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Current Affairs: 28 November 2018


RBI Governor stresses need for autonomy of central bank
  • Reserve Bank of India Governor Urjit Patel batted for autonomy of the institution in strong terms in his deposition before the Parliamentary Panel on Finance.
  • Mr. Patel made a presentation on the impact of demonetisation and the status of non-performing assets in the banking sector.
  • According to sources, while he steered clear of controversial questions, including the recent friction between the government and the RBI, Mr. Patel assured the Committee that he would submit written answers to all the questions posed by the members.
  • Mr. Patel made three key points at the meeting. First, he said, depositors’ interests were of primary importance for which autonomy was non-negotiable. Second, monetary policy should be the exclusive domain of the RBI.
  • He also asserted that maintaining the central bank’s reserves was extremely essential to maintaining the country’s AAA rating.
  • “He told us that it is only the experts and technocrats who should have a say in the country’s monetary policy. There would be a direct conflict of interest if any other committee is given say in the matter,” an Opposition MP told.
  • BJP MPs Nishikant Dubey and Shivkumar Chanabasappa Udasi asked why India should follow the Basel III norms for the banking sector to which Mr. Patel said it was “obligatory” to follow the norms as per G20 commitments made by the government.
  • Mr. Patel also made a presentation about the state of economy, which he said was doing well.
  • The Committee will take stock of the developments at the crisis-hit IL&FS Group for three days from December 3, an official said. 
  • On October 1, the government superseded the board of IL&FS after some of its group entities defaulted on debt payments which triggered concerns of a liquidity crisis in the financial market. 
Agriculture Ministry takes back report on note ban
  • Reversing its earlier report that conceded for the first time that demonetisation had affected millions of farmers, the Union Agriculture Ministry has submitted a fresh report claiming that there was no “adverse impact.”
  • Agriculture Secretary Sanjay Agarwal informed the Parliamentary Panel on Finance that a show-cause notice had been served on two Directors and a Joint Secretary.
  • According to official sources, Mr. Agarwal said the report submitted on November 20 was not vetted by him as he was leaving on an overseas tour and could not find time to see it. The earlier report had a “compilation error” because of which it had been withdrawn.
  • The Hindu had reported on November 21 on the Ministry’s earlier submission which said, “Millions of farmers were unable to get enough cash to buy seeds and fertilizers for their winter crops.” It said that even bigger landlords could not pay daily wages and buy inputs. 
  • “It is very unusual for the Ministry to replace a report it has submitted. It looks like there was pressure from certain quarters on the Ministry,” an Opposition member said.
  • In the fresh report, the Ministry claimed that a multi-pronged strategy was adopted to ensure availability of credit, seeds, fertilizers and marketing avenues for the farmers.
  • To support its claim, the Ministry submitted a series of statistics saying that Rabi area sown in 2015-16 was 612.28 lakh hectare which increased to 635.29 lakh hectare.
  • The financial year 2016-17 only had four months post-demonetisation. The note ban was announced on November 8, 2016. In financial year 2017-18 there was a dip in area of lakh hectare sown, from 635.29 lakh hectare to 628 lakh hectare.
  • The report also said that food grain production in Rabi 2016-17 increased from 1264.50 lakh tons in 2015-16 to 1367.78 lakh tons and then to 1441.02 lakh tons in 2017-18.
  • “It is not about increase in production. It is about the remuneration that the farmers got. Did they get a good price for their crops? The other point is that they had to take loans to buy agriculture input that year because of cash crunch,” Ritika Khera, associate professor, IIM Ahmedabad said.
  • She added that demonetisation came in a year of good monsoon after two consecutive seasons of drought.
Now, Bangladesh citizens can visit Sikkim, Ladakh
  • Last week the Indian High Commission in Dhaka introduced an application form for citizens of Bangladesh to visit Sikkim, Ladakh and Arunachal Pradesh, a High Commission official told.
  • Earlier the permission was given from New Delhi and in most cases the applications were rejected, a Bangladeshi journalist said.
