Current Affairs for IAS Exams - 07 May 2017

:: National ::

India has “serious reservations” about China’s One Belt, One Road plan

• India has “serious reservations” about China’s One Belt, One Road (OBOR) plan given that there are issues of “sovereignty” at stake, Union Finance Minister Arun Jaitley said.

• “The idea is always there for the future that the expansion of connectivity takes place between countries,” Mr. Jaitley said at a roundtable on the role of trade in Asia’s economic outlook, when asked for his views on the OBOR initiative.

• China is set to host ‘The Belt and Road Forum for International Cooperation’ in Beijing starting May 14 and has been trying to bring India on board. One section of OBOR passes through Pakistan-occupied Kashmir.

• Pakistan sees the plan as a welcome step to boost regional connectivity which is essential to promoting intra-regional trade.

Central bank wants to eliminate billions of demonetised notes quickly

• Holding a pile of billions of demonetised notes, the Reserve Bank of India has a problem — it is unable to destroy them quickly. At the current pace, the process could take nearly two years.

• Keen on completing the task on a war footing, the RBI’s central office in Mumbai is seeking the Army’s help for the job.

• It has asked its regional offices to requisition the services of Army personnel, wherever necessary, through the central office. The help of soldiers is being sought due to the ‘sensitivity and secrecy’ required.

• As of March 31 last year, there were 15.7 billion Rs. 500 notes and 6.3 billion Rs. 1,000 currency notes in circulation, before demonetisation.

• According to a Bloomberg report, if one stacked up all the defunct notes, they’d form a column 30 times the height of Everest.

• When the deadline for depositing the scrapped notes expired, 16.4 billion were with banks and the Reserve Bank of India.

• These masses of notes, now lying in 19 RBI offices, are being sorted, counted, verified and then sent to the shredder.

• Not all RBI offices have enough manpower explaining the quest for more hands. An initial count of the notes has been completed, which is being followed up with recounts, since the presence of fake currencies was strongly suspected.

• Another reason is to ascertain the exact number of demonetised notes that came back, a figure that the RBI has not yet confirmed. Shredding is undertaken only after verification.

• Most demonetised notes were deposited; the RBI’s annual report for 2015-16 says fake notes are but a small fraction of the total.

Namami Gange to get new branding for better results

• In the third year of the Narendra Modi government, one of its flagship programmes, the ambitious Namami Gange, is set for a rebranding exercise, and pitches from top advertising agencies.

• The move, powered by Prime Minister Narendra Modi, aims at a more participatory approach to the Namami Gange (National Mission for a Clean Ganga-NMCG) programme.

• While there is no questioning the reverence in which the river is held, the emotional connect with the Ganges, for most Indians tends to be restricted to personal ritualistic moments and becomes passive once it is over.

• Invoking this reverence [ aastha ] towards the river — without however giving it religious overtones — could be an entry-point towards mass awareness and action towards river clean-up.

• The proposed campaign therefore needs to evoke a strong soul connect with the Ganga and leverage associated emotion to drive active participation to keep the river clean and healthy.

• Ideas like a Ganga Jyoti Yatra (like an Olympic torch run) starting from Kolkata and ending in Varanasi, and roping in brand ambassadors like former Indian cricketer Sachin Tendulkar are some of the things being discussed.

• In spite of being a marquee project of the government, the Namami Gange is yet to show visible progress.

• Out of a Rs. 20,000-crore clean-up programme, only Rs. 2,000 crore has been sanctioned to the NMCG, the executive authority tasked with commissioning treatment plants, cleaning and beautifying the ghats and setting up improved crematoria.

• To treat the 12,000 million litres per day (MLD) of sewage emptying into the river, that meanders through 11 States from Uttarakhand to West Bengal, only capacity worth 4,000 MLD exists and of them, only plants with 1,000 MLD capacity are working.

US wants to expand the trilateral malabar excercise (Register and Login to read Full News)

Silk road project a gateway tocentral Asia and Europe (Register and Login to read Full News)

:: Business and Economy ::

Infrastructure and construction, power, iron etc sector contributing to bank debts

• The much awaited ordinance empowering the Reserve Bank of India to effectively tackle bad loans has been passed. Clearly, resolving the banking sector’s bad loan issue is the Centre’s top priority. And rightly so.

• Not long ago, the RBI, in a bid to clean up banks’ balance sheets, undertook an AQR (asset quality review) exercise and forced banks to declare certain accounts as non-performing assets (NPAs).

