Weekly Current Affairs Update for IAS Exam - VOL. 133 (19th June 2016 TO 25th June 2016)

Weekly Current Affairs Update for IAS Exam

VOL. - 133 (19th June 2016 TO 25th June 2016)

Issue : VOL. - 133 (19th June 2016 TO 25th June 2016)

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Burning Issues (Editorials From Different Newspapers) (Full Material Available Only For Subscribed Members)

:: National ::

Governor of the Central bank announced that he would not seek second term

In a surprise move that sent ripples across the financial sector, Governor of the Reserve Bank of India Raghuram Rajan announced that he would not continue to head the central bank after his term expires on September 4.
Mr. Rajan announced his decision to RBI employees via an email which was published on the central bank’s website for ‘wider dissemination’.
This is the first time during Dr Rajan’s tenure that his communication to staffers has been made public.
Speculation is rife on why Mr. Rajan decided not to continue and communicated his decision two and half months before his term ends.
The government’s decision to form a search panel, headed by a cabinet secretary to select financial sector regulators has not gone down well with the RBI governor as the governor’s post is also cabinet secretary rank.
In the past, the prime minister and the finance minister have held consultations to select the governor of the central bank.
The Finance Ministry’s proposal in last year’s budget to hand over bond market regulation to the SEBI was criticised by Mr. Rajan following which the proposal was rolled back.
More recently, Mr Rajan’s comment that India is one eyed king in the land of blind has not gone well with ministers with Nirmala Sitaraman, minister of state for commerce criticised the comments in the media.

History was created when Defence Minister presented ‘wings and brevets’ to 3 women

History was created at the Air Force Academy (AFA) at Dundigal when Defence Minister Manohar Parrikar presented ‘wings and brevets’ to three women — Avani Chaturvedi, Bhawana Kanth and Mohana Singh.
After commissioning 129 cadets in all at an impressive Combined Graduation Parade in the AFA, including the trio, he said it was the endeavour of the Centre to bring gender parity in the Armed Forces.
He would discuss the details with service chiefs before taking any step forward. “Any move towards ushering in gender parity has to be a smooth affair and not a forced operation,” he told press-persons.
He described it as a ‘golden day’ and one that should be open up for more women to join the armed forces”.
Hoping that more would volunteer for combat duties, he said it was a challenge when it came to having the required women-friendly infrastructure in place.
Citing an example, he said the women would need separate hostels and washrooms and a host of related facilities.
For now, the government was going ahead with a need-based approach, he said and pointed out that a completely different set of infrastructure was required to be put in place.

Draft report on the new national policy on education

The draft report on the new national policy on education submitted by a panel headed by T.S.R. Subramanian wants reservation for disadvantaged children to be extended to unaided minority schools.
While the Right of Children to Free and Compulsory Education Act, 2009, mandates that even private, unaided schools shall provide admission to children from disadvantaged groups and weaker sections in admission.
But private, unaided minority institutions are exempt from this requirement of 25 percent quota for disadvantaged group.
The Supreme Court, in April, 2012, held that the provision did not extend to institutions set by minorities, which are defined as religious and linguistic minorities in India.
The panel report says that “it is now important to reconcile the rights of the economically weaker sections with the rights of the minorities under Article 30 (1), particularly when minority institutions appear to clutch at any prop to ensure that their obligations, met by other aided or unaided schools, are circumvented.”
The Right to Education Act includes the Scheduled Castes, the Scheduled Tribes and the Socially and Educationally Backward Classes in its definition of “disadvantaged group” and defines a child belonging to “weaker sections” as one whose parent or guardian earns below a minimum level of income specified by the appropriate government.

T.S.R. Subramanian panel critical to higher education regulator (UGC)

A high-power committee headed by former Cabinet Secretary T.S.R. Subramanian, tasked has recommended that the law that set up the higher education regulator University Grants Commission (UGC) be allowed to lapse.
The committee's report, submitted recently to the Ministry of Human Resource Development, says the UGC has been unable over the years to effectively implement its regulations aimed at ensuring the quality of higher education in the country.
The panel has instead suggested an alternative arrangement for a pruned UGC.
“The UGC could be revamped, made considerably leaner and thinner, and could be the nodal point for administration of the proposed National Higher Education Fellowship Programme, without any other promotional or regulatory function,” it said.

Govt rein in on pulses hoarders

About 1.30 lakh tonnes of pulses have been seized from hoarders in Haryana, Uttar Pradesh, New Delhi and other parts of northern India in the last few months.
The crackdown is part of government efforts to rein in the spiralling prices of pulses, of which some varieties are selling in retail in large cities for Rs. 180-200 per kg.
Finance Minister Arun Jaitley told a TV channel that action against hoarders last year helped the government bring the prices of pulses down by about Rs. 50 per kg in the retail market.
This year, the Directorate of Revenue Intelligence, Income Tax department and local police have been conducting raids on people who are suspected to have been hoarding pulses to take advantage of the high prices, according to sources.
The demand-supply gap could be even wider than five million tonnes.
As against the average supply of 17 million tonnes of pulses, the national demand is about 24 million tonnes. India is largest producer of pulses but also largest consumer and a very large importer.