  • About a month before the national elections in Bangladesh, Indian High Commission in Dhaka introduced multilevel facilitation of visa to the citizens of the country. Six new visa issuing centres will be opened in six districts of Bangladesh — Bogra, Thakurgaon, Noakhali, Kumilla, Satkhira and Brahmanbaria.
  • The new visa centres are being introduced in view of the increasing pressure from Bangladeshi visitors to India over the last decade. “Number of visas are increasing at the rate of 8-10% each year,” the official said.
  • While 14 lakh visas were issued last year, the number has already crossed 12 lakh by the winter of 2018.
  • But what could possibly be the most exciting announcement is that the citizens of Bangladesh can now visit India for “regular medical treatment” availing of just the tourist visa. “ For minor treatment they can travel on a tourist visa,” the official said. This will be introduced from December.
ISRO’s imaging satellite HysIS is all set for Thursday launch
  • HysIS, the country's first hyperspectral imaging satellite for advanced earth observation, is slated for launch  from Sriharikota.
  • About 30 small satellites of foreign customers will be ferried on the PSLV launcher, numbered C-43, the Indian Space Research Organisation has announced. They will go into an orbit different from that of HysIS. The launch from the first launch pad is set for 9.57 a.m.
  • A hyperspectral imaging camera in space can provide well-defined images that can help identify objects on earth far more clearly than regular optical or remote sensing cameras, ISRO Chairman K. Sivan said earlier.
  • The technology will be an added advantage in watching over India from space across sectors including defence, agriculture, land use and mineral exploration. Sources said the new ‘eye in the sky’ can be used to even mark out a suspect object or person on the ground and separate it from the background with applications in transborder infiltration etc.
  • “The primary goal of HysIS is to study the Earth’s surface in visible, near-infrared and shortwave infrared regions of the electromagnetic spectrum,” ISRO said.
  • HysIS will be ISRO's first full-scale working satellite with this capability. While the technology has been around, not many space agencies have working satellites with hyperspectral imaging cameras as yet.
  • The satellites would be ejected in two orbits by restarting the rocket's fourth-stage engine twice.
Amaravati: MoEF ‘no’ to forest use
  • The Ministry of Environment’s Forest Advisory Committee (FAC) has rejected eight proposals from the Andhra Pradesh government entailing the diversion of about 3,300 hectares of forest land for infrastructure projects in the State’s capital city of Amaravati.
  • According to the records of a meeting of the FAC held on November 15, the State government had sought permission to divert land in various forest divisions in Guntur district for projects including an ‘Adventure Eco Theme Park’ and a ‘Science City’.
  • The 6-member committee rejected all the eight “in-principle” proposals on the grounds that the “area under Reserve Forest (RF) was less than 5% of the entire area of the Capital Region, which in the opinion of the FAC is too less as a green cover in any capital city.”
Modi to meet Xi in Buenos Aires
  • Prime Minister Narendra Modi and Chinese President Xi Jinping will meet in Argentine capital Buenos Aires on the sidelines of the G20 summit this week.
  • Foreign Secretary Vijay Gokhale announced that the bilateral meeting between the two leaders will cover issues of mutual interest. 
  • Foreign Secretary Gokhale, however, declined to give details of the agenda of the bilateral talks, which are expected to be significant as it comes days after the dialogue between the Special Representatives (SR) of both India and China that pledged to increase ‘strategic communication’ between the two countries.
  • Mr. Modi’s meeting with President Emmanuel Macron of France is also under planning, Mr. Gokhale said, without elaborating further.

Ukraine declares martial law
  • Russian President Vladimir Putin warned Ukraine against any “reckless acts” after Kiev declared martial law in response to ’s seizure of three of its Navy vessels.
  • The Ukrainian Parliament  voted in favour of President Petro Poroshenko’s request for the introduction of martial law in border areas for 30 days.
  • The move came after Russian forces fired on, boarded and captured three of Kiev’s ships on Sunday off the coast of Crimea, sparking the most dangerous crisis between the ex-Soviet neighbours in years.
  • The incident was the first major confrontation at sea in the long-running conflict pitting Ukraine against Moscow and Russian-backed separatists in the country’s east.
  • It has raised fears of a wider escalation — in a conflict that has killed more than 10,000 people since 2014 — and prompted international calls for restraint.
