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Current Affairs: 21 November 2018



NATION

Farmers badly hit by note ban
  • Millions of farmers in India were unable to buy seeds and fertilisers for their winter crops because of demonetisation, according to a report submitted by the Union Agriculture Ministry to the Parliamentary Standing Committee on Finance.
  • The report submitted by the Ministry of Agriculture, said that demonetisation came at a time when farmers were engaged in either selling their Kharif crops or sowing the Rabi crops. Both these operations needed huge amounts of cash, which demonetisation removed from the market. “India’s 263 million farmers live mostly in the cash economy,” the report said, adding, “millions of farmers were unable to get enough cash to buy seeds and fertilizers for their winter crops. Even bigger landlords faced a problem such as paying daily wages to the farmers and purchasing agriculture needs for growing crops.”
  • Even the National Seeds Corporation (NSC) failed to sell nearly 1.38 lakh quintals of wheat seeds because of the cash crunch. The sale failed to pick up even after the government, subsequently, allowed the use of old currency notes of ₹500 and ₹1,000 for wheat seed sales.
  • According to sources, All India Trinamool Congress’ Dinesh Trivedi asked if the government was aware of a report by the Centre for Monitoring Indian Economy (CMIE), which stated that 1.5 million jobs were lost during January-April 2017 post-demonetisation.
  • The Labour Ministry filed a laudatory report on demonetisation.
  • The Ministry said that comparisons of quarterly employment surveys (QES) for the periods just before and after demonetisation revealed an increase of 1.22 lakh and 1.85 lakh respectively in the fourth and fifth round of the QES, in the total employment for establishments with 10 or more workers.
  • Farmers’ distress is an important issue in three of the five States that are facing Assembly poll — Madhya Pradesh, Rajasthan and Chhattisgarh.
Singapore backs India in patrol of Malacca Straits
  • Defence Minister of Republic of Singapore Ng Eng Hen said that “we strongly support India’s deep engagement with the ASEAN member-States’ participation in patrols along the Straits of Malacca with Singapore, and look forward to the inaugural conduct of the trilateral maritime exercise with Thailand in the Andaman Sea”. 
  • He was addressing a press conference with Defence Minister Nirmala Sitharaman at the Eastern Naval Command headquarters as part of the ongoing 25th Singapore-India Maritime Bilateral Exercise and the third Defence Ministers’ dialogue between the two countries.
Odisha House passes 33% reservation for women
  • The Odisha Assembly passed a resolution by unanimous voice vote for providing 33% reservation for women in Legislative Assemblies and Parliament.
  • Mr. Patnaik termed the motion as “historic”. The move is being viewed as a masterstroke to woo the women voters ahead of the forthcoming elections. There are 12 women legislators in the 147-member State Assembly at present.
  • Mr. Patnaik, known for initiating women-focussed programmes, said that no household, no society, no State, no country has ever moved forward without empowering its women. He appealed to the legislators to extend their support and adopt the resolution unanimously.
  • Mr. Patnaik, whose government has enhanced reservation for women in local bodies to 50%, said that the real number was much more than 50% in the State at present.
India, Russia to build stealth frigates
  • India signed a $500 million deal with Russia to locally manufacture two stealth frigates with technology transfer. The agreement was signed between Goa Shipyard Limited (GSL) and Rosoboronexport of Russia.
  • “The deal is for material, design and specialist assistance from Russia for the ships. Balance work will be done by GSL, and it will have a whole lot of Indian equipment, including BrahMos missiles,” Shekhar Mital, CMD of GSL, told The Hindu.
  • Mr. Mital added that work on the two frigates will start in two years by mid-2020 and is expected to be completed by 2026-2027.
  • The cost of the engines for the ships which would come directly from Ukraine and the cost of constructing them at GSL are in addition. While the ships are built by Russia, the engines are supplied by Zorya Nashproekt of Ukraine. Four gas turbine engines, gear boxes and specialist support will cost around $50 mn per ship, a Defence source said.
  • In October 2016, India and Russia signed an Inter-Governmental Agreement (IGA) for four Krivak or Talwar stealth frigates — two to be procured directly from Russia and two to be built by GSL. Of late, GSL has maintained a good track record. It has delivered 28 ships ahead of schedule in the past four years.
  • India recently signed a $1 bn deal with Russia for direct purchase of two frigates. The basic structures of the two frigates are already ready at the Yantar shipyard in Russia and will be finished now.