The model code of conduct (MCC) for polls is under review by a Parliamentary Committee

The model code of conduct (MCC) for polls is under review by a Parliamentary Committee, which will suggest ways to check use of cash and other freebies to lure voters during the elections.
The panel had, in an earlier report submitted three years ago, recommended reducing the time between enforcement of the model code and the day of polling.
The panel had suggested that the MCC should come into force from the date of notification and not the announcement of poll schedule. The proposal is pending with the government.
It is to be looked into quickly to avoid the frustration of people over non-implementation of the recommendation of the panel for three years.
The panel has also decided to suggest ways to check distribution of cash and freebies ahead of the polls.
The move comes after it took cognisance of the cancellation of polls in Aravakurichi and Thanjavur constituencies in Tamil Nadu recently following evidence of use of money and gifts to influence the voters.

After reforms PM says India is most open economy in the world

The Modi government announced radical liberalisation of the FDI regime by easing norms for a host of important sectors, including defence, civil aviation and pharmaceuticals, opening them up for complete foreign ownership.
The move assumes significance as it comes soon after Raghuram Rajan’s announcement that he would not seek another term as the Reserve Bank of India Governor.
The governor’s announcement, days before Britain decides whether to stay in the European Union, had triggered fears that India’s growth narrative could unravel.
Commerce and Industry Minister stressed that the announcement had nothing to do with the RBI governor's decision. “We have been working on this for quite some time. We could not have done all this in one or two days,” she said.
The decision on FDI reforms was taken at a high-level meeting chaired by Prime Minister Narendra Modi.
In November last, the government announced FDI reforms across several sectors, two days after the BJP-led NDA suffered a resounding defeat in the Assembly elections in Bihar.

:: International ::

Role of Saudi Arabia in 9/11 still unclear

In February 2004, two U.S. investigators interrogated a man they believed might hold answers to one of the lingering mysteries of the Sept. 11, 2001, attacks: What role, if any, did officials in Saudi Arabia’s government play in the plot?
However, nearly, 15 years after the attacks, the question of a Saudi connection has arisen again amid new calls for the release of a long-classified section of a 2002 congressional inquiry into the attacks that discusses a possible Saudi role.
At the FBI, the Sept. 11 plot officially remains an open case. While there is broad agreement on how it unfolded, there are aspects of the investigation that remain unresolved.
And the mystery begins with the arrival at Los Angeles International Airport on Jan. 15, 2000, of two Saudi men who more than year and a half later would be among the hijackers who crashed American Airlines Flight 77 into the Pentagon.
That circumstance would make it all the more critical for the FBI, after the attacks, to find out whether the two hijackers received help after reaching Los Angeles.
An FBI document from 2012, cited last year by an independent review panel, concluded that al-Thumairy “immediately assigned an individual to take care of al-Hazmi and al-Mihdhar during their time in the Los Angeles area”.
Whether out of charitable instincts or at someone’s direction, Bayoumi helped the two future hijackers settle in San Diego, in the apartment building where he himself lived.

Two amendments for cut in the U.S. aid to Pakistan have been defeated

Two legislative amendments seeking a cut in the U.S. aid to Pakistan have been defeated in the House of Representatives with most lawmakers arguing that it is essential to maintain ties with a nuclear armed country.
The first amendment moved by Congressman Ted Poe that sought to cut funding to Pakistan from $900 million to $700 million in coalition support fund (CSF) was defeated on the House floor by a recorded vote of 191 to 230.
Another amendment moved by Congressman Dana Rohrabacher seeking to prohibit funds from being used to provide aid to Pakistan has been defeated by a recorded vote of 84 to 236.
However, majority of the lawmakers did not support Poe and Rohrabacher in cutting aid to Pakistan.

Migrant crisis showing a light

Contemporary writing on the ongoing “migrant crisis” has focused on the collapse of border-patrols and asylum bureaucracies; the erosion of political mandates in countries like Germany; and the rise of xenophobia, creating an impression of a world in chaos.
The EU’s deployment of warships and intelligence assets against agents like Majid suggests a fundamental misunderstanding of the complex, and dispersed, networks of obligations and solidarities resulting from one of the largest migrations of humanity in recent memory.
Many refugees and facilitators like Majid recall the past year-and-a-half as a moment of intense, frenetic freedom when the restrictive border apparatus across a vast geography, from the fringes of the Indian subcontinent to the heart of Europe, temporarily retreated.
Its place was taken by a robust network of Afghans, Turks, Kurds, Syrians, Iranians, and Pakistanis, snapped in place to ferry migrants from across the world to the European border.
So when a traveller from Lahore reaches Samos in Greece, he triggers off a wave of escrow payments — his family pays an agent in Pakistan, who maintains a running account with another agent in Tehran, who works with a Kurd in Van, who has people in Istanbul.

