A mutual fund is an investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and other assets.
Mutual funds are operated by professional money managers, who allocate the fund’s investments and attempt to produce capital gains and/or income for the fund’s investors.
Mutual Funds are regulated by SEBI.
What is the Total Expense Ratio (TER)?
The total expense ratio (TER) is a measure of the total costs associated with managing and operating an investment fund, such as a mutual fund.
These costs consist primarily of management fees and additional expenses, such as trading fees, legal fees, auditor fees and other operational expenses.
For example, if a fund charges 2% as the TER, and the fund produces a gross profit (return) of 15% in a given year, the investor would get 13% – which is the gross profit minus the TER – in their hands.
Therefore, TER is an important number to focus on since it has a direct impact on their returns.
It is calculated by dividing the total annual cost by the fund’s average assets over that year, and is expressed as a percentage.
What is an ‘Assets Under Management – AUM’?
Assets under management (AUM) is the total market value of assets that an investment company or financial institution manages on behalf of investors.
Assets under management definitions and formulas vary by company.
Some financial institutions include bank deposits, mutual funds and cash in their calculations. Others limit it to funds under discretionary management, where the investor assigns responsibility to the company.
What was the issue?
It has been argued that while the MF industry has benefited in terms of growth in revenues from the rise in AUM, the benefits had not been passed on adequately to investors, even as their expenditure on managing the fund rose marginally.
Solution- TER Rationalisation
The Sebi Board took note of the benefits of the proposal with respect to sharing of economies of scale, lowering the cost for mutual fund investors, bringing in transparency in appropriation of expenses, and reducing mis-selling and churning.
What are the changes made by SEBI now to TER?
SEBI has, across the board, lowered the TER that a fund house can charge its investors.
The reduction is higher for larger funds and lower for smaller funds — larger and smaller being a measure of how much money a fund manages.
The reduction has been anywhere between 0.01% to 0.44%.
For very small funds, SEBI has actually increased the allowable expense ratio a little.
However, in general, mutual fund investors should see a marginal reduction in the fee they were paying, which would mean they would see an increase in the returns they were getting.
Also, SEBI has specified the expense ratio for funds larger than the largest funds today, in anticipation of market growth.
How investor will benefit?
Investors can save up to 80-90 basis points in charges, every year, on their AUM.
For example, the SBI Bluechip Fund (AUM over Rs 20,000 crore) has a TER of 2.35%.
Under the new rules, the TER will come down to 1.4% (plus the additional TER on account of inflows from B-15 cities), and thus the investor will save between 80 and 90 basis points.
An investment of Rs 1 lakh in the scheme, growing at, say, 10% for 20 years with a TER of 2.35%, would have grown to a corpus of Rs 4.18 lakh; the same investment with a TER of 1.5% would grow into a corpus of Rs 4.99 lakh.
How the changes will affect mutual fund houses?
For mutual fund companies, there will definitely be a loss of revenue, as there will be for other participants in the industry, such as individual financial advisors and distributors.
The magnitude of the impact will be known only after we find out how the AMCs deal with the situation – in terms of, how much of the reduction they are passing on to the distributors and how much they are taking on in their own balance sheets.
In Focus: Sub Mission on Agricultural Mechanization
The Sub-Mission on Agricultural Mechanisation (SMAM) was introduced in April 2014 with an aim to have inclusive growth of farm mechanisation to boost productivity.
The scheme is implemented in all the states, to promote the usage of farm mechanization and increase the ratio of farm power to cultivable unit area up to 2.5 kW/ha.
Significance of Agricultural Mechanisation
It helps in increasing production through timely farm operations and cut in operations by ensuring better management of inputs.
The objectives of the Scheme are-
Increasing the reach of farm mechanization to small and marginal farmers and to the regions where availability of farm power is low.
Promoting ‘Custom Hiring Centres’ to offset the adverse economies of scale arising due to small landholding and high cost of individual ownership.
Creating hubs for hi-tech & high value farm equipments.
Creating awareness among stakeholders through demonstration and capacity building activities.
