommendation made by the Thirteenth Finance Commission for the years 2010-15. The Finance Commission also suggested to release a grant of Rs 20 crores to establish Centre for Innovation in Public System.
The International Monetary Fund recently released the World Economic Outlook titled “Managing Divergent Recoveries”.
Key Findings of the report
The report has predicted GDP growth of India for the current fiscal year 2022 to be 12.5%. This is 1% higher than the previous projection of 11.5% in January 2021. This is the highest among the emerging economies and also among the elite group of advanced economies.
Also, the growth projection of India for the year 2023 has been increased from 6.8% to 6.9%. Earlier the IMF had predicted the growth rate of India to be 6.8%.
The global economy is to grow at 6% in 2021 and is expected to moderate to 4.4% in 2022. In 2020, the global economy contracted by 3.3%.
According to the report, China has returned to pre-COVID GDP in 2020. However, many others are not expected to return till 2023.
Hotel and Restaurant sector has suffered huge production and employment losses due to COVID-19.
According to the report, good recovery is expected in North America, India and China.
UK and US are outperforming on vaccine front. On the other hand, Asia is lagging on vaccine roll out.
The economies that are dependent on Tourism are severely hit. Eg: Spain.
Unlike 2008 financial crisis, the global economic recovery looks lopsided (one side is higher than the other). This is mainly because the roll out of vaccines is different in different parts of the world. Also, the fiscal support differs across the border.
International Monetary Fund
The IMF was set up after the Second World War to assist in the reconstruction of war-ravaged countries. It was created in 1945. It is governed by and accountable to 189 countries. India joined the IMF in 1945. Apart from World Economic Outlook, the IMF also releases Global Financial Stability Report.
On April 7, 2021, the Monetary Policy Committee of Reserve Bank of India announced the outcome of its bi-monthly monetary policy review.
The repo rate has been kept unchanged at 4%.
The reverse repo rate has been kept at 3.35%.
The real GDP growth for the Fiscal Year 2022 is predicted to be 10.5%.
The CPI of 2022 is predicted to be at 5.1%.
The MSF rate has been kept unchanged at 4.25%.
The Bank rate has been kept unchanged at 4.25%.
RBI is to buy Rs 1 lakh crores of G-Sec under the G-Sec Acquisition Programme.
The Apex Bank has increased the centre’s Ways and Means Advances by 46%. The current limit is Rs 32,225 crores. It has now been increased to Rs 47,010 crores.
Maximum End of Pay balance for payment banks has been doubled to Rs 2 lakhs.
Additional liquidity facility of Rs 50,000 crores announced for NABARD, SIDBI and NHB in 2021-22.
Softening of cereal prices are expected.
The mitigation of price pressure on key food items is to depend on supply side measures.
The global growth is to gradually recover from slowdown.
The repo rate is the rate at which the Reserve Bank of India lends money to the commercial banks in the country.
Reverse Repo Rate
The reverse repo rate is the rate at which the Reserve Bank of India borrows money from the commercial banks in the country.
CPI is Consumer Price Index. It is the measure that examines the weighted average of prices of goods and services purchased by households.
MSF is Marginal Standing Facility. It is the rate at which RBI lends funds to scheduled banks against Government securities.
The scientists have used the stem cells of frogs to create a new living robot. These robots have been named Xenobots.
Xenobots are capable of healing themselves.
They can record memories.
Xenobots are made from frog cells. They have been named after the Xenopus laevis frog that supplied its cells to create the robot. Xenopus laevis is an African frog.
These robots are to be used to detect diseases and deliver drugs to specific areas of the body.
Xenobots are less than 1 milli metre long.
They are comprised of 500-1000 living cells.
Xenobots come in different basic shapes and can scoot themselves in linear or circular directions.
They are capable of joining up together to act collectively.
They can move small objects by harnessing their cellular energy for a maximum of ten days.
How were the Xenobots created?
The Xenobots were created by microengineering amphibian eggs with RNA. The biologists later removed the egg membrane after 24 hours. They then harvested the stem cell tissue from the embryo. The tissues then formed into spheres with tiny hair like structure called cilia. The cilia moved to propel the bots across a surface creating a Xenobot.
How was the memory of the Xenobots created?
The memory retaining capability of the Xenobots was propelled by a protein called EosFP. This protein normally glows green. However, it emits red colour when exposed to a light of 390 nm wavelength.
The cells of frog embryos with messenger RNA coding enabled the Xenobots to record when exposed to blue light (at around 390 nm of wavelength).
The scientists tested the above function on ten Xenobots that were swimming around a surface where one spot was illuminated by the light of 390 nm of wavelength. After two hours, three of the bots emitted red light and the rest remained green. This provides a memory of their travel experience.
The FDA of the US recently approved the ADHD drug for treating patients in the age group of 6 to 17 years. ADHD is Attention Deficit Hyperactivity Disorder. The ADHD drug belongs to a group of medicines called stimulants. These drugs work by increasing the activity of the brain. Several controversies have arisen in the US as the FDA has approved the ADHD drug. This is the first ADHD drug approved by FDA in ten years.
What are the controversies over the approval?
The ADHD drug that has been approved by the FDA is called Qelbree. Qelbree was developed by Supernus Pharmaceuticals of Rockville, Maryland. The controversies over the approval of Qelbree are due to the fact that it carries a warning of “potential for suicidal thoughts and behaviour”.