  • Martial law gives Ukrainian authorities the power to mobilise citizens with military experience, regulate the media and restrict public rallies in affected areas.
  • Russian state television late on Monday aired footage of some of the captured sailors being questioned by Moscow’s security services.
  • One of the sailors is heard saying “the actions of the Ukrainian armed vessels in the Kerch Strait had a provocatory character” — parroting the version of events put forward by Russian authorities.
  • Meanwhile, a court in Russian-annexed Crimea  ordered three Ukrainian sailors to be held in custody for two months.

NPAs on downhill path since March peak, says RBI
  • Both gross and net non-performing assets (NPAs) of scheduled commercial banks have reduced in the two quarters ending September 30, 2018 since their peak in March 2018, the Reserve Bank of India (RBI) said.
  • However, the RBI did point out that the profitability of banks was still impacted due to a decline in earnings from loan assets and on higher provisioning required due to deterioration in asset quality.
  • That said, it highlighted the bank credit growth that had accelerated over the last two quarters.
  • The RBI, in its submissions to the Standing Committee on Finance, said that the gross and net NPAs of scheduled commercial banks had reduced due to the concerted efforts taken by the government and the central bank to address the problem.
  • The data shows that gross non-performing assets of all scheduled commercial banks were at ₹10.36 lakh crore at the end of the March 2018 quarter, and subsequently declined to ₹10.14 lakh crore by the end of the September quarter.
  • Public sector banks account for an overwhelming proportion of these gross NPAs but even their contribution had marginally come down since March 2018. Where public sector banks accounted for 86.6% of all gross NPAs of scheduled commercial banks, this fell to 85.9% by September 30, 2018.
  • Net NPAs for all scheduled commercial banks fell from ₹4.54 lakh crore in the March quarter to ₹4.10 lakh crore as of September 30. Correspondingly, the net NPA percentage fell from 7.97% to 7.19% over the same period.
  • “The annualised slippage ratio (i.e. the percentage of fresh NPAs as percentage of standard advances at the beginning of the quarter) has also witnessed a declining trend over” it said.
Economy faces several risks to fiscal health
  • The Reserve Bank of India (RBI) has highlighted several risks to the Indian economy, including oil prices, the uncertainty over the effect of the minimum support price (MSP) hike and the revenue impact of the lower-than-expected GST collections and the cut in excise duty on fuel.
  • These risks, the central bank said in its submissions to the Standing Committee on Finance, could pose a challenge to the government’s commitment to meeting the Fiscal Responsibility and Budget Management targets.
  • “The key downside risks to growth are high international commodity prices — especially of crude oil (although they have eased recently, there are significant uncertainties), spillovers from tightening global financial conditions, geo-political tensions, trade wars, financial turbulence, and the overhang of impairment in domestic banking and corporate balance sheets,” the RBI said.The central bank added that the decline in the gross saving rate, mainly due to the decline in household gross financial savings, is another cause for concern.
  • Regarding inflation, the RBI said that the outlook calls for a “close vigil” over the next few months as several upside risks persist.
  • “Significant volatility in global crude oil prices and financial markets, a sharp rise in input costs combined with rising pricing power of firms, risk of fiscal slippage at the Centre and/or State levels, and the staggered impact of HRA revisions by the State governments could pose upside risks to the inflation trajectory.”
  • “Laggard” GST collections and the cut in Union excise duties on petroleum products by the Centre as well as 18 State governments pose risks on the revenue side, while higher MSPs combined with the ramping up of food procurement and “unbudgeted” farm loan waivers by States could put pressure on expenditure.
Reserve Bank to inject ₹40,000 crore in Dec.
  • The RBI will pump in more liquidity in December by infusing ₹40,000 crore into the system through open market operations (OMOs).
  • “Based on an assessment of the durable liquidity needs going forward, the RBI has decided to conduct purchase of government securities under open market operations (OMOs) for an aggregate amount of ₹400 billion in the month of December 2018,” the central bank said in a release.
  • However, it added that this OMO amount is indicative with the RBI retaining the flexibility to change it, depending on the evolving liquidity and market conditions.

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