British PM says rise of India is one of the reason to go against Brexit

British Prime Minister David Cameron invoked increasing trade with India as part of his plea to the public to vote to remain in the European Union (EU), saying cutting off from the main EU market would be “economic madness”.
Mr. Cameron said, “The rise of countries like India and China... [means we have] big economies that we need to trade with more.”.
He said Britain could “do more with India” but not by cutting itself off from the EU.
Mr. Cameron also said that about 80 per cent of Britain’s economy consists of services like insurance and banking and architecture and sales and advertising.
About 45 per cent of the U.K.’s exports go to the EU at £227 billion, while imports accounts for £288 billion, according to 2014 data.
The debate for Britain’s future with the 28-member economic bloc has entered its final stage with just three days to go before the crucial referendum.
With opinion polls reflecting a very close contest between the ‘Remain’ and ‘Leave’ camps, some of the U.K.’s senior-most entrepreneurs and professionals spoke out in favour of the country remaining in the Union.
Virgin Group boss Richard Branson, one of the country’s most respected business tycoons, also warned that a British exit from the EU would be “devastating” for the U.K.’s long-term prosperity.

Virginia Raggi was elected as Rome’s first woman Mayor

Virginia Raggi waselected Rome’s first woman Mayor, sweeping into city hall on the ticket of the populist Five Star movement (M5S) with the backing of over two-thirds of voters.
Ms. Raggi (37), a Rome-born lawyer, started the campaign as a political novice.
However, she won over voters with her programme for cleaning up the administration, presenting her ideas in the crisp and sober manner of a patient academic.

Panama inaugurate wider canal

The Central American nation is to officially open its expansion work on the century-old Panama Canal after years of costly work with a ceremony featuring regional leaders and foreign dignitaries.
The project ran hundreds of millions of dollars over budget and two years past deadline, taking nine years to complete at a cost of more than $5.5 billion.
It required the construction of new locks, enlarged access and a deepening of the canal bed. Enough metal was used over the nine years to build 20 Eiffel Towers.
The pharaonic task of broadening the 80-kilometer canal, which is sometimes called the eighth modern wonder of the world, is a source of pride for Panama.
With the expansion, the Panama Canal — through which five per cent of world maritime commercial traffic already passes — will be able to take ships carrying three times as much cargo as before, up to 14,000 containers.
The government also hopes to wrest back “a good part” of the cargo traffic currently going through Egypt’s Suez Canal.

India may have to amend the SOEC clause

The International Civil Aviation Organisation template on air services agreements says that the SOEC norms in bilateral agreements address “potential concerns such as safety, security or other economic aspects.
However, the template is not binding and the countries are free to set their own terms.
India will have to amend the SOEC clause in its agreement with a particular country for allowing an airline with majority foreign control to fly abroad.
At present, only a couple of countries that India has bilateral agreements with do not acknowledge the SOEC norms.

End of Latin America’s longest civil war

Colombia’s government and the FARC guerrilla group reached agreement on a definitive ceasefire in Latin America’s longest civil war, they said in a joint statement.
The national government and FARC delegations inform the public that we have successfully reached an agreement for a definitive bilateral ceasefire and end to hostilities.
The announcement heralds an end to a half-century conflict that has seen hundreds of thousands of people getting killed.
The deal would all but end the conflict by resolving one of the final points at peace talks between the government and the Revolutionary Armed Forces of Colombia (FARC), the country’s biggest rebel group.
The Colombian conflict started as a rural uprising in the 1960s. It has left 260,000 people dead, 45,000 missing and nearly seven million displaced, according to official figures.
Peace talks have been under way in Havana since 2012. They got a boost when the FARC declared a unilateral ceasefire a year ago.

:: Economy ::

Ministries to study adding labour rules in trade talks

The Labour Ministry will initiate a dialogue with external affairs and commerce ministries to explore the possibility of inserting labour provisions in trade negotiations, Labour Minister Bandaru Dattatreya said.
This comes on the back of Bharatiya Mazdoor Sangh (BMS) move opposing India’s stand at the recently concluded International Labour Organisation conference in Geneva.
He said that adding labour as a condition in trade agreements will become a “trade barrier and impede the growth of the country.”
“The net importing country would say that your labour laws are not in conformity with our laws and this will affect our own production and economic growth,”.
The issue was taken up at the ILO where India had objected to bringing labour conditions as a part of trade agreements and BMS had issued a statement earlier this week saying their “condemn the stand” taken by the government.
The Centre had introduced a system-generated inspection system in 2014 under various labour law Acts wherein inspectors were not allowed to inspect a factory on his own will, unless he receives a complaint or gets an instruction from a Central Analysis and Intelligence Unit.

