Daily News Simplified - DNS 03 01 20

Notes

SL. NO. TOPICS

THE HINDU

PAGE NO.

1 IRDAI norms for standard health cover 15

2 Bharat bond debuts on bourses 15

3 In the ruins of unilateralism 10

4 A weak test 10

5 5 DRDO Young Scientists Labs launched 08

Dated: 03-Jan-2020 DNS Notes Title 1. IRDAI norms for standard health cover (The Hindu, Page 10)

Syllabus Prelims: Indian Economy Theme Insurance and Standard Health Cover Highlights The News

• The IRDAI has issued guidelines on standard individual health insurance to offer a product that can take care of basic health needs of customers with a maximum sum insured of ₹5 lakh and a minimum of ₹1 lakh.

• In order to make health insurance policies more transparent and inclusive, the IRDAI guideline is to standardize health insurance policies in the country.

Background • While the health space in India is witnessing changing technology and novel

treatments, the health insurance policies have to increase their scope in order to keep apace.

• The health insurance sector in India is clogged with issues including lack of awareness about exclusion lists, claim denial, reduced payouts etc.

• In this backdrop, the Insurance Regulatory and Development Authority of India (IRDA), has prepared guidelines to standardize health insurance policies in India with the main aims of Standardize Exclusion list Increase Transparency and Enhance Uniformity and Inclusiveness and Make them Consumer-friendly

Challenges in health insurance products 1. Advanced Medical Procedures • The current health insurance policies do not cover a number of novel treatments

and medical procedures in case of critical illnesses. • The ‘exclusion list’ in most health insurance policies currently incorporates the

novel medical procedures such as robotic surgery, hormone replacement therapy, balloon sinuplasty, oral chemotherapy, cyber knife, stem cell therapy including implants, laser surgery in case of cataract, dental treatment and other aesthetic surgeries.

• This increases the out-of-pocket expenditure of the patient 2. New-age diseases

I. Life-style disorders • As a result of growing urbanization, changing lifestyles and nutrition transition,

we are witnessing changes in the disease profile in the population with increasing lifestyle disorders including non-communicable diseases.

• Most insurance policies do not cover these lifestyle diseases such as infertility, obesity and other chronic degenerative, physiological diseases.

II. Non-communicable diseases • Non-communicable diseases contribute to 61.8% of the disease burden in India

today. • Non communicable diseases such as hypertension, diabetes, cardio-vascular

diseases etc covered under current insurance policies have high waiting periods and thus prove to be ineffective

3. Lack of Transparency

Dated: 03-Jan-2020 DNS Notes

• One of the major concerns in health insurance sector in India is non-declaration or misrepresentation of material facts in the policy contract.

• In addition, lack of standard terminologies, ambiguous wordings in the policy contract discourages insurance penetration among consumers.

4. Pricing Mechanism • The pricing mechanism of health insurance products is heavily dependent on a

number of non-payables including non-medical consumables such as toiletries, cosmetics, administrative costs, room charges etc

• Further the add-on features in the health insurance product significantly increase the price of the insurance product.

• Without the knowledge of non-payables the consumer end up paying more than expected increasing the out-of-pocket expenditure.

• This is a major hurdle for health insurance penetration in India. Guidelines for Standard Health Insurance Policy In order to overcome the aforesaid challenges, the IRDA has released guidelines to be followed by insurance companies in India for designing a standard health insurance policy. Main Features Basic Cover

• The standard health insurance product will have a minimum basic sum insured of ₹1 Lakh and a maximum limit of ₹5 Lakh.

• The standard health insurance product standardizes entry-age to cover those in the age bracket 18-65years.

• This is aimed at increasing the health insurance penetration in India which is which is less than 20%.

Need-based Coverage • The standard health insurance product will be a product with basic mandatory

covers and no additional or add-on covers. • This will standardize the pricing mechanism to a great extent.

Standardize Exclusion List • In 2012 IRDA had release a standard exclusion list of 199 products. • Now the regulator is set to streamline the exclusion list in order to minimize the

items in the list. • The exclusion list will have pre-decided list of diseases which are not covered

under the product. • Besides the exclusion list will be based on diseases and not treatments. • Thus the ‘basic cover’ under the standard health insurance product will cover

novel treatments like intensive care unit, treatment of cataract, dental treatment, plastic surgery due to disease or injury etc.

Enhanced coverage including AYUSH • The standard mediclaim product will included expenses incurred on treatment

under Ayurveda, Unani, Siddha and Homeopathy subject to fixed and standard sub-limits.

Post and Pre hospitalization Expenses • The standard product should include pre-hospitalisation costs for a period of not

less than 30 days prior to the date of hospitalisation and post-

Dated: 03-Jan-2020 DNS Notes

hospitalisationmedical expenses incurred for a period of not less than 60 days from the date of discharge.