• That was six quarters ago. Even after the near doubling of banks’ bad loans over the past six quarters to about Rs. 7 lakh crore, the meter is still running. Is India Inc still neck-deep in debt?

• Top 20 companies still contribute nearly half of the total debt of NSE listed companies. These companies have lost an eye-watering Rs. 2.4 lakh crore in market capitalisation over the past two years, despite the bulls charging up D-Street.

• It is well known by now that the stock pile of banks’ stressed assets is a result of excessive lending between 2009 and 2013, particularly to sectors such as infrastructure, power, textiles, metals, etc.

• In fact, as of half year ended September 2016, debt accretion appears to have halted (flat over the previous year). The number of companies that raised debt has also reduced notably over these two years.

• Many corporates that accumulated huge debt in the past have trimmed their debt substantially between FY14 and FY16. Adani Enterprises, IOCL, Tube Investments, HPCL, and JP Associates (to some extent) are some of them.

• Up until 2013-14, aside from the fast pace of accumulation of debt, the problem had also gotten larger in size with more number of companies’ debt-equity ratio rising to over three and five times.

• In 2010-11 for instance, the number of companies that had debt-equity ratio of more than three was 81 (of the 1,190 NSE listed companies). This number went up to 113 in FY14.

• With the RBI’s rate cut cycle, which began in 2015, coming to an end and rate hikes in the offing over the medium term, India Inc can soon start to feel the heat, if demand does not recover significantly in the coming quarters.

• For companies with debt-equity of over three times, the situation is far worse. From an already low cover of 1 times (just about meeting interest payments) in 2013-14, interest cover fell to 0.5 times in 2015-16.

• The net debt (adjusted for cash) position, hence, has seen a slightly higher growth of 8 per cent between FY14 and FY16 (when compared to the 6 per cent growth in debt alone).

• Infrastructure and construction, power, iron and steel, mining, textiles and cement are sectors that continue to contribute significantly to banks’ stressed loans.

• In textiles , for instance, after debt grew by 12 per cent annually between FY09 and FY13 for NSE listed companies in the space, it has continued to grow — a tad higher at 14 per cent annually between FY14 and FY16.

• Telecom is another sector that has seen debt rise by 15 per cent annually between FY14 and FY16. Bharti Airtel, Idea Cellular, and Reliance Communication — all have raised additional debt during this period.

• While the overall picture for steel companies looks less gloomy from the past, with debt growing at a much slower pace of 7 per cent annually between FY14 and FY16 (when compared to 16 per cent in the past), company-specific issues persist.

• Power companies’ woes are well known. From providing a lifeline to the ailing state-owned power distribution utilities (discoms) in the form of UDAY (Ujwal DISCOM Assurance Yojana) to boosting domestic coal supply, the Centre has kick-started many initiatives.

• The overall debt equity for the sector has gone up to 1.7 times in 2015-16 from 1.4 times two years back. Interest cover has shrunk from 2.1 times to 1.7 times.

• Construction and Infrastructure is one of the sectors which contribute significantly to the level of stressed loans within the banking industry.

• The still 14-odd per cent annual growth in debt levels between FY14 and FY16 for infra companies remains a concern. At an aggregate level, interest cover ratio has fallen from about 1.8 times in FY14 to 1.4 times in FY16.

:: Science and Technology ::

A new mission to Saturn’s moons Titan or Enceladus

• A new mission to Saturn’s moons Titan or Enceladus to find signs of life beyond Earth cannot be ruled out as NASA says it is reviewing 12 proposals for future unmanned solar system mission to be launched in the mid-2020s.

• The proposed missions of discovery — submitted under NASA’s New Frontiers programme —will undergo scientific and technical review over the next seven months, the US space agency said in a statement.

• Selection of one or more concepts for Phase A study will be announced in November. At the conclusion of Phase A concept studies, it is planned that one New Frontiers investigation will be selected to continue into subsequent mission phases.

• Investigations for this announcement of opportunity were limited to six mission themes — comet surface sample return; lunar South Pole-Aitken basin sample return; ocean worlds (Titan and/or Enceladus); Saturn probe; Trojan tour and rendezvous; and Venus in situ explorer

• The New Frontiers Programme conducts principal investigator (PI)-led space science investigations under a development cost cap of approximately $1 billion.

• This would be the fourth mission in the New Frontiers portfolio. Its predecessors are the New Horizons mission to Pluto, the Juno mission to Jupiter, and OSIRIS-Rex.

Indian researchers have unravelled the mechanism to reverse drug resistance (Register and Login to read Full News)

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