Tatkal window for patents set a limit on applications that it will consider

The government, which opened a ‘tatkal’ window to expedite examination of patent applications in the backdrop of 2.37 lakh pending patent applications, has now set a limit on applications that it will consider under the fast-track clearance mechanism.
The number of requests for expedited examination to be received by the Patent Office on or before December 31, 2016 has been limited to 1,000 requests.
The ‘tatkal’ window was opened after the amendments to the patent rules came into effect from May 16.
Under the ‘tatkal’-like system, applicants can opt for the ‘expedited examination’- route on the grounds that they have chosen India as the competent International Searching Authority or International Preliminary Examining Authority in the corresponding international application, and file their applications first in India.
The ‘expedited examination’-route is also available to all entities that qualify as a start-up as per the definition for start-up provided in the Patent Rules. The applications for this route have to be filed only electronically.
There is a need to have more patent examiners with technical skills because the top ten filers of patent applications belong to the hi-tech category, namely telecom, semi-conductors and consumer electronics.
The 'tatkal' window was aimed at popularising India as a patent filing hub to ensure more companies file applications in India.
Currently, several applications for the initial examination are filed abroad, in places like Europe, the US or Japan.
Under the ‘expedited examination’ route, the fees for individuals and start-ups have been fixed at Rs.8,000, while for small firms it is Rs.25,000 and for large companies, the fee is Rs.60,000.
The Centre is aiming to bring down the time period for clearing applications from the present 5-7 years to two-and-a-half years.

India’s Tea output made new record

India’s tea output rose three per cent to 1,233.1 million kgs in the last fiscal year — a record for the commodity, according to the Tea Board of India.
Tea exports gained 17 per cent by volume and value during this period, according to official statistics. Exports, breached the 230-million-kg mark for the first time since 1980-81, touching 232. 9 million kgs in 2015-16 and valued at Rs.4,493.1 crore.
Auction prices of tea rose as did the volume sold through auctions. Bought Leaf Factory sector (which buys teas produced by the small tea growers) increased its share by 5.8 per cent.
About 33.9 per cent of total tea production is now coming from small growers.
In a statement, the industry regulator said that north Indian tea estates led by Assam were able to increase their output, offsetting the reverses suffered by South India which accounts for a quarter of India’s tea crop.
The Tea Board statement said that Russia, Iran, Germany and Pakistan accounted for most of the increase.
Russia, India’s single largest market, and one which is showing increased preference for high value teas, bought 22.4 per cent more teas.

Members of MPC and Next RBI Governor to be announced

The government is expected to soon announce both, members of the monetary policy committee, as well as the successor to RBI Governor Raghuram Rajan, according to sources.
The government is working overtime to counter the fallout arising from sudden exit announcement of Reserve Bank of India (RBI) Governor, Raghuram Rajan.
Both the prime minister’s office and the finance ministry have gone on a war footing to search for a successor.
The new Governor would be announced well before the next monetary policy announcement scheduled on August 9.
What is also certain is that the government will announce the formation of the monetary policy committee shortly.
The Finance Bill, passed by the Parliament, has paved the way for the formation of such a panel.
The monetary policy committee is to have have six members — three of them, including RBI Governor, who will head the panel, will be from the RBI while the remaining three will be external members.
RBI Governor will have the casting vote in case of an undecided vote.
The formation of the monetary policy committee was mooted by the Urjit Patel committee which was set up by Mr. Rajan shortly after he took charge as Governor.
The committee suggested that monetary policy be rule-based and not discretion-based.
Targeting inflation is to be the core objective of the central bank, and it will be answerable to law-makers if it failed to achieve the target, the Patel committee had suggested.
RBI has already moved to an inflation-targeting framework following an agreement signed with the government in 2015.

:: India and World ::

India wants NSG membership based on credentials and not on the basis of process

An international consensus is building around India’s bid for membership to the Nuclear Suppliers Group (NSG), External Affairs Minister said.
She also said that she is confident of a favourable outcome when the issue comes up for discussion at the NSG plenary in Seoul on June 23.
According to Ms. Swaraj, the government is “hopeful of success in convincing China” by then, indicating that Beijing would not wish to go against the consensus built.
“I think a consensus is being made, and I don’t think any country will break that consensus, and this time we will get the NSG membership,” Ms. Swaraj told reporters at the MEA’s annual press conference.
By rule, decisions on memberships and other issues in the body that regulates nuclear trade have to be taken by consensus among all members.
“All major issues, including India’s NSG membership, were discussed,” the MEA spokesperson said about the visit on June 16-17.
China has said that it wants the NSG to agree on a process or “criteria” for members, indicating that Pakistan must benefit from any flexibility given to India,.
“Instead of speaking about criteria, one should speak about our credentials. Our track record should be discussed. Whatever commitments and undertakings we gave prior to receiving the [NSG] waiver in 2008, we have kept,” Ms. Swaraj said.

