(Current Affairs) International Events | November : 2017

::International Events::

Pak. Stability under threat according to U.S

  • The United States is worried that emboldened terror outfits could threaten the stability of the government of Pakistan, visiting U.S. Secretary of State Rex Tillerson said, explaining he discussed the issue with Pakistan during his meeting in Islamabad.
  • Mr. Tillerson also said the U.S. has no opposition to legitimate business with Iran even as External Affairs Minister SushmaSwaraj defended New Delhi’s ties with Tehran and said India will also continue to have its embassy in North Korea as the mission may serve the purpose of dialogue.
  • We also are concerned about the stability and security of Pakistan’s government as well. If these terrorist organisations enlarge their numbers, strength and capability within Pakistan’s borders, then these can lead to a threat to Pakistan’s own stability.
  • It’s not in anyone’s interest that the government of Pakistan is destabilised. We have a mutually shared interest in not just containing these organisations, but ultimately eliminating them said Mr. Tillerson
  • He emphasised that the U.S. wants to work with Pakistan as this is also in the interest of Pakistan and the larger region to eliminate terrorism eliminating from Pakistan. The U.S. Secretary of State addressed questions on U.S. President Donald Trump’s new South Asia policy after holding detailed talks with Ms. Swaraj.
  • Mr. Tillerson also met Prime Minister Narendra Modi who noted commonalities between the Indian and American policies.
  • However, while India and the U.S. agreed on Pakistan and Afghanistan-related concerns, India defended its ties with Iran and North Korea. Officials said discussions covered India’s infrastructural investments in Iran and ties with North Korea.

Five year leadership line up unveiled by Xi

  • Chinese President Xi Jinping unveiled a new five-year leadership line-up, geared towards implementing a two-stage plan that aims to make China a leading developed country by the middle of the 21st century.
  • In his opening remarks, Mr. Xi, flanked by his brand new team, underscored that China’s two centenary goals — a moderately prosperous society by 2021 and an advanced socialist country by 2050 — would guide policy and political conduct in the coming decades.
  • Apart from Mr. Xi, who has started his second innings as the General Secretary of the Communist Party of China (CPC), the members of the of the apex Standing Committee of the top decision-making body include Li Keqiang. Mr. Li has already served his first term as Premier, and headed the State Council — China’s Cabinet.
  • Other leaders in the new line-up are — Li Zhanshu, Wang Yang, Wang Huning, Zhao Leji and Han Zheng.
  • Mr. Xi introduced all members of the apex body a day after the 19th Party Congress, held after a customary gap of five years, concluded at the Great Hall of the People. Mr. Li is expected to continue as Prime Minister for a second term. But the portfolios of the rest of the team are yet to be announced.
  • Regarding specific portfolios, there is widespread expectation that Mr. Li Zhanshu, will take over as the head of China’s National People’s Congress (CNPC) — the country’s top legislative body.
  • The decision would be in tune with Mr. Xi’s focus on cementing ‘rule of law’ in China, requiring extensive interaction with the CNPC.
  • Mr. Wang Yang is likely to head the Chinese People’s Political Consultative Conference (CPPCC), the country’s top advisory body tasked with generating fresh ideas.
  • All the members are above 60 when it comes to their age. Under the current rules, they would be too old to serve the customary two terms as the party’s leader after the next Congress in 2022.
  • Commenting on the CPC’s decision not to announce a succession plan, the Hong Kong based South China Morning Post pointed out that Mr. Xi has made a decision of “far reaching consequences”. “This opens the way for China to rethink its power transition mechanism and to give several possible candidates time to prove themselves,” the daily observed.
  • The new leadership is expected to advance, ‘Xi Jinping Thought on Socialism with Chinese Characteristics in the New Era’. The CPC carried out an amendment that paired Xi Jinping’s ‘Thought’ with Mao Zedong’s and DengXiaoping’s theories — the only two other leaders whose theoretical contributions have been named after them in China’s Basic Law.

World’s most powerful passport is of Singapore

  • Tiny Singapore now has the world’s most powerful passport, according to a new ranking, with its citizens able to travel to the greatest number of countries visa free.
  • Passport Index, which keeps track of how usable such documents are, said the city-state grabbed the top spot after Paraguay removed restrictions for Singaporeans.
  • That means the approximately 3.4 million holders of Singaporean passports can now travel to 159 countries either without a visa at all, or can have one issued on arrival. Germany came in second place, with its citizens able to visit 158 countries without a visa, while Sweden and South Korea tied for third.
  • The U.S. passport was in sixth place, alongside Malaysia, Ireland and Canada.