Ensuring performance testing and certification at designated testing centers located all over the country.
To achieve the above objectives, the Mission will adopt the following strategies:
Conduct performance testing for various farm machineries and equipments at the four Farm Machinery Training and Testing Institutes (FMTTIs), designated State Agricultural Universities (SAUs) and ICAR institutions.
Promote farm mechanization among stakeholders by way of onfield and off-field training and demonstrations.
Provide financial assistance to farmers for procurement of farm machinery and implements.
Establish custom hiring centres of location and crop specific farm machinery and implements.
Provide financial assistance to small and marginal farmers for hiring machinery and implements in low mechanized regions.
Promotion and Strengthening of Agricultural Mechanization through Training, Testing and Demonstration
Aims to ensure performance testing of agricultural machinery and equipment, capacity building of farmers and end users and promoting farm mechanization through demonstrations.
Demonstration, Training and Distribution of Post Harvest Technology and Management (PHTM)
Aims at popularizing technology for primary processing, value addition, low cost scientific storage/transport and the crop by-product management through demonstrations, capacity building of farmers and end users. Provides financial assistance for establishing PHT units.
Financial Assistance for Procurement of Agriculture Machinery and Equipment
Promotes ownership of various agricultural machinery & equipments as per norms of assistance.
Establish Farm Machinery Banks for Custom Hiring
Provides suitable financial assistance to establish Farm Machinery Banks for Custom Hiring for appropriate locations and crops.
Establish Hi-Tech, High Productive Equipment Hub for Custom Hiring
Provides financial assistance to set up hi-tech machinery hubs for high value crops like sugarcane, cotton etc.
Promotion of Farm Mechanization in Selected Villages
Provides financial assistance to promote appropriate technologies and to set up Farm Machinery Banks in identified villages in the states.
Financial Assistance for Promotion of Mechanized Operations/hectare Carried out Through Custom Hiring Centres
Provides financial assistance on per hectare basis to the beneficiaries hiring machinery/equipments from custom hiring centres in low mechanized areas.
Promotion of Farm Machinery and Equipment in North-Eastern Region
Extends financial assistance to beneficiaries in high-potential but low mechanised states of north-east.
SMAM will have Central Sector Schemes under component No.1 & 2 (given above) in which Government of India contributes 100%.
It will be a Centrally Sponsored Schemes are covered under component No. 3 to 8 (given above) including Administrative and Flexi funds in which Government of India contributes 60% and states contribute 40% except North eastern states and Himalayan regions states where it is 90 %(Central Share) and 10% (State Share). For Union Territories, it is 100% centre share.
It is the treaty between the Government of India and the Government of Pakistan with twin objectives-
Water sharing of river Indus and its tributaries between the upper riparian India and lower riparian Pakistan.
Optimum utilisation of the waters of the Indus system of rivers.
It was signed under the arbitration of the International Bank for Reconstruction and Development (which is now World Bank) in Pakistan in 1960.
The Indus Waters Treaty is one of the most liberal water distribution agreements between the two countries as it gives India 20% of the water from the Indus River System and the rest 80% to Pakistan.
Rivers Covered under the Treaty
The treaty covers the water distribution and sharing rights of-
Three Eastern Riversof Ravi, Beas and Sutlej and their tributaries
Three Western Riversof Indus, Jhelum and Chenab and their tributaries
Major Provisions of the Treaty
Under this treaty, India got control exclusive over all the waters of the eastern rivers of Beas, Ravi and Sutlej.
Pakistan got control over the waters of the western rivers of Indus, Chenab and Jhelum except for except for specified domestic, non-consumptive and agricultural use permitted to India.
This implies that-
All the waters of the three eastern rivers, averaging around 33 million acre-feet (MAF), were allocated to India for exclusive use.
The waters of the western rivers averaging to around 135 MAF were allocated to Pakistan except for ‘specified domestic, non-consumptive and agricultural use permitted to India,’ according to the treaty.