China cools down India's NSG entry talks

India’s membership of the Nuclear Suppliers Group (NSG) is not yet on the agenda of the Seoul Plenary this week, China said.
“We understand that non-NPT countriesare very concerned about their entry into the NSG but since the NSG is still divided on this issue it is still not mature to talk about it at the annual conference in Seoul,” China said.
The statement from Beijing came a day after External Affairs Minister Sushma Swaraj said India hoped to convince China to support its application.
China and a few other NSG countries have called for a criteria-based process for entry of countries like India and Pakistan, who are not signatories to the NPT, into the 48-member nuclear club.

:: Science & Technology ::

PSLV-C34 to take highest number of satellites

The Polar Satellite Launch Vehicle (PSLV-C34), which will lift off at 9.25 a.m. on June 22 from Sriharikota, is an important mission for the Indian Space Research Organisation (ISRO).
The vehicle will not only put 20 satellites into the same orbit — the highest number of satellites to be put into orbit by a PSLV — but it will perform two tricky experiments of the same nature.
Fifty minutes after the satellites are injected into the orbit from the fourth stage of the vehicle, its engine will be re-ignited for five seconds.
The ISRO wants to master this complex manoeuvre so that it can put multiple satellites into different orbits using the same rocket.
A forthcoming PSLV launch will put the ISRO’s SCATSAT-1, meant for forecasting weather and cyclone detection, and a foreign satellite in two different orbits.
On December 16, 2015, after the PSLV-C29’s fourth stage put six Singapore satellites into the same orbit, the ISRO re-started the fourth-stage engine for four seconds.
On June 22, eight minutes after the PSLV-C34 lifts off, the fourth stage engine will sizzle into life, taking the stage to an altitude of 514 km.
The fourth stage engine will be cut off 16 minutes and 30 seconds after the lift-off. Over the next 10 minutes, 20 satellites will be injected into the same orbit from the fourth stage, one after another.
In 2008, the PSLV-C9 deployed 10 satellites, but in the same orbit.

Carbon dioxide levels surpassed 400 ppm in South Pole

Carbon dioxide levels have surpassed 400 parts per million (ppm) at the South Pole for the first time in four million years, according to U.S. scientists.
The South Pole remote location means it is the last to register the impacts of increasing emissions from fossil fuel consumption, the primary driver of greenhouse gas pollution, researchers said.
The far southern hemisphere was the last place on Earth where CO{-2}had not yet reached this mark.
Over the course of the year, CO{-2}levels rise during fall and winter and decline during summer in the Northern Hemisphere, as terrestrial plants consume CO{-2}during photosynthesis.
However, plants only capture a fraction of annual CO{-2}emissions. For every year since observations began in 1958, there has been more CO{-2}in the atmosphere than the year before.
Last year’s global CO{-2}average reached 399 ppm, meaning that the global average in 2016 will almost certainly surpass 400 ppm.
The only question is whether the lowest month for 2016 will also remain above 400 ppm, researchers said. The annual rate of increase appears to be accelerating.
The annual growth rate of atmospheric carbon dioxide measured at NOAA’s Mauna Loa Observatory in Hawaii jumped 3.05 ppm during 2015, the largest year-to-year increase in 56 years of monitoring.
Part of last year’s jump was attributable to El Nino, the cyclical Pacific Ocean warming that produces extreme weather across the globe, causing terrestrial ecosystems to lose stored CO{-2}through wildfire, drought and heat waves.

Study shows Cretaceous period asteroid wiped out 90% mammals

The same asteroid that killed the dinosaurs in the Cretaceous period 66 million years ago also wiped out over 90 per cent of mammal species, significantly more than previously thought, new research has found.
Following the asteroid hit, most of the plants and animals would have died, so the survivors probably fed on insects eating dead plants and animals.
With so little food, only small species survived. The biggest animals to survive on land would have been no larger than a cat, the study said.
For the study, the researchers reviewed all mammal species known from the end of the Cretaceous period in North America.

Scramjet engines now on ISRO’s agenda

Flush with the success of the technology demonstration flight of its Reusable Launch Vehicle last month, ISRO is gearing up to test a scramjet engine based on air-breathing propulsion.
The test flight of the indigenously developed scramjet engine is scheduled to take place from the Satish Dhawan Space Centre at Sriharikota sometime in July.
Named Advanced Technology Vehicle (ATV), the test platform will comprise a scramjet engine hitched to a two-stage sounding rocket (RH- 560).
The air-breathing engine will be released at a height of 70 km and ignited during the coasting phase. Apart from the hypersonic ignition at Mach 6, ISRO hopes to sustain the combustion for 5 seconds.

Third satellite in cartosat-2 series to be launched

The PSLV-C34 is set to lift the third satellite in the Cartosat-2 series and an Indian record-making 19 small satellites into space. It will be the 36th PSLV launcher to fly from the Satish Dhawan Space Centre, Sriharikota.
The current Cartosat-2 spacecraft is an Earth observation spacecraft and will be put into a pole-to-pole orbit 515 km from surface.
The spacecraft is said to offer the best resolution of less than a metre on an Indian satellite, going as sharp as 60 cm. That is a measure of the smallest size of objects it can pick up on Earth.
This is the highest number of deployments by an Indian launcher.