India ranked 75th

  • India, which was listed 78th last year, has improved its ranking, figuring at 75th position with a visa-free score of 51. Afghanistan came bottom of the list with visa-free access to just 22 countries.
  • Passport Index said the U.S. passport’s usefulness has fallen since President Donald Trump took office, with Turkey and the Central African Republic becoming the most recent countries to revoke their visa-free entry for holders.
  • Passport Index ranks passports worldwide based on the cross-border access a holder has. It was developed by Canada-based global consultancy Arton Capital.
  • For the first time ever, an Asian country has the most powerful passport in the world. It is a testament of Singapore’s inclusive diplomatic relations and effective foreign policy.
  • Passport Index has become the most popular interactive online tool to display, sort and rank the world’s passports.

The U.S. policy Which could be a game changer

  • India and Afghanistan discussed regional counter-terror efforts and enhancing New Delhi’s defence assistance to Kabul during a day-long working visit by Afghan President AshrafGhani to India.
  • In contrast to previous bilateral summit meetings, no agreements were announced, but both sides expressed an appreciation for the U.S.’s new South Asia policy, even as Secretary of State Rex Tillerson continued his travels in the region.
  • Mr. Tillerson held talks with President Ghani at the U.S.-controlled Bagram Base outside Kabul, while he met the Pakistani leadership in Islamabad.
  • “President Ghani exchanged thoughts with Prime Minister Modi following the new U.S. Strategy, agreeing that the strategy is an opportunity for lasting peace and stability in Afghanistan & South Asia; expansion of cooperation between the countries and the region.
  • “The Indian side agreed to extend further assistance depending on the needs of the Afghan defence and police forces,” the MEA statement added. Afghanistan has pending requests for ammunition and engineers to maintain aircraft and other hardware in Afghanistan as it transitions to newer acquisitions.
  • In a speech at the Vivekananda International Foundation (VIF), a think-tank, in Delhi, Mr. Ghani also called the new U.S. strategy a “game-changer” aimed at ensuring a regional approach to fighting terrorism, including making Pakistan act against “state sponsorship of sanctuaries” along the border with Afghanistan.