Incentive to Wellness • The product will include incentives to wellness in general. • This will be done through free regular health check-ups, disease management,

fitness activities etc. About IRDA

• Insurance Regulatory and Development Authority is an autonomous body responsible for regulating insurance industry in India.

• It is further entrusted with the responsibility of protecting the interests of the policyholders and increase insurance penetration in the country.

• IRDA is a statutory body set up under the IRDA Act, 1999 Main Functions

• Frames regulations for insurance industry. • Registrations of new insurance companies • Monitoring insurance sector activities • Licensing and establishing norms for insurance intermediaries • Regulating and overseeing premium rates and terms of non-life insurance covers • Ensuring the maintenance of solvency margin by insurance companies • Ensuring insurance coverage in rural areas and of vulnerable sections of society

Dated: 03-Jan-2020 DNS Notes

Personal Notes

P

Dated: 03-Jan-2020 DNS Notes Title 2. Bharat bond debuts on bourses(The Hindu Pg. No.15) Syllabus Prelims: Economy Theme About Bharat Bond ETF Highlights Context

• Bharat Bond ETF has made its maiden debut in the secondary market as the first corporate Bond ETF in the country.

• Earlier the Cabinet Committee on Economic Affairs had approved for the establishment of Bharat Bond Exchange Traded Fund (ETF) to create an additional source of funding for Central Public Sector Undertakings (CPSUs) Central Public Sector Enterprises (CPSEs), Central Public Financial Institutions (CPFIs) and other Government organizations.

Features of Bharat Bond ETF: • ETF will be a basket of bonds issued by CPSE/CPSU/CPFI/any other Government

organization Bonds which are tradable on secondary market. • Small unit size Rs 1,000 to attract retail investors • Each ETF will have a fixed maturity date with 2 maturity series 3 and 10 years

Benefits of Bharat Bond ETF to investors • Safety as they are investing in government bonds • Liquidity as they are tradable on exchange • Since unit value is only Rs. 1000 it provides for easy and low-cost access to

bond markets thereby increasing the participation of retail investors who are currently not participating in bond markets due to liquidity and accessibility constraints.

Benefits for CPSEs • Additional source of meeting their borrowing requirements apart from bank

financing. • It will expand their investor base through retail participation which can increase

demand for their bonds. • With increase in demand for their bonds, these issuers may be able to borrow

at reduced cost thereby reducing their cost of borrowing over a period of time. Overall impact on Bond Markets

• This is expected to eventually increase the size of bond ETFs in India leading to achieving key objectives at a larger scale - deepening bond markets, enhancing retail participation and reducing borrowing costs.

What are ETFs? • ETF is a fund that is created by pooling together assets and then dividing this

cumulated asset into individual units that are traded on the stock exchange. • The value of the ETF comes from the value of the underlying assets (shares of

stock, bonds, foreign currency, etc.). • These ETFs are listed in the stock exchanges are similar to like shares and can

be traded like ordinary shares. • In nature, the ETFs are index funds because they comprise of shares of different

companies. ETF vs Mutual Funds

• ETF is similar to Mutual fund in that a unit of both ETF and MF comprise of equities of different companies.

• However they differ with respect to the tradability on the stock exchange.

Dated: 03-Jan-2020 DNS Notes

• While buying and selling of mutual fund means you are transacting directly with the fund, the ETF is basically traded on a secondary market just like shares.

• Besides while Mutual Fund is managed by a fund managers and ETF is managed by the investor himself.

• While mutual fund is bought and sold at the price of shares at the close of the day, shares of ETF are traded throughout the day meaning which ETFs have more liquidity and marketability.

Personal Notes

Dated: 03-Jan-2020 DNS Notes Title 3. In the ruins of unilateralism(Page number 10) Syllabus Mains: GS Paper II: International Relations Theme Decline in the Influence of USA Highlights Some important highlights of the global politics in year 2019 are as follows:

• Chinas growing assertiveness in trade as well as in foreign policy • Iran’s calculated defiance of USA • Emergence of Turkey as a key player in West Asia • Relative decline of America’s power

But before that, let us see how USA showed its dominance in past few decades:

• It controlled and manipulated global institutions like UN, IMF and World Bank • It maneuvered international support in its favor to attack Afghanistan and Iraq

o Despite UN opposition But global situation has changed since and three developments in 2019 have suggested that the US’s ability to shape global politics is clearly receding:

• The Afghan War: o The war which started in 2001 is nowhere near conclusion. o The US entered into the war with the intention of toppling the Taliban

regime but lately it is actively negotiating with the later. o The whole afghan fiasco indicates that USA has a superior conventional

power and hence it can topple any regime, but it lacks the prowess to stabilize the governments that it props up. The early withdrawal of USA from Afghanistan will leave

Afghanistan troubled for a very long time. • The Iran standoff:

o The current standoff between USA and Iran began after unilateral withdrawal of the earlier from Nuclear deal.

o The idea was to put immense pressure on Iran to force it renegotiate the nuclear deal.

o But Iran countered this “Maximum Pressure” by “Maximum Resistance” and also took following aggressive actions: It shot down an American drone and captured British oil tankers Attacked Saudi oil facilities

o Now we know the long association of Saudi and USA and hence attack on Saudi oil facilities were seen as a direct challenge to USA and hence it was expected that USA will take these offensives seriously, but the only measure which USA took was imposing more sanctions.