:: Sports ::

India gets champions Trophy silver medal

The Indian hockey team settled for a silver medal in its best ever Champions Trophy performance after the spirited side went down 1-3 to world champion Australia in a controversy-marred summit clash penalty shootout here.
Only Harmanpreet Singh was able to score in the shootout, while S.K. Uthappa, S.V. Sunil and Surender Kumar all missed the target. Just four attempts were required from the two teams as Australia had gained a winning 3-1 lead.
India thus improved on its bronze medal show in the 1982 edition.
There was plenty of drama in the shootout as Beale’s shot was re-taken after he failed to score and sought a video review. The video umpire asked the shot to be taken again, leaving Indian coach Roelant Oltmans fuming on the sidelines.
At the end of the match, India protested against the second successful attempt awarded to Beale, delaying the final announcement on the result of the match.
After discussing the appeal for more than an hour, the jury declared that there was unintentional obstruction on part of Indian goalkeeper Sreejesh in the seventh second thus the re-take of the shot was justified.

:: Important Articles from Various Newspapers ::

India and the Brexit forecast (The Hindu)

Unlike many other governments of countries with strong economic and historical ties with the United Kingdom, India has refrained from officially commenting on the crucial European Union (EU) membership referendum to be held on June 23.

At a recent debate on “Would Brexit Benefit India” at the House of Commons moderated by journalist Ashis Ray of Ray Events, Lord Archie Hamilton, a former Defence Minister and now Brexit supporter argued that the EU was the biggest obstacle to U.K.-India trade. “We should be doing much more business with India with its middle class of 200 million people, but we can’t because trade with India is part of what is known as an EU competence,” he said. “An EU trade deal with India is almost completely out of the question, and Britain will have to get out of the EU if we are going to tie up a bilateral trade deal with India which I am absolutely certain we can do.” In the absence of any realistic projection on what a post-Brexit U.K. holds in store, such claims carry little authority. That said, India remains deeply vested in the outcome of the referendum for two reasons. The first concerns the welfare of a nearly three-million strong diaspora of Indian-origin U.K. citizens, while the second concerns the interests of a large moving population of Indians who come to Britain ever year as tourists, business people, professionals, students, spouses, parents and relatives.

Indian industry in the U.K. is thriving. There are 800 Indian companies in the country -- more than the combined number in the rest of Europe. According to the India Tracker 2016 commissioned by the Confederation of Indian Industry (CII), Indian companies generate 110,000 jobs. The number of Indian companies growing at more than 10 per cent — the key benchmark for inclusion on the list — has nearly doubled this year over the last. The total turnover of the fastest growing Indian companies in the U.K., especially in the fast growth sectors of technology, telecom, pharmaceuticals and financial services, rose by 18 per cent in 2016 — from £22 billion in 2015 to £26 billion this year, according to the Tracker. Telecom and technology companies Bharti Airtel and HCL Technologies top the list of Indian companies, registering phenomenal growths of 886 per cent and 728 per cent respectively. In turnover terms, the Tata Group still dominates, although its share has fallen from 83 per cent of total turnover of Indian companies on the Tracker compared to 90 per cent last year. Despite the downturn in the automobile industry, Jaguar Land Rover’s business is still the success story it was, reporting a 13 per cent growth due to increased demand for its product range.

Chandrajit Banerjee, Director General of CII, in a statement that spoke to a Brexit scenario underscored the importance of continued border-free access to European markets as a “key driver for Indian companies coming to the U.K.”. “Anything that lessens this attractiveness may have a bearing on future investment decisions,” he said. This pro-Europe sentiment was echoed in a memo issued to its staff by the management of Tata Steel — a company currently in the process of finding a buyer for its Port Talbot steelworks. The Daily Telegraph reported that the letter urges staff to give “careful thought” to the referendum “because the choice you make on 23 June will make a difference to your working life”. The memo stated that access to the EU market is “fundamental to our business”.

The Indian industrialist and philanthropist Lord Swraj Paul, head of the Caparo Group, sounded a strong warning on the perils for British industry from leaving the EU in respect of skilled labour supplies, free trade opportunities in Europe, and immigration restrictions. On a historical note, Lord Paul spoke of the great damage to India and Pakistan wrought by the Partition of 1947. “At the time of Partition they [citizens of India and Pakistan] were people with the same language; yet it was decided that they should become separate countries with their own sovereignty. In my view, and in the view of many other people, India and Pakistan are still suffering today from that decision,” he said.