India’s demand for coal is on rise

  • Demand for coal is expected to climb despite ramping up of renewable energy capacity.
  • With India embarking on an ambitious journey to achieve renewable energy capacity of 175 gigawatt (GW) by 2022, questions have been raised on the relevance of coal in the present context. Does coal, the principal source of energy for now, face a dark future?
  • According to analysts, renewable energy sources and coal will coexist, as the availability of coal is abundant in India and it can provide affordable power to propel India’s growth and light every household.
  • Despite the rapid growth in renewable energy, legacy coal plants will continue to generate thermal energy. However, most additional capacity in the country will come from renewable sources.
  • If coal had a bleak future in India, then the coal block auctions could not have happened or succeeded. This is evident from the fact that captive power plants purchased 80% of the coal offered on a five-year contract at an auction at an average premium of 25% over the notified price.
  • With reliable supply of energy becoming critical to provide round-the-clock electricity across the country and to achieve 100% electrification by December 2018, super thermal power plants and other modern thermal plants are being nudged by the Centre to produce more energy from the same capacity.
  • The NITI Aayog, which had sought suggestions from experts for meeting the electricity demand under the current circumstances, was advised to allow thermal plants to enhance output without adding any capacity.
  • Though the latest prices of solar and wind energy do throw a question mark on whether further thermal power capacity would come up, analysts said coal would continue to dominate in the absence of cost-effective storage of renewable energy that has been generated.
  • Today, the plant load factor (PLF) for India’s thermal power capacity has dropped to 52% from 79% in 2007-8 but the country’s thermal plants are equipped to operate at about 85 to 90% PLF. Assuming the PLF is scaled up from 55% to 85%, one can see a 50% increase in output from the same capacity. The only costinvolved here is the variable cost of coal.
  • This variable cost is far lower than that for solar power. It is expected to be about Rs. 1.50 per unit and the price difference is expected to be in the range of Rs. 0.70 to Rs. 1 per unit with solar or wind energy, according to industry players.
  • It makes eminent sense for the country to increase the output from existing plants. The additional generation will be close to 500 billion units. With an average cost saving of Rs. 0.80 is Rs. 40,000 crore. This benefit will go to discoms and consumers if the country adopts this kind of a strategy.
  • To produce 500 billion units, 350 million tonnes of coal would be required — this is the additional demand. Even at a requirement of 300 million tonnes of coal, coal demand will increase by 7% a year from now.
  • India uses about 800 million tonnes of coal. The current coal production in the country is 650 million tonnes, while the balance is imported. The additional demand for coal to fire up power plants would contribute a substantial Rs. 12,000 crore annually to the Clean Environment Fund at the rate of Rs. 400 per tonne.
  • India’s share in pollution is far less than its share of the global population. Developed countries did want to club India with China and said that what applied to China, applied to India too. Fortunately, India has not succumbed to that.
  • Using more coal to meet the energy demand from the same thermal capacity for the next 20 years will not put India at disadvantage given its commitment to meet the Climate Change COP 21 obligations.
  • As per the obligations, India’s renewable capacity should be 40% of the total capacity by 2030. Including hydro-based power, that capacity is currently at 28%. Once India implements the 175 GW renewable programme, the 40% criteria will be achieved.
  • Besides, India is well within the COP 21 obligation till it uses 1,500 million tonnes of coal a year as compared with 800 million tonnes now to generate energy.
  • Analysts also said India could continue with a coal-based growth plan, which is cost effective. This is what China has done to place its economy on a solid footing, said an analyst with a foreign brokerage firm.
  • The Chinese share in global emissions is now close to 30%, whereas its share in global population is just about 17%. India’ share in global population is 16%, while its share in emissions is only 6%-7%, said an analyst, highlighting the contrast.
  • Even though the NITI Aayog energy policy mentions 330 GW of thermal capacity as target by 2040, it is unlikely to be achieved because of the sharp correction in solar power prices, said an analyst.
  • The International Energy Agency (IEA) in a recent report titled India Energy Outlook has said, “The rapid change anticipated for the Indian energy system in the New Policies Scenario does not translate into a dramatic shift in the energy mix. Coal retains a central position in the mix, increasing its overall share in primary energy from 44% in 2013 to 49% in 2040.”
  • It said coal-fired power contributes substantially more to output than to overall costs, helping to keep electricity tariffs affordable for consumers in a period when India is adding more costly sources of power.
  • In India, coal has always been thought of as the raw material for power. Because the demand from the power sector was much more than the availability of coal in the last 10 years, no serious thought has gone into any other use for coal.
  • Once the power sector begins to use increasing amounts of power from solar and other renewable sources, then coal can be put to use elsewhere: eg, coal can be deployed in the manufacture of ammonia and for conversion of ammonia to fertilizer.
  • With the government’s plans to usher in a second green revolution, the demand for domestically-made fertilizer will be high. Thoughts are being channelised now to come up with methods to produce chemicals such as methanol and others of its ilk from coal.
  • India’s total coal reserve is estimated at a little more than 300 billion tonnes. If 50% of that is extractable, a 1-billion-tonne annual consumption will translate into availability for 150 years.

Total Return Index

  • Currently, a majority of fund houses benchmark their equity mutual fund schemes against simple price indices which capture only the change in price of the stocks that are components of the said index.
  • An index comprises a basket of securities taken at the prevalent market price. For instance, two of India’s popular indices Sensex and Nifty comprise shares of 30 companies and 50 companies respectively and the returns are measured based on price movements of the index components. So, an equity mutual fund’s performance was measured against the performance of their respective benchmarks.
  • A Total Return Index takes into account not just the Price Returns of the stocks but also dividends paid out on the stocks.
  • Total Returns Indices are commonly used as the primary benchmarks for comparing fund performance, but in India this trend is only now taking off.
  • Historically, Indian indices have always been tracked for the Price Return, but now you can find historical Total Returns data for most indices, although they are not widely tracked yet, the firm said.
  • Total returns included interest, capital gains, dividends and distributions realised over a given period of time.
  • The TRI will help in giving the right picture of the real alpha (a metric which measures what the fund has earned over and above — or below — what was expected.
  • The alpha that is shown currently may look overstated as dividends are not added in benchmark returns calculation and the move towards TRI is a step towards “responsible and transparent communication with our advisors and investors and also sets high standards in investment management,” BlackRock said.
  • The number of equity mutual funds beating the benchmark dropped to 58% from 85% after making a comparison on TRI rather than on Price Return Index basis.
  • From an investor stand point, TRI would give the actual picture of what exactly he or she earns from a mutual fund investment. From the standpoint of fund managers, it will make them work a little harder to make the right stock pick.
  • One has to wait and see how the TRI changes the working style of fund managers and their performance in India.

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