Current Affairs for IAS Exams - 31 December 2016

:: National ::

India’s international counter-terror campaign suffered a setback from China

• India’s international counter-terror campaign suffered a setback with China again blocking its attempt to blacklist Pakistan-based terror leader Masood Azhar at the U.N.

• China’s action stopped the counter terror committee of the U.N. Security Council Taliban/al Qaeda Sanctions Committee from designating the Jaish-e- Mohammad leader, which India called a “surprising” move.

• Chinese Foreign Ministry Spokesperson, said, “when it comes to the listing matter of the U.N. Security Council 1267 Committee, we believe it should conform with relevant Security Council resolutions and the Committee’s rules of procedure.”

• India began the campaign to blacklist Masood Azhar after the Pathankot attack on January 2.

• Subsequently India highlighted the contradiction that the UNSC 1267 Committee had banned Jaish-e-Mohammed in 2001 while leaving out Mr Azhar and therefore, should proscribe him as well.

• However, China blocked India’s attempts to list Masood Azhar in the agenda of the 1267 Committee earlier this year, neutralising India’s campaign.

• China’s blockade also cast a shadow on India’s plans to bring an international convention against terrorism under the aegis of the United Nations.

• The attempt to blacklist Masood Azhar will remain part of India’s multilateral agenda and India will continue to campaign for the need to place him on the list of international terrorists.

Demonetisation of old notes to end today

• The Reserve Bank of India, meanwhile, has asked banks to put together data on how much of the demonetised currency returned to the system by December 30.

• Union Finance Minister Arun Jaitley said the record number of search and seizure operations carried out by the Income-Tax department were ample proof that the decision to demonetise the high-value currency notes was on the mark.

• Mr. Jaitley also said the cash crunch faced by people due to the lack of adequate currency in banks had eased as gauged by thinner queues at banks.

• Though he refused to commit to a time line for lifting the withdrawal caps of Rs. 24,000 a week imposed on bank account holders.

• The Prime Minister’s address to the nation on New Year’s Eve could hold some goodies for the common man, days before the Election Commission announces poll dates for upcoming elections.

Demonetisation have no immediate impact on the railway and aviation sectors (Register and Login to read Full News)

:: International ::

China to invest in Pakistan's power sector

• China’s State Grid Corporation is set to build a $1.5-billion power line across Pakistan to enable the transmission of 4,000 megawatts of electricity from the country’s north to south.

• Pakistani and Chinese officials signed an investment agreement in Beijing to build the country’s first high-voltage, direct current line, according to a government statement.

• The power transmission line would link the national grid between the southern Pakistani town of Matiari and easternmost city of Lahore, some 1,000 km apart.

• Pakistan has been struggling to provide enough power to its nearly 200 million citizens, and Prime Minister Nawaz Sharif has vowed to solve the crisis by 2018.

:: Business and Economy ::

Economist believe demonetisation has reduced economic momentum

• The Centre’s decision to withdraw high value banknotes couldn’t have come at a worse time for the recovering Indian economy as the cash crunch that resulted from the sudden demonetisation crimped all-round demand.

• Starting 2016 on a relatively weak base with gross value added (GVA) growth at 6.9 per cent and GDP growth at 7.2 per cent in December 2015 — economic momentum recovered towards the middle of the year.

• GDP growth in March accelerated to 7.9 per cent and GVA growth rose to 7.4 per cent.

• Although the upsurge hit a hurdle in June, with GDP growth for the second quarter of FY17 falling to its slowest rate in six quarters at 7.1 per cent.

• A good monsoon and an imminent pick-up in demand seemed to have placed the economy in a sweet spot for higher growth, investments and, possibly, job creation.

• The Centre's move to withdraw high value currency notes in November altered that script, though the government is confident that deferred consumption will still spur growth once the initial shock of the move is absorbed.

• On the infrastructure side, the main sticking point — non-performing assets — remains a problem independent of the effect of demonetisation, with banks not willing to lend for such projects.

• The index of industrial production on average contracted by 0.1 per cent over the January-to-October period, with private investment faring very poorly and any growth in the index being mostly driven by consumption.

• The index reached its lowest level in the year in July, when it contracted 2.55 per cent. The best performance was in the preceding month, when the index grew 2.18 per cent.

• Retail inflation slowed significantly over the year, while the contraction in wholesale prices reversed.

• This meant that the growth rates of the Consumer Price Index and the Wholesale Price Index converged — coming the closest to each other in November, when the CPI grew at 3.6 per cent and the WPI at 3.15 per cent.

• Growth in gross value added has been slowing since the fourth quarter of the previous financial year (quarter ended March 2016), when it was 7.4 per cent.

• GVA growth for the second quarter of this financial year was 7.1 per cent, which is the lowest it has been since the quarter ended December 2015.

• That was before the demonetisation announcement, which economists said would dampen growth in the last two quarters of the fiscal.

• The current account deficit has contracted sharply over the last two years, with the amount touching $3.4 billion in September 2016, down from $10.9 billion in September 2014.

• The CAD touched a more than two-year low in the quarters ended March and June, coming in at just $300 million.

Finance ministry told banks to review the lending rates

• Lending rates may fall sharply from the beginning of January as the finance ministry has told banks to review interest rates as huge sums of cash have been deposited in the banks in the wake of demonetisation.

• According to bankers, at a meeting with the finance ministry officials, the latter suggested lenders should review the marginal cost of funds-based lending rate (MCLR) and pass the benefit to customers.

• MCLR is the benchmark rate to which all the loan rates are linked.

Last date for Direct Tax Dispute Resolution Scheme extended to January 31 (Register and Login to read Full News)

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