Current Affairs - 1 September 2015

General Affairs

Ram Jethmalani Supports OROP, Slams Arun Jaitley

• NEW DELHI:  Former BJP leader Ram Jethmalani today visited the ex-servicemen protesting in New Delhi seeking One Rank One Pension (OROP) and launched a sharp attack on Finance Minister Arun Jaitley.
  
  Saying he was there to support the veterans, Mr Jethmalani said the finance minister was an "enemy" of the veterans as well as the nation.
  
  "Throughout the campaign (for Lok Sabha election), I went round the country and said (Prime Minister) Modi is a gift of god. I am ashamed to say that Modi has frustrated my dream, and every day I get more and more evidence that he has no intention of fulfilling this promise," Mr Jethmalani said.
  
  

  "I have already told him (Modi) that my love and respect for him has all gone," the senior Supreme Court lawyer said.
  
  He then slammed the finance minister.
  
  "The finance minister is the greatest curse of god that has come to us. He is your enemy and he is the enemy of the nation," he said.
  
  Monday was the 78th day of protest at the Jantar Mantar by military veterans demanding the immediate implementation of OROP.
  

Senior Bureaucrat Rajiv Mehrishi Will Be New Home Secretary

• NEW DELHI:  In a high-level shake-up in the government, a new home secretary will take over just six months after the last appointment.
  
  Senior bureaucrat Rajiv Mehrishi has been appointed home secretary in place of LC Goyal, whose appointment in February was also sudden. The new Home Secretary has had a stint in Rajasthan where he served as Chief Secretary and was hand picked by the Prime Minister to serve in the central government
  
  Mr Goyal had replaced Anil Goswami, who was asked to go for allegedly interfering in a CBI probe on behalf of a Congress leader.
  
  

  A government statement said Mr Goyal's request for voluntary retirement has been approved by Prime Minister Narendra Modi. He has reportedly cited "personal reasons."
  
  Mr Mehrishi, a 1978 batch IAS officer, was Secretary in the Department of Economic Affairs, Finance Ministry. He was due to retire today but has been given a two-year extension.
  
  Sources say "low synergy" between the finance and home ministries was among the reasons for the shuffle. They also say Mr Goyal had few options but to make way for a new officer in his place. He has not enjoyed the best of ties with the government or the finance ministry.

Watershed Programmes Recommended in Drought-Hit Marathwada

• MUMBAI:  Maharashtra Water Resources Department has recommended creation of decentralized reservoirs and promotion of watershed programmes among others as a part of a long-term policy to provide relief to the Marathwada region which is reeling under drought. The department's report, based on the Godavari river basin study, has recommended creation of decentralised small water reservoirs, promoting watershed programmes along with 'Jalyukta Shivar' to bring 94 per cent land under water catchment areas and promote cultivation of oilseeds and pulses, instead of crops, under protective irrigation.
  
  The joint planning, review and implementation committee headed by executive director of Water Resources Department has prepared a report on micro-planning of Godavari river basin. A multi-disciplinary team was appointed comprising water experts and officials of state government.
  
  

  The recommendations are based on considering the population and requirement of water for drinking, conditions of agriculture and industries sector in 2030.
  
  According to an official from the Water Resources Department, the planning of the Godavari basin will not only help in identifying places where small and medium dams to hold water can be constructed, but will provide directions on overcoming the drought situation in the Marathwada region.
  
  "The report has recommended that cash crops or crops dependable on assured irrigation like cotton and sugarcane should not be allowed in the Marathwada region. It instead asks to promote cultivation of oilseeds and pulses," he said.
  
  The Godavari basin is spread in eight districts of Marathwada, including Aurangabad, Jalna, Parbhani, Hingoli, Nanded, Beed, Latur and partial Osmanabad districts.
  
  Parts of Nashik, Ahmednagar and Jalgaon districts from North Maharashtra are also covered under the basin. Eleven districts of the Vidarbha region and parts of Pune will also come under the Godavari basin.

Indian Embassy Organises Visa Camp in US

• WASHINGTON:  As part of its objective to address visa related concerns of Indian-Americans at their door steps, Indian Embassy in Washington has hosted a visa camp for the community living in and around the Baltimore area.
  
  About 150 applications for visa, Overseas Citizens of India and Renunciation Certificates were received during the day long camp inaugurated by First Secretary (Consular) Prasanna Shrivastava, a media release said today.
  
  

  During the interaction with the Indian-American Community, Mr Shrivastava apprised the participants of the recent initiatives taken by the Embassy for providing efficient and predictable consular services to the applicants.
  
  The visa camp, through its Service Provider Cox and Kings Global Services, was held this week with support from ISKCON Baltimore and Baltimore Fest.
  
  It was also supported by India Samaj Baltimore, Maryland India Business Roundtable, Shreyas Panchigar Foundation, Gujarati Samaj of Metropolitan Washington, Sikh Association of Baltimore, Guru Nanak Foundation of America, Capitol Area Telugu Society and American Telugu Association from Baltimore.
  
  Last such visa camp was held at Raleigh in North Carolina in May.

Pakistan Determined to Eliminate Terrorism: Sartaj Aziz

• ISLAMABAD:  Pakistan's National Security Advisor Sartaj Aziz on Monday urged the international community to join hands to develop a strategy to counter terrorism.
  
  The scourge of terrorism was continuing and Pakistan was paying a heavy price in the fight against terrorism, Aziz said while addressing a joint news conference here along with visiting German Foreign Minister Frank Walter Steinmeier, Radio Pakistan reported.
  
  Mr Aziz said the military's Zarb-e-Azb operation had broken the backbone of terrorists. Pakistan was determined to eliminate the menace of terrorism, he added.
  
