Current Affairs for IAS Exams - 14 May 2017

:: National ::

Cyber Security Chief says India safe from cyber attack

• While no major incident of the worldwide ransomware attack has been reported from India so far, Gulshan Rai, the Cyber Security Chief in the PMO, said a better impact assessment would be possible only on Monday when offices open.

• CERT— In issued an advisory asking organisations to install updates to Windows systems, had, in fact, released a vulnerability note with a “Severity Rating of High” on March 15 for “a possible remote exploitation of this vulnerability.”

• The agency advised that the patch released by Microsoft be applied. Over 70 countries have been hit by the cyberattack.

India will not take part in Chinese initiative

• India will be absent from China’s Belt and Road Initiative (B&RI) Forum. Govt said that while the government supported connectivity projects, they “must be pursued in a manner that respects sovereignty and territorial integrity”.

• India has objected to the $46-billion China-Pakistan Economic Corridor part of the B&RI, as it includes projects in Pakistan-occupied Kashmir (PoK).

• “The international community is well aware of India’s position. No country can accept a project that ignores its core concerns on sovereignty and territorial integrity,” the Ministry spokesperson said.

• All neighbours of India, except Bhutan, will have senior-level participation at the forum.

• UN Secretary-General Antonio Guterres, IMF chief Christine Lagarde and World Bank President Kim Yong will be present as China unveils plans for infrastructure projects estimated at $500 billion across Asia and Europe.

• In a dig at China’s high-interest project loans in the region, which India believes will lead to a “debt trap” in countries such as Sri Lanka and Bangladesh.

• B&RI must pursue “principles of financial responsibility to avoid projects that would create unsustainable debt burden for communities; balanced ecological and environmental protection and preservation standards; transparent assessment of project costs”.

• According to experts, India’s absence from the forum will be seen as a major snub to China, that is pitching it as a “prestige event” to which it has confirmed 110 official delegations and 29 heads of state and government.

• Both the U.S. and Japan are not signatories to the Belt and Road initiative, but will be represented by senior advisers to President Donald Trump and Prime Minister Shinzo Abe respectively.

• The Chinese government had doubled efforts to convince India to join. In a speech last week, the Chinese Ambassador to India suggested a four-step initiative to repair ties damaged over differences on the CPEC.

• Entry to the Nuclear Suppliers Group and UN designation for JeM chief Masood Azhar, and even suggesting that China could consider changing the name of the corridor through Pakistan.

• However, subsequently, the reference in the Ambassador’s speech was deleted online after Pakistan protested.

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:: International ::

Chinese investments related to the Belt and Road initiative have totalled $60 billion

• Chinese investments related to the Belt and Road initiative have totalled $60 billion since 2013, and Beijing plans to invest $600 billion to $800 billion in the next five years.

• Chinese investments were expected to touch $120 billion to $130 billion a year over the next five years.

• “This will be a big driving force for a steady recovery in the global economy, and for free trade and investment,” he said. The scrutiny of outbound investments by Chinese regulators will not affect the Belt and Road projects, Mr. Ning said.

• China Development Bank and the Export-Import Bank of China have extended $110 billion in loans for the Belt and Road projects by the end of 2016 and China has signed currency swap deals with the countries along the Belt and Road routes totalling 900 billion yuan.

:: Business and Economy ::

Amendment to the Banking Regulation Act to give more powers to RBI

• The Central government has amended the Banking Regulation Act to give more powers to the Reserve Bank of India (RBI) to fast-track resolution of stressed assets in a time-bound manner.

• Sec 35 AA authorises the RBI to issue directions to banks to initiate the insolvency process in case a party has defaulted under the provisions of the Insolvency and Bankruptcy Code, 2016, and 35 AB allows the RBI to issue directions to banks for resolution of stressed assets.

• The banking regulator has also been allowed to specify one or more authorities or committees to handle bad loans.

• Stressed assets in the banking system, or non-performing assets (NPAs), have reached unacceptably high levels and need urgent attention, the government ordinance to amend the BR Act noted.

• According to industry estimates, bad loans in the banking sector could be as high as Rs. 14 lakh crore.

• The NPAs in the banking system have gone up sharply in the last couple of years, particularly after the Asset Quality Review of the RBI in December 2015.