ADHD in the US
The ADHD affects more than six million American children and adolescents in the United States. These children struggle to pay attention and complete tasks. They also show signs of impulsiveness and fidgeting.
There are two categories of ADHD Drugs. They are Stimulants and Non-Stimulants. According to FDA, the stimulant medications increase dopamine levels in brain. Dopamine is a brain chemical that is associated with motivation and attention. However, stimulant medications can bring side effects such as high blood pressure, headaches, insomnia and decreased appetite. Most of the ADHD drugs are classified as Schedule II substances as they pose risk of abuse and dependence.
Non-stimulant ADHD drugs include duanfacine, atomoexetine and clonidine.
ADHD in India
The ADHD affects 2% to 7% of children globally. In India more male child were found to have ADHD. 83.3% of the patients in India discontinue taking their medicines within the first month. The Indian parents cite the following reasons for stopping the medication:
Lack of effectiveness
Problems at the hospital
Fear that the child might become addicted.
The President of Israel recently issued a mandate for Benjamin Netanyahu to try and form the Government. Benjamin has been given twenty-eight days to form the government.
In March 2021, Israel conducted elections. This is the fourth election in two years. However, the election results ended with no majority. Neither Netanyahu nor his opponent Benny Gantz secured the required majority to form the government. However, in consultations with the political parties, Netanyahu received more endorsements and thus the president has invited him to try and form the government.
What is the issue?
The thirty fifth Government of Israel was sworn in on May 17, 2020. It was originally to be established following the April 2019 election. However, Knesset dissolved by itself as none could form a majority Government. Knesset is the Unicameral National Legislature of Israel. Following this a third election was held in 2020. After this election, Netanyahu and Gantz finally reached on an agreement to form a national unity Government. A National Unity Government is a coalition government that consists of all parties in the legislature. However, this government was dissolved in December 2020. Thus, Israel went for elections again in 2021.
Netanyahu served as the Prime Minister of Israel between 1996 and 1999. Also, he served as the Prime Minister since 2009. During his fourth term as Prime Minister of Israel, that is, in 2017, the police investigation on Netanyahu began. He was investigated in two cases namely Case 1000 and Case 2000. He was charged of crimes involving fraud, bribes and breach of trust in both the cases. In 2018, he was charged of corruption. Some critics consider this as the major cause of 2019-2021 Israeli political crisis that began after April 2019 elections.
RXIL is Receivables Exchange of India. Recently RXIL has become the first TReDS platform to cross monthly throughput of Rs 1000 crores. The transaction volume in the platform grew from Rs 69 crores in April 2020 to Rs 1,105 crores in March 2021. This shows economic recovery in the country. Also, it shows that the MSME sector that was badly hit during COVID-19 is getting revived.
RXIL was incorporated in 2016.
It is a joint venture between Small Industries Development Bank of India (SIDBI) and National Stock Exchange of India Limited.
It operates TReDS.
It was the first entity to receive approval from RBI to launch the first TreDS Exchange of India.
RXIL is an integrated provider of financial platform that supports growth and development of MSMEs.
What is TReDS?
TReDS is an electronic platform that facilitates financing of MSMEs through multiple financiers.
The main three participants in the TreDS are MSMEs (sellers), financiers and Corporate entities (buyers).
According to RBI, only MSMEs can participate as sellers in TReDS.
In 2015, RBI granted approval for SIDBI and NSICL to set up and operate TReDS.
It can help the MSMEs unlock their working capital.
It ensures higher efficiency and capital management.
How does TReDS work?
The seller first uploads an invoice. This invoice waits for an acceptance from a buyer. After the buyer accepts the invoice, it goes for auction. The financiers enter discounting rates. The party bearing the interest cost will accept the best bid. Later the financier account is debited and seller account is credited.
Legality of TReDS
The RBI granted permission for the operation of TReDS in the country based on the guidelines under Payment and Settlement System Act, 2007.
The Uttar Pradesh Cabinet recently approved the Uttar Pradesh Regulation of Urban Premises Tenancy (second) Ordinance, 2021. The ordinance will reduce the tenancy disputes.
Key Features of the Ordinance
The ordinance makes it mandatory to sign contract will to rent out a property. This is being done to safeguard the interests of both the tenant and the owner.
The ordinance will establish rent authority and rent tribunal to solve disputes. Currently there are no clear mechanisms for conflict resolution.
The ordinance will help 1.1 crore vacant homes in the urban region to get suitable tenants in the state of Uttar Pradesh.
It will encourage people to invest in more properties for renting purposes.
It will help in bringing robustness and dynamism to the real estate market. This is because the provisions in the ordinance will reduce the friction between property owners and tenants.
The ordinance is very much similar to the Draft Model Tenancy Act.
Model Tenancy Act
The Model Tenancy Act was framed by the Ministry of Housing and Urban Affairs. It is yet to be passed in the parliament. The key features of the Model Tenancy Act are as follows:
Formation of Rent Authority. Every tenancy agreement should be reported to this rent authority.
For non-residential tenancy, the residential housing security deposit is to be capped at one month interval and for residential-housing security deposit is to be capped at two months interval.
The landlords should provide access to basic amenities.
The landlords cannot hike the property rent in the middle of a tenancy term.
The tenants shall not sublet the property without the permission of the landlord.