India has also been given the right to generate hydroelectricity through the run of the river (RoR) projects on the western rivers which, subject to specific criteria for design and operation, is unrestricted.
Permanent Indus Commission
A Permanent Indus Commission was set up by the United Nations for resolving any disputes that may arise in water sharing, with a mechanism for arbitration to resolve conflicts amicably.
As per the Treaty, both India and Pakistan have created a permanent post of Commissioner for Indus Waters which together constitutes the Permanent Indus Commission (PIC).
It is also entrusted with the implementation of the Treaty.
The water commissioners of Pakistan and India are required to meet twice a year and arrange technical visits to projects’ sites and critical river head works.
Both sides are required to exchange information related to river flows observed by them, not later than three months of their observation.
They also exchange specified information on agricultural use every year and the quantum of water being used under the treaty.
India is also under obligation to supply information of its storage and hydroelectric projects as specified.
Major Issues of IWT
In 2016, Pakistan had approached the World Bank raising concerns of India’s Kishenganga and Ratle hydroelectric power projects being constructed in Jammu & Kashmir region. India then requested for neutral experts to inspect the plants. The World Bank permitted India to proceed with the projects.
India also expresses its objection to Pakistan’s Left Bank Outfall Drain (LBOD) project which passes through the Rann of Kutch in India’s Gujarat. The lower riparian state is in India and hence it needs to be given all details. There is also the danger of flooding in the state of Gujarat.
The Indian government has decided some years back to review the suspension of Tulbul project. The project got suspended in 1987 after Pakistan’s objection.
Post Uri attacks on India, Indian Prime Minister Modi remarked that blood and water cannot flow simultaneously which was an indication that India can rethink the provision of the IWT.
India does not use its entire share of water it is entitled to as per the provisions of the IWT. About 2 million acre feet (MAF) of water from the River Ravi flows into Pakistan unutilised by India. However, GOI is taking slew of measures for that.
After Pulwama attacks in 2019, the Indian government decided that all water flowing into Pakistan from the three eastern rivers, will be diverted to Haryana, Punjab and Rajasthan for different uses.
India’s Utilization of Eastern Rivers
To utilise the waters of the Eastern rivers which have been allocated to India for exclusive use, India has constructed-
Bhakra Dam on Satluj
Pong and Pandoh Dam on Beas
Thein (Ranjitsagar) on Ravi
These storage works, together with other works like Beas-Sutlej Link, Madhopur-Beas Link, and Indira Gandhi Nahar Project have helped India utilise nearly the entire share (95 per cent) of the eastern river waters.
However, about two MAF of water annually from Ravi is reported to be still flowing unutilised to Pakistan.
To stop the flow of these waters, the Centre is currently taking steps like-
Resumption of construction of Shahpurkandi project
Significance of Soyabean for Madhya Pradesh has been explained.
History of Soyabean in India
Malwa is India’s Midwest US and Indore its Chicago and that’s only because of soyabean.
Soyabean in India has an American connection.
The leguminous oilseed was hardly grown in the country till the mid-sixties.
The first yellow-seeded soyabean varieties were introduced by University of Illinois scientists, who conducted field trials at the Jawaharlal Nehru Krishi Vishwa Vidyalaya (JNKVV) in Jabalpur, Madhya Pradesh.
Many of these varieties — with names such as Bragg, Improved Pelican, Clark 63, Lee and Hardee — were released for direct cultivation.
By 1975-76, the all-India area under soyabean had touched around 90,000 hectares but the revolution took place only after that.
The strains imported from US Midwest had a maturity period of 115-120 days from seed to grain.
In 1994, JNKVV released an indigenously bred variety, JS 335 and later JS 9560 and JS 2034.
Story of Soyabeancrop in Madhya Pradesh
The plateau region of western MP — covering the districts of Dewas, Indore, Dhar, Ujjain, Jhabua, Ratlam, Mandasur, Neemuch, Shajapur and Rajgarh — traditionally grew only a single un-irrigated crop of wheat or chana (chickpea) during the rabi winter season.