BASIC nations push for ‘climate finance’
  • Ahead of the United Nations Conference of Parties (COP) in December, Environment Ministers and top climate change negotiators from Brazil, South Africa, China and India (BASIC) convened in Delhi and said the countries — as a group — would continue to push for developed countries on their earlier commitment to providing $100 billion annually from 2020.
  • So far only a fraction of these monies have actually been provided, the BASIC group stated.
  • This year’s edition of the COP — the 24th such meeting — will see representatives from at least 190 countries, think-tanks, and activists converge in Katowice, Poland from December 2 to 14 to try to agree on a Rule Book that will specify how countries will agree to take forward commitments taken at the 21st COP in Paris in 2015. 
  • At that meeting, countries had agreed to take steps to limit global warming to 2C below pre-industrial levels. A key aspect to make this possible is climate finance, but countries so far aren’t agreed on what constitutes climate finance: do investments made by private companies in developed countries in new green technology count? Does improving efficiency in a thermal plant count?
‘Cases under SC/ST Act not false’
  • The high rate of acquittals seen under the Scheduled Castes Scheduled Tribes (Prevention of Atrocities) Act of 1989 is not because the cases are false or malafide. It is because of the failure of the police and the prosecution to render justice to a section of society which has suffered social stigma, poverty and humiliation for centuries, the Centre told the Supreme Court.
  • The government was explaining its decision to enact the Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Amendment Act, 2018.
  • The 2018 Act nullified a March 20 judgment of the Supreme Court, which allowed anticipatory bail to those booked for committing atrocities against SCs and STs. The original 1989 Act barred anticipatory bail.
  • The apex court verdict saw a huge backlash across the country. 
  • The government reacted by filing a review petition in the Supreme Court and subsequently amended the 1989 Act back into its original form.
  • In August, several petitions were filed challenging the 2018 amendments. The Supreme Court, however, refused to stay the implementation of the amendments.
Row over RBI defaulter list persists
  • A Right to Information (RTI) appeal against the RBI’s refusal to disclose a list of wilful defaulters has exposed the fault lines within the Central Information Commission.
  • In a hard-hitting letter written on the eve of his retirement, Information Commissioner Sridhar Acharyulu defended his decision to discuss the case in the media as “an ethical exercise in pursuance of transparency”.
  • “Information Commissioner’s primary duty is to uphold and implement RTI Act, which was being violated by important public authorities like RBI,” Mr. Acharyulu wrote in response to objections voiced by Chief Information Commissioner R.K. Mathur over his “overstepping” the boundaries of his role, contradicting other CIC members and speaking to the media.
  • According to the letter, Mr. Mathur told Mr. Acharyulu on November 8 — after the Information Commissioner had issued a show-cause notice directly to the RBI Director — that he had violated unwritten protocol by taking on the case when a substantial portion of the appeal dealt with the RBI, putting fellow Commissioner Sudhir Bhargava (who has been allotted responsibility for RBI-related appeals according to the CIC website) in an embarrassing position.
  • Mr. Acharyulu responded that he had not chosen the case; it had been routinely issued to him by the registry as it also had questions to the Labour Ministry, which is a subject allotted to him.
India offers many roads, says President
  • India and Vietnam “share a vision for the Indo-Pacific” and will launch their first “Bilateral Maritime Security Dialogue” in early January, announced President Ramnath Kovind during a visit to Hanoi, as he took a broad swipe at China’s Belt and Road Initiative in an address to the National Assembly on Wednesday.
  • “India offers a cooperation model that does not require its friends to make choices but rather expands choices and expands opportunities for all; that opens not one but many roads,” Mr. Kovind, who is the only foreign leader besides Chinese President Xi Jinping to address the Assembly.
  • Mr. Kovind also said Vietnam and India concurred on the South China Sea as a “critical component” of the Indo-Pacific, which is the area of another flashpoint with Beijing, that has a territorial dispute with Hanoi over the Spratly Islands.

    ECONOMY

    Capital deadline extension credit negative: Moody’s
    • The Reserve Bank of India’s (RBI) decision to extend the deadline for the last tranche of capital conservation buffer by one year is credit negative for banks, rating agency Moody’s said.
