Current Affairs for IAS Exams – 25 June 2016

:: National ::

Brexit is complete

The United Kingdom opted for a momentous change of course by voting to leave the European Union in a closely-fought referendum held. The ‘Leave’ side won decisively with 52 per cent of the vote in the high-turnout vote, which overturned opinion polls that predicted a slender margin for ‘Remain’.
This is the second referendum on Britain’s relationship with the European project.
In 1975, in a referendum on whether the U.K. should stay or leave the European Community (Common Market) Area, the country voted for staying in with a resounding 67.2 per cent vote.
Prime Minister David Cameron, the architect of the referendum, announced that as a measure of respect for the “will of the people” he would be stepping down as Prime Minister in October.
The referendum saw a turnout of 72 per cent, the highest in any election since 1992, ‘Leave’ won 17,410,742 votes and ‘Remain’ 16,141,241, with all but the regions of London, Scotland and Northern Ireland voting to leave.
The markets have predictably reacted sharply to the referendum result with the pound falling to its lowest since 1985. Other major currencies have also shown volatility especially the Euro that has seen its worst fall against the dollar.

Govt gives confidence after Brexit

India is well-prepared to deal with the consequences of Britain’s decision to exit the European Union, Finance Minister Arun Jaitley reassured investors after local stock indices slumped in the aftermath of the referendum.
The BSE Sensex fell as much as 1,091 points, or 4 per cent, before recovering to close 2.2 per cent lower.
Mr. Jaitley said. “Our macro-economic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline, and declining inflation. Our immediate and medium-term firewalls are solid too in the form of a healthy reserve position.”
“This verdict will, obviously, further contribute to such volatility not least because its full implications for the U.K., Europe and the rest of the world are still uncertain,” Mr. Jaitley said.
In a separate conference call with the media from Switzerland, RBI Governor Raghuram Rajan said the country’s fundamentals were healthy and money would return after the initial bout of volatility.

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:: International ::

EU wants transition to Britain exit should be smooth

A stunned European Union (EU) urged Britain to leave as “soon as possible” amid fears the devastating blow to European unity could spark a chain reaction of further referendums.
German Chancellor Angela Merkel and French President Francois Hollande led calls for the European Union to reform in order to survive a traumatic divorce with Britain.
In a sign that the bloc wants to move on swiftly, EU chiefs told Britain in a strongly-worded joint statement to “give effect to this decision of the British people as soon as possible, however painful that process may be”.
The uncompromising stance came after Prime Minister David Cameron said he would resign and leave the negotiations on Britain’s departure from the 28-nation club to a successor who will be named by October.
Worried European leaders will hold a series of crisis talks in coming days, with Ms. Merkel saying she would host the leaders of France and Italy along with EU President Donald Tusk in Berlin to try to chart a reform plan.
Mr. Hollande said the Brexit vote was a “grave test for Europe”, adding that the bloc “must show solidity and strength in its response to the economic and financial risks”.
EU chief and former Polish premier Tusk — who had earlier warned that a ‘Leave’ vote could “end Western political civilisation” — put on a brave face, saying that “what does not kill you makes you stronger”.
The European Parliament will, meanwhile, pass a motion at an emergency meeting urging Mr. Cameron to trigger the exit process by invoking what is known as Article 50.
The biggest fear was of contagion, with immediate calls by far-right leaders in France and the Netherlands for their countries to hold their own votes on EU membership.
French far-right leader Marine Le Pen said the British result was a “victory for freedom”, while Dutch anti-Islam MP Geert Wilders said “the Dutch people deserve a referendum as well”.

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:: Science and Technology ::

NASA and ISRO are developing satellite to observe ecosystem disturbances

NASA and ISRO are working together to develop a synthetic aperture radar satellite to observe and measure ecosystem disturbances, ice-sheet collapses and natural hazards.
The data gathered from this mission will help build climate resilience and potentially save lives, said U.S. Ambassador to India Richard Rahul Verma.
The Indian Institute of Tropical Meteorology, Pune, is also working with the U.S. National Oceanographic and Atmospheric Administration (NOAA) to develop high resolution seasonal and long-term climate forecasts to prepare for the monsoons.

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:: Business and Economy ::

Brexit will see renegotiation in BTIA

Britain’s exit from the European Union will not have any immediate impact on India’s trade and investment with the U.K. and the EU.
However the proposed India-EU Free Trade Agreement (FTA) will see some “modifications and moderations,” Commerce Secretary said.
The Centre does not see any immediate impact of Brexit on ties with the U.K. and the EU as trade and investment with the two are currently happening not on the basis of an FTA but on a bilateral basis.
The implications of Brexit will happen only after 2018 when the terms and conditions regarding Britain’s exit from the EU are likely to be finalised.
India was not in favour of restarting the FTA talks from scratch, owing to the impending separation of the U.K. and the EU.
India will undertake a study of those Britain-related tariff lines that are part of India-EU FTA talks.
The India-EU FTA negotiations have been deadlocked since 2013 after 16 rounds of talks due to several differences. Both sides are yet to fix dates to resume negotiations.
Commerce Ministersaid that there will be some impact on trade in the short-term due to the currency volatility, adding that the government was closely monitoring the situation to assess the short, medium and long-term impact on India’s trade and investment with the U.K. and the EU.
Currency volatility may put pressure on India’s exports as both British Pound and Euro will depreciate giving greater competitiveness to their products particularly in third countries.
With currency depreciation, the domestic manufacturer in EU and Britain may get some competitiveness as imports becoming costlier having its effect on India’s and other countries exports.

Share market plunge after Brexit

World stocks saw more than $2 trillion wiped off their value as Britain's vote to leave the European Union triggered 5-10 per cent falls across Europe's biggest bourses and a record plunge for sterling.
Such a body blow to global confidence could prevent the Federal Reserve from raising interest rates as planned this year, and might even provoke a new round of emergency policy easing from all the major central banks.
Almost $1 trillion had been lost from European share prices ahead of what is expected to be a nearly 4 per cent fall on Wall Street when it opens later.
London's FTSE dropped almost 5 per cent while Frankfurt’s DAX and the CAC 40 index in Paris fell 6 to 8 per cent. The Italian FTSE MIB, Spanish IBEX and European bank stocks all headed for their sharpest one-day drops ever.
Britain's big banks took a $100 billion battering, with Lloyds, Barclays and RBS plunging as much as 30 per cent at one point.
The British pound dived by 18 U.S. cents at one point, easily the biggest fall in living memory, to hit its lowest since 1985. The euro in turn slid 3 per cent to $1.1050 as investors feared for its very future.
That message was being broadcast loud and clear. The Bank of England, European Central Bank and the People's Bank of China all said they were ready to provide liquidity if needed to ensure global market stability.