Farmers mostly kept their lands fallow during the kharif monsoon season.
The reason was the monsoon’s unpredictability: Even if the rains arrived on time, it could be followed by long dry spells.
Sometimes, it rained so much that the fields would get waterlogged, damaging the standing crop.
The best option, then, was to allow the soil to retain water from the monsoon rain and take a rabi crop using this residual moisture.
The change came with the advent of tube-wells in the mid-seventies.
The Malwa plateau is made up of hard basaltic rocks of the Deccan Trap.
Since these had aquifers with unutilised groundwater in many places, it was possible to drill tube-wells and grow irrigated wheat.
Farmers also now felt no need to conserve rainwater during monsoon.
They could, instead, raise a kharif crop on this previously fallow land and that kharif crop was soyabean.
Reasons for selection of Soyabean by MP
It could tolerate water-logging for 2-3 days and survive dry spells for over three weeks without much yield loss.
Being a legume, its root nodules harboured atmospheric nitrogen-fixing bacteria.
When harvested, it left behind 40-45 kg of nitrogen per hectare — equivalent to nearly two 50-kg urea bags — for the succeeding crop.
Soyabean’s main advantage, though, was duration.
The indigenously bred variety, JS 335 not only matured in just 95-100 days, but yielded 25-30 quintals per hectare, which was 5-10 quintals more.
The crop duration fell further to 80-90 days with varieties like JS 9560 and JS 2034.
It could grow well in the Malwaregion’s black cotton soil and didn’t require much effort; farmers simply had to prepare the field, sow the seeds, do some basic intercultural and weeding operations, and harvest after three months.
Farmers were assured of a minimum yield even under waterlogged or drought conditions.
The relative hardiness and shorter maturity — at least 10-15 days less than jowar (sorghum) or maize — made soyabean the ideal kharif crop.
Facts regarding Soyabean production in India and MP’s share in it
By 1979-80, the country’s soyabean area had reached 0.5 million hectares.
It rose further to 2.25 mh in 1989-90 and 6 mh towards the end of the century, with MP accounting for 70 per cent.
Within MP, soyabean cultivation spread to other districts as well, especially in the neighbouring Vindhya plateau (Sehore, Raisen, Bhopal, Vidisha, Sagar and Guna) and the Narmadapuram division (Harda, Hoshangabad and Betul).
Even in 2017, Malwa’s share in MP’s 5 mh (out of India’s 10.2 mh) was well over 50 per cent.
Soyabean-wheat became the dominant crop cycle in this region, just as for the US Midwest or paddy-wheat in the case of Punjab and Haryana.
Significance of soyabean for Madhya Pradesh
In Malwa, soyabean’srelevance even shaped electoral outcomes, which may be compared to sugarcane in western Uttar Pradesh.
Soyabean had only 18-20 per cent oil content, as against 40-45 per cent in mustard or groundnut.
The real potential lay in the balance 80-82 per cent de-oiled cake and extractions, also called meal.
The protein-rich meal could be exported out, especially to South-East/East Asia where it was used as an ingredient for animal feed.
Soon the businessman spotted an export market for Indian soya-meal andstarted setting up solvent extraction plants for processing soyabean.
The real boom in Soyabean production in Madhya Pradesh happened only from the mid-2000s, which was when Shivraj Singh Chouhan also took over as MP Chief Minister.
Between 2002-03 and 2013-14, the value of soya-meal shipments from India soared from just over Rs 1,360 crore to almost Rs 14,500 crore.
As the fortunes of the industry rose, realisations from oil, too, went up — so did that of soyabean growers in Malwa and the neighbouring regions of MP.
During this period, the average price of soyabean in Indore market climbed from Rs 1,353 to Rs 3,667 per quintal.
All these factors provided political mileage for two consequent terms to the running Shivraj Singh Chauhan’s government.
Issues with soyabean and collapse of its boom
The Soyabean boom collapsed after 2013-14, along with a crash in global agri-commodity prices.