    • In its board meeting, the central bank, while deciding to retain the CRAR at 9%, agreed to extend the transition period for implementing the last tranche of 0.625% under the Capital Conservation Buffer (CCB), by one year, that is, up to March 31, 2020.
    • “With the regulatory timelines now extended, at least some of the rated public sector banks’ CET1 ratios over the next 12 months would be lower than what we currently expect,” Moody’s said. The agency also said the decision of a debt recast scheme for MSMEs has the potential for negative implications for the credit profiles of Indian banks.
    • Another rating agency, Crisil, said the deadline extension will reduce the burden of public sector banks this fiscal by ₹35,000 crore. “This will provide some breathing space to capital-starved PSBs,” said Krishnan Sitaraman, senior director, Crisil Ratings. 
    • “As per our earlier estimates, they needed around ₹1.2 lakh crore up to March 2019 to meet Tier 1 capital stipulated under Basel III norms. Now they would need only around ₹85,000 crore.” Karthik Srinivasan, Group Head-Financial Sector Ratings, ICRA, said the decision to retain capital adequacy ratio of banks at minimum 9% is positive for banks, given high unprovided losses against the existing stressed loans.
    • “Based on the existing framework, 17 out of 21 PSBs would come under the PCA framework, though only 11 are formally under PCA. With the framework to now be examined by the BFS, one may explore scenarios for a faster exit of banks from PCA framework.”
            More than half of gas-based power plants ‘stranded’
            • More than half of India’s 25 Giga Watt (GW) of gas-based power plant capacity is ‘stranded’ or unutilised and 10.6 GW of this requires immediate attention, the Union of Ministries of Power and Finance revealed in a presentation during a meeting of the Standing Committee on Energy last week.
            • The presentation said that one of the major reasons for these plants being unutilised is that they were built based on the assurance by the government of an adequate supply of gas, which did not materialise.
            • “In the earlier e-RLNG [regasified liquefied natural gas] scheme, the CEA [Central Electricity Authority] has identified about 14 GW capacity as stranded,” the report said.
            • In other words, 10.6 GW worth of capacity is either not even meeting its fixed costs, or just meeting its fixed costs.
            • It said that in the 11th Five Year Plan, the Ministry of Power had finalised a plan to add 78,800 MW of generation capacity and encouraged the setting up of gas-based power plants to fulfil this on the basis of their shorter gestation periods, and also based on the assurance of by the Ministry of Petroleum and Natural Gas of an ‘adequate quantity of domestic gas’.
            • “New plants of 9,000 MW capacity were plAnned and accordingly IPPs [Independent Power Producers] have built these plants based on the government’s plan to allocate gas as and when commissioned,” the report said. “RIL Gas was forecasted to produce around 120 mmscmd, however it started depleting and touched 60 mmscmd in 2013.”
                    Q2 GDP growth to slow to 7.2% on higher fuel prices, weaker rupee: ICRA
                    • The second quarter GDP growth is likely to be substantially lower than that seen in the first quarter of this financial year due to higher fuel prices and a weaker rupee, according to ICRA.
                    • The agency said it expected GDP and Gross Value Added (GVA) growth to be 7.2% and 7.1%, respectively, in the second quarter of this financial year, down from the 8.2% and 8% respectively in the first quarter.
                    • “The sequential decline in the year-on-year GVA growth in Q2 FY2019, relative to Q1 FY2019, is expected to be led by industry (to 7.1% from 10.3%) and agriculture (to 3.5% from 5.3%), even as the momentum for the services sector is likely to improve (to 7.8% from 7.3%),” Aditi Nayar, principal economist at ICRA said in the report.
                    • Ms. Nayar added that although the Index of Industrial Production and the available second quarter financial results of the corporate sector indicate an increase in activity in the manufacturing sector and increased revenue growth, the aggregate EBITDA [Earnings before interest, tax, depreciation and amortization] margins declined on a quarter-on-quarter (QoQ) basis. 
                    • “An uneven and sub-par monsoon, flooding in some areas amid a late withdrawal of the monsoon rains, and instances of crop damage and pest attacks are likely to result in muted agricultural growth in Q2 FY2019,” the report added. “Higher commodity prices may support a shallow recovery in the GVA growth in mining and quarrying from the marginal 0.1% in Q1 FY2019 to around 2.5% in Q2 FY2019, despite a slowdown in volume growth.”
                    • Services sector growth is expected to rebound to about 7.8% in the second quarter from 7.3% in the first quarter.