Work-related visa restrictions have already resulted in a fall in the number of Indian students studying in British universities from 22,385 in 2012-13 to 18,320 in 2014-15, according to the U.K. Council for International Student Affairs (UKCISA). Given their tough stance on cutting immigration, a Brexit government could be expected to make such curbs more stringent. According to Lord Karan Bilimoria, President of the UKCISA, the clutch of new visa rules that have impacted student flows from India — especially the withdrawal in 2012 of the post-study work visa — has had disastrous consequences. A Brexit vote would only exacerbate these. “Unlike other countries, Britain classifies overseas students as immigrants.” He argues that Justice Minister and Brexit advocate Michael Gove has recommitted to a post-Brexit government aiming to reach the Conservative party target of bringing immigration down to the “tens of thousands”. The latest immigration figures put the number of immigrants at between 330-350,000 in 2015, of which 180,000 are non-EU migrants.

The “curry and mango wars’ are a part of the Brexit arsenal used by the U.K.’s Employment Minister of Indian-origin Priti Patel, a leading voice of the South Asian community for Brexit. Protectionist EU acts as a barrier to trade for the U.K., including from India, she argues, citing the EU-led ban on Indian mango shipments to the U.K. in May 2014 after fruit flies were found in consignments. The ban was lifted in early 2015, but not before Indian exporters and local traders suffered considerable losses. High European regulatory standards are a dampener on Indian exports, as the mango ban demonstrates.

Indian businesses and financial institutions are however hedging their bets. According to a report by the State Bank of India's Economic Research Department, Brexit may actually strengthen India's position. “This referendum will have geopolitical implications and will affect the relation of the rest of the world with Europe. But, our take is that though such an exit brings up a lot of uncertainty within Europe, it definitely opens up opportunities for India,” the SBI report says. With only three days to go, the outcome of the referendum is unclear. The recent murder of a young and popular Labour MP and Remain activist Jo Cox by a man espousing a right wing, anti-immigrant ideology has shocked and appalled ordinary citizens. Whether this is a taster of what the extreme fringe of the Brexit campaign will bring to a post-Brexit scenario will only be known later — if and when a post-Brexit government takes the reins after June 23.

The cost of nuclear diplomacy (The Hindu)

In their recent joint statement, Prime Minister Narendra Modi and President Barack Obama “welcomed the start of preparatory work… in India for six AP1000 reactors to be built by Westinghouse…” Judging by the cost of similar reactors under construction in the U.S., these six reactors may cost as much as Rs.4 lakh crore. This makes the deal potentially the largest commercial contract in the offing between the two countries. When the United Progressive Alliance government announced its intention to start work on two reactors each from Westinghouse and General Electric (GE) in the 12th Plan period (2012-2017), it did little to pretend that these contracts made sense on their own merits. Instead, as the former chairperson of the Atomic Energy Commission, Anil Kakodkar, explained, India had “to keep in mind the commercial interests of foreign countries and of the companies there” and was obliged to purchase these reactors in return for U.S. diplomatic support on other issues. Last year, GE backed out of this arrangement citing concerns about India’s liability law. This was good riddance; GE was offering India an untested design that it has not yet managed to sell anywhere in the world. But the government’s decision to deepen India’s investment in Westinghouse — even as negative news about the company has accumulated — makes little sense.

Likewise, the fiscally responsible action for India would be to cancel this deal. The two AP1000 reactors being built in the U.S. state of Georgia are now projected to cost Rs.1.4 lakh crore, which translates into a capital cost of about Rs.70 crore per megawatt of capacity. Even indigenous Indian nuclear reactors, which have struggled to be economically competitive, have capital costs that are seven times lower at about Rs.10 crore per megawatt. A more detailed calculation indicates that with these capital costs, the first year tariff on electricity from these reactors could be as high as Rs.25 per unit. In contrast, recent winning bids for solar power have projected tariffs of about Rs.5 per unit. The government claims that it can reduce construction costs in India by 25-30 per cent, but this is far from sufficient to make the AP1000 reactors cost-competitive.

The joint statement suggested that these reactors would help India meet its commitments on climate change but this is misleading. Economists use a “price on carbon” to determine whether a given technology provides a cost-effective method of reducing greenhouse gas emissions; a commonly used European figure is about Rs.2 (0.03 euros) per kg of carbon dioxide. Since coal plants, which produce most of India’s electricity, emit about 1 kg of carbon dioxide per unit of electricity, the AP1000 reactors may have been attractive from this point of view if their tariffs had been within Rs.2 of the tariffs from coal-based plants. Since their projected tariffs are much higher than this, India could reduce greenhouse gas emissions more efficiently by investing the same resources in other green technologies.

In the joint statement, Mr. Obama “re-affirmed that India is ready for membership” of the Nuclear Suppliers Group (NSG). But India’s engagement with the NSG is irrelevant for its energy problems. A 2008 NSG waiver allowed India to purchase uranium for its indigenous civilian reactors but these account for less than 1 per cent of the country’s total electricity generating capacity. NSG membership may additionally allow India to acquire enrichment and reprocessing technology. However, since India’s indigenous heavy water reactors do not use enriched uranium and imported light water reactors come with associated fuel contracts, this technology has little significance for India’s electricity sector.