• Cracks in NATO o The creation and sustenance of NATO has been led by USA to counter

now dysfunctional USSR. o But the military alliance has come under strain in recent past due to

following reasons: Emergence of populist and nationalist leaders which view these

alliances as too much of commitment:

Dated: 03-Jan-2020 DNS Notes

• Trump in USA, Erdogan in Turkey and Putin in Russia Actions on behalf of Turkey

• It created a buffer zone in bordering areas of Turkey to be guarded by combination of Russian and Turkish forces.

o These Kurdish areas had so far housed USA forces which were compelled to withdraw.

• Turkey has purchased S-400 missile system from Russia which led to its expulsion from F-35 (considered the most advanced fighter jet) program.

Now these incidents do not mean that the dominance of USA of global affairs is over. But they indicate the ability of the USA shape the post war outcomes is very low. And this is indicated by the outcomes from Afghanistan, Libya and Iraq.

Personal Notes

Dated: 03-Jan-2020 DNS Notes Title 4. A weak test(The Hindu Page 10)

Syllabus GS II: Polity & Governance

Theme About Swachh Survekshan Survey

Highlights Context: Recently, the Union Ministry for Housing and Urban Affairs has published the results of the Swachh Survekshan survey. In this regard, this editorial highlights that the survey is indeed a novel method to enhance cleanliness and sanitation. However, at the same time, there is a need to recalibrate the survey so as to focus on sustainability rather than mere symbolism. About Swachh Survekshan Survey • First launched in July 2017 it is a ranking exercise taken up by the Government of

India to assess rural and urban areas for their levels of cleanliness and active implementation of Swachhata mission initiatives in a timely and innovative manner.

• The objective of the survey is to encourage large scale citizen participation towards making towns and cities a better place to live in.

• The survey fosters a spirit of healthy competition among towns and cities to improve their service delivery to citizens, towards creating cleaner cities and towns. The Ministry of Urban Development takes up the Swachh Survekshan in urban areas and the Ministry of Drinking Water and Sanitation in rural areas.

• The Quality Council of India (QCI) has been commissioned the responsibility of carrying out the assessment.

Concerns raised in the article Infrastructural bottlenecks: One of the main components of the Swachh Bharat Mission (SBM) is the Solid Waste Management (SWM) which requires huge investment in the setting up of Sewage treatment plants (STPs). However, most of the urban local bodies have failed to effectively manage their garbage which is evident in the rising mountain of garbage at the Ghazipur landfill in Delhi. Hence, there is a need to provide extended funding to the states for creating the necessary infrastructure for the management of the wastes. Absence of Integrated outlook: Most of the Urban Local bodies work in silos and adopt a narrow outlook towards the improvement of cleanliness and sanitation. They have failed to realise that Swachh Bharat cannot be successful unless there is an integrated outlook which takes into account all the holistic view of housing, sanitation, water-supply, waste management and transport. Lack of Emphasis on Circular Economy: Across the world, there has been growing emphasis on the circular economy to reduce the human footprint and improve the natural environment. Under the circular economy, maximum emphasis is on 3Rs- Reduce, Reuse and Recycle. Going forward, the Survey must give highest weightage to this dimension for the ranking of the cities. This would foster competitive spirit among the cities for adoption of the circular economy in their policies.

Personal Notes

Dated: 03-Jan-2020 DNS Notes

Dated: 03-Jan-2020 DNS Notes Title 5. DRDO Young Scientists Labs launched(The Hindu Page 08)

Syllabus Prelims: Science and Technology

Theme Young Scientists Laboratories Highlights Context:

Prime Minister has recently dedicated to the nation 5 Young Scientists Laboratories of Defence Research and Development Organisation (DRDO). Details

• DRDO Young Scientist Laboratories (DYSLs) are located in five cities viz, Bengaluru, Mumbai, Chennai, Kolkata and Hyderabad. Each lab will work on a key advanced technology of importance to the development of futuristic defence systems viz, Artificial intelligence, Quantum technologies, Cognitive technologies, Asymmetric technologies and Smart materials.

• The establishment of the five DRDO Young Scientist Labs lays down the foundation for research and development of futuristic technologies. It will be a big leap forward for DRDO from the goal of making India self reliant to future ready in defence technologies.

Personal Notes