The period since then, coinciding with Chouhan’s third term, has seen soya-meal exports plunge to Rs 1,900 crore in 2015-16, before recovering somewhat in the following years.
Soyabeanrealisations have also fallen to Rs 2,900-3,000 per quintal levels.
The problem is not just economic, but also ecological.
The soyabean-wheat crop cycle has led to groundwater overexploitation, more so in Malwa.
The initial digging of bore-wells was a success, but now you need to dig deeper and deeper, as the top aquifers have been exhausted.
Moreover, soyabean itself has over the years become prone to pest and disease attack.
Yellow mosaic virus was once a problem confined to Northwest India but today, it has come even to soyabean in Central India and we saw it particularly in 2015.
There are also fungal diseases such as collar rot, rhizoctonia root rot and pod blight.
The pests that are increasingly causing crop damage include white fly (carrier of yellow mosaic virus), stem fly (whose larva feeds on the inner part of the stem, making it hollow), girdle beetle and tobacco caterpillar.
The main reason for pest and disease susceptibility is the absence of crop rotation and growing the same variety year after year.
Impact on politics
The collapse of soyabean boom could play out a major role in decision in the current Assembly elections.
It has to be seen if the ruling BJP could win the Malwa region as was in 2013.
However, the role of a crop grown in five mh in MP certainly cannot be ignored.
Crop rotation: It would help manage organic soil fertility and also help avoid or reduce problems with soil-borne diseases and some soil-dwelling insects.
Herbicide/pesticide resistant crops: It would enable farmers to use certain herbicides that will kill weeds without harming their crop.
Appropriate support price: It could reduce the stress of farmers due to loss occurred to them.
The Mars 2020 Perseverance mission is part of America’s larger Moon to Mars exploration approach that includes missions to the Moon as a way to prepare for human exploration of the Red Planet.
NASA is planning to send the first woman and next man to the Moon by 2024.
Thereafter, NASA will establish a sustained human presence on and around the Moon by 2028 through NASA’s Artemis program.
In Focus: NASA’s Mars Mission with Perseverance rover
By February 2021, the Perseverance rover is expected on land on Mars in Jezero Crater.
The 2,260-pound, 10-feet long rover is the biggest and heaviest robotic Mars rover NASA has ever built.
The Perseverance rover’s astrobiology mission is to:
Explore the diverse geology of its landing site, Jezero Crater
Seek out signs of past microscopic life on Mars
Jezero Crater is the perfect place to search for signs of ancient life.
Demonstrate key technologies that will help us prepare for future robotic and human exploration.
Perseverance is also carrying a small helicopter named Ingenuity.
If successful, Ingenuity will be the first aircraft to fly in a controlled way on another planet.
A technology demonstrator, Ingenuity’s goal is a pure flight test – it carries no science instruments.
Over 30 sols (31 Earth days), the helicopter will attempt up to five powered, controlled flights.
The data acquired during these flight tests will help the next generation of Mars helicopters provide an aerial dimension to Mars explorations – potentially scouting for rovers and human crews, transporting small payloads, or investigating difficult-to-reach destinations.
MOXIE instrument to make Oxygen:
The MOXIE (Mars Oxygen In-Situ Resource Utilization Experiment) instrument will attempt to demonstrate a technology that converts carbon dioxide in the Martian atmosphere into oxygen.
It could lead to future versions of MOXIE technology that become staples on Mars missions, generating oxygen that could be used by astronauts as rocket propellant and for breathing.
The ability to do so will be a critical consideration in planning human landings and bases on Mars.
Other Mars rovers of NASA:
Perseverance is NASA’s 5th rover to Mars.
The previous rovers were named Sojourner, Spirit, Opportunity, and Curiosity.
Sojourner finished its mission in 1997.
Spirit was active from 2004 to 2010.
Opportunity’s mission was declared complete in February 2019 after 15 years of work when NASA lost contact with the vehicle.
Note: Spirit and Opportunity were launched on the same NASA’s Mars Exploration Rover (MER) mission launched in 2003 and landed on Mars in 2004.