• Following the review, the RBI handed out a list of borrowers to the banks and asked them to classify which of the loans could be termed NPAs.

• Many public sector banks like Bank of India and IDBI Bank, to name a few, suffered huge losses owing to the exercise.

• According to RBI data, gross NPA as a percentage of gross advances went up to 9.1% in September 2016 from 5.1% in September 2015.

• During the same period, stressed assets, which are gross NPA plus standard restructured advances and write-offs, moved up from 11.3% to 12.3% and some estimates suggested it had doubled since 2013.

• Public sector banks share a disproportionate burden of this stress. Stressed assets in some of the public sector banks have approached or exceeded 20%.

• The RBI had announced several schemes in the last two years to resolve the bad loans crisis such as Strategic Debt Restructuring and Sustainable Structuring of Stressed Assets.

• The banks have always been wary of the deep ‘haircuts’ they may have to take during restructuring of bad loans. When a bank takes a ‘haircut,’ it gives up a part of its claims on a borrower.

• Bankers were worried that in case a deep haircut was taken, investigating agencies like the Central Bureau of Investigation would harass them, especially if the borrower could not repay the dues even after restructuring.

• Now, the RBI and the government are expected to give banks some assurance that they will not be hounded by investigating agencies if something goes wrong, as business decisions do not always yield the desired results.

• Following the amendment of the Banking Regulation Act, the RBI issued a notification about the lenders required in the JLF to approve a resolution proposal — to 60% from 75% of lenders by value, and to 50% from 60% of lenders by number.

• The amendment to the Banking Regulation Act is expected to force banks to take a decision under a strict time frame. However, the devil will be in the detail as the RBI is expected to issue detailed guidelines under what circumstances a loan can be restructured.

• It is highly unlikely — contrary to what is speculated — that the RBI will take a call on specific accounts on the amount of haircut a bank will take while recasting the debt. In all probability, the RBI will prepare a broad framework, which the banks have to follow.

• At the same time, it is expected provide some comfort to the banks that bona fide decisions will not be questioned and both the central bank and the government are on board for such a decision.

:: Science and Technology ::

NASA has dropped the idea of putting astronauts aboard the EM-1

• NASA has dropped the idea of putting astronauts aboard the first integrated flight of the Space Launch System rocket and Orion spacecraft - Exploration Mission-1 (EM-1).

• This is the first in a broad series of exploration missions that plans to take humans to deep space, and eventually to Mars.

• NASA’s original plan was to launch the test flight without crew, but in February, reportedly at the request of the Donald Trump administration, NASA began an effort looking at the feasibility of putting crew aboard EM-1.

• However, engineers will apply insights gained from the effort to the first flight test and the integrated systems to strengthen the long-term push to extend human presence deeper into the solar system.

• NASA determined it is technically capable of launching crew on EM-1, but after evaluating cost, risk and technical factors in a project of this magnitude, it would be difficult to accommodate changes needed to add crew at this point in mission planning.

• The effort confirmed that the baseline plan to fly EM-1 without crew is still the best approach to enable humans to move sustainably beyond a low-Earth orbit.

India’s notorious traffic pollution is no longer an urban malaise

• India’s notorious traffic pollution is no longer an urban malaise, its impact is now being felt 4,000 metres above sea level, in the Himalayas.

• Geologists have found high levels of sulphur from diesel emissions along the Manali-Leh highway that snakes through the northwestern Himalayas.

• Soil samples from four sites along the 480 km highway were tested for 10 heavy metals and sulphur among other chemicals.

• While the good news is that heavy metal contamination was found to be low, the soil had significantly high levels of sulphur (490–2033 ppm), which the scientists attribute to diesel exhaust from heavy traffic on this mountainous road.

• Indian diesel contains some of the highest concentrations of sulphur in the world and an estimated 70% of automobiles running on Indian roads use diesel, “and the Himalaya are no exception,” says the paper.

• Approximately 50,000 vehicles run on this highway every year, most of which use diesel. While the majority of these vehicles transport fuel and supplies to Indian army outposts, an increasing proportion ferries tourists, the paper says.

• With the likely increase of exhaust and sulphur in this region in the future, the paper recommends periodic monitoring of contaminant accumulation and human health along the Manali-Leh Highway and similarly remote areas around the world.

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