In his address to the U.S. Congress, Mr. Modi explained that the Indo-U.S. “relationship has overcome the hesitations of history”. In light of this, it is important to take a sober look at the recent nuclear deal. The Indian government has offered to spend lakhs of crores of public money on a loss-making American corporation, and has put its citizens in a position where they might have to pay high costs for electricity and will not be able to hold this corporation accountable for an accident. In return, the U.S. President said some nice words about India. Is this the shape of the Indo-U.S. alliance to come?

A strategic exit (The Hindu)

In declaring that he will not seek a second term after his first ends in September, Reserve Bank of India Governor Raghuram Rajan has chosen the best and most dignified way out of a situation that was getting increasingly ugly. Over the last few months, his ‘extension’ became the subject of fevered speculation as it became increasingly apparent that sections within the Modi government were uncomfortable with his continuance. The complaints against Mr. Rajan varied — they included the relatively trifling (his choice of words and plain-speaking ways), the debatable but substantive (his unwillingness to lower interest rates despite stable macro-economic indicators), and the indisputably ridiculous (his alleged lack of commitment to India). The last, coupled with the Centre’s decision to form a search panel to select all financial sector regulators, could have nudged Mr. Rajan to rule himself out of the race two and a half months before his term ends. In doing so, he has saved the Centre from the possible repercussions that a refusal to grant a second term could have had. After all, the RBI Governor has an enormous amount of credibility with international investors (the impact of his exit on foreign portfolio flows will be keenly watched), and he has earned himself the reputation of having skilfully managed the country’s currency, inflation and foreign exchange reserves in a faltering world economic climate.

On monetary policy, the Centre’s uneasiness stemmed from what it believed was an important reason for the economy not taking off as fast as it could have. The slow pace of interest rate cuts, a result of what Mr. Rajan saw as fresh or rising inflationary pressures, is on that list; but although the RBI has cut rates by 1.5 percentage points since 2015, private investments are still moribund. The central bank’s crackdown on the evergreening of loans, forcing banks to acknowledge bad loans rather than throw more good money after bad, has led to record losses across the public sector banking system. This has been another source of friction. By ruling himself out for a second term, Mr. Rajan has brought down the curtain on the unfortunate and unpleasant politics around his continuance. In choosing his successor, the Centre must remember that the central bank, by its very remit, is concerned about inflation and that the country needs a Governor with enough independence and authority to maintain a balance between the aspirations for growth and the concern about rising prices; it is also imperative that the new central bank chief has a free hand in charting a course to fix banks’ books so that they can begin lending again. A rubber stamp for rate cuts won’t do, and it is not such a bad thing if a healthy tension exists between the Reserve Bank of India and the Finance Ministry. As Mr. Rajan himself once said, if the two always agreed, the public should be very worried.

The Centre’s big reform push (The Hindu)

With India now acknowledged as the fastest growing large economy in the world and also edging up in the World Bank’s ease of doing business rankings, the time is ripe for the country to open its doors wider to Foreign Direct Investment (FDI). This is exactly what the Centre has done by raising FDI caps in some sectors (airlines from 49 to 100 per cent), sweeping others entirely into the automatic route (cable TV, brownfield airports) and diluting preconditions for sectors with restrictions (relaxation of sourcing norms in single-brand retail and technology norms for defence). FDI is stickier and more resilient to business cycles than mercurial Foreign Portfolio Investor (FPI) flows. At a time when the private sector has a limited appetite to invest and when the government is tied down by fiscal constraints, India needs to seek out foreign capital to keep its growth engines purring. That foreign investors are interested in India is evident: there has been a 23 per cent surge in inbound FDI, which touched a record $55.5 billion in 2015-16.

Even so, it is simplistic to assume that merely opening up more sectors or setting more liberal equity caps will have foreign investors queuing up to invest. India’s experience suggests that actual investment interest in the newly liberalised sectors will be tied to three factors. One, foreign investors, like domestic ones, are ROI (Return on Investment) focussed. Therefore, sectors that are already witnessing booming consumer demand — such as DTH television, airlines and pharmaceuticals — are more likely to attract quick investment flows than those that are in need of bailouts (asset reconstruction firms) or entail long gestation periods (airports or defence). Two, even if the Centre is willing to reduce initial entry barriers, frequent market or pricing interventions can deter investors. The Centre seems to have recognised this in watering down the sourcing norms for FDI in single-brand retail. But its attempts to woo FDI into pharma may be stymied by increasing price controls and the lack of clarity in the policy on essential drugs. Three, the experience with sectors such as insurance suggests that foreign investors committing long-term capital expect to exercise control over the entities they fund. Overall, there is no disputing that the FDI relaxations, irrespective of whether they were timed to signal the Centre’s commitment to reforms in the face of RBI Governor Raghuram Rajan’s exit in September, are a step in the right direction. But as we have learnt from the past, the devil is usually in the detail.

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Weekly Current Affairs Update for IAS Exam - VOL. 133 (19th June 2016 TO 25th June 2016)