  

  The advisor said he had a productive meeting with Mr Steinmeier and they exchanged views on bilateral relations, and regional and global issues specially the situation in Afghanistan and the stalemate in the India-Pakistan dialogue.
  
  Mr Aziz said Pakistan welcomed German investment in various sectors of the economy including engineering and renewable energy. He said they discussed cooperation in the fields of parliamentary exchanges, capacity building and education.
  
  The German foreign minister appreciated Pakistan's achievements in its fight against terrorism. He said the world recognised the sacrifices made by Pakistan in this fight.

Business Affairs 

Asian markets dent Indian equities, Sensex closes 109 pts down

• Despite hopes of healthy economic expansion data, the slide in Asian bourses and a weaker rupee dented the Indian equity market on Monday.

  Bearish sentiments due to negative Asian cues dampened trade at the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which fell by 109.29 points or 0.41 per cent.Weak sentiments were also witnessed at the wider 50-scrip Nifty of the National Stock Exchange (NSE). The CNX Nifty of the NSE declined by 30.65 points or 0.38 per cent at 7,971.30 points.

  The S&P BSE Sensex, which opened at 26,469.42 points, closed at 26,283.09 points - down 109.29 points or 0.41 per cent from Friday's close at 26,392.38 points.

  Analysts pointed out that the negative cues eminating out of Asian markets, especially due to the slide in the Chinese markets, made investors reluctant to chase higher prices.

  "The markets are lower due to the fall in Asian markets. Despite attractive valuations, bargain hunting is being resisted due to the Asian markets factor and its consequence - the weakening in rupee value," Anand James, co-head, technical research, Geojit BNP Paribas, told IANS.

  "However, the markets might pick up on the back of healthy GDP data due to be released later on Monday. A healthy data coupled with government's attempts to restart the consensus-building efforts to pass the GST bill (goods and services tax) have the potential to support the Indian equities."

  Sector-wise, automobile, capital goods and consumer durables came under heavy selling pressure.

  The S&P BSE automobile index plunged by 125.75 points, the capital goods index receded by 109.21 points and consumer durables index declined by 56.37 points.

  On the other hand, healthcare index augmented by 323.18 points, metal index gained by 72.09 points and oil and gas sector was higher by 62.73 points.

FM Arun Jaitley pushes for rate cut in Sept 29 policy review

• Pushing for interest rate cut, Finance Minister Arun Jaitley   said on Monday inflation is under control while oil and commodity prices are also low and expressed hope that RBI will consider all these factors in its monetary policy review.

  "Inflation in India is broadly under control and you have low oil prices, you have low commodity prices. Though August and September are not going to be very exciting from the point of view of monsoon, at least July was a very good month for monsoon. So production in agriculture is going to be significantly better than the last year and therefore I don't think food prices will rise very much either, he said. In a scenario where inflation is under control, the quantum of interest rate cut is the prerogative of the RBI," Jaitley said."And therefore I do see RBI as a very professional institution which will certainly take note of all these factors when it decides its next stand," he told ET NOW.

  Asked if RBI has shown little stubbornness on monetary policy stance so far, Jaitley said, "People can have different views. But when an institution such as Reserve Bank with all its professionalism and capacities is empowered, we must learn to trust them a bit."

  The Finance Minister said oil and commodity prices have seen global slump and India is a net importer of these.

  "Therefore we are buying products at cheaper price... We are the beneficiaries of slowdown in the oil prices and the commodity prices. We are not part of China's production chain. We have a huge domestic demand," he said. India, Jaitley said, offered an attractive investment avenue for investors pulling out their money from other destinations.

  Stating that the reforms process has to continue, Jaitley said, "Supposing we have the GST through, either by the Centre or by the state we can get our land law little liberalised, we take the necessary monetary policy steps, our private sector investment picks up, of course our ability to move into still higher range of economic growth is there. And that is where the real opportunity lies for India," he said. 

GDP data may bring cheers to worried investors

• For investors worried about the health of emerging economies, India's gross domestic product (GDP) data for April-June should supply some cheer on Monday - the country is expected to remain the fastest growing major economy for a second straight quarter.

  The median estimate from a Reuters poll of economists put GDP annual growth at 7.4 per cent in the quarter, just below 7.5 per cent in January-March.If the number is that high, it will be a boost for Prime Minister Narendra Modi, whose image as the country's economic saviour has taken a beating after his struggle to pass his legislative agenda.

  But doubts persist over India's new way of calculating GDP, introduced early this year, even though the method gained an endorsement from the World Bank's chief economist. With the change method, India's growth topped that of China in the first quarter this year.

  Still, India's robust headline growth does not square with the not-so-rosy ground reality.

  "Growth momentum has improved in the last two years," said Kaushik Das, an economist with Deutsche Bank. "But the pace of recovery has been frustratingly slow."

  Monday's data is expected to fuel hopes in New Delhi of taking the baton of global growth as China's economic slowdown deepens.

  NEW INVESTMENT COMMITMENTS

  However, with an economy only one-fifth the size of China's, India is in no position to support the global economy as its northern neighbour has.

  Blessed with a huge domestic market and a large cheap workforce, Asia's third-largest economy has an opportunity to get more investment.

  Lured by its prospects, iPhone maker Foxconn this month announced a $5 billion investment in India.

  The announcement came days after Sony Corp. shipped its first made-in-India television sets, and General Motors (GM.N) unveiled a plan to spend $1 billion to expand its main plant.

  "It is India's moment," Minister of State for Finance (MoS) Jayant Sinha said.

  But very few believe it can seize the moment without making land, labour, bank and tax reforms.

  Modi swept to power in last year's general election on a promise of speedier growth creating millions of manufacturing jobs.

  But just 15 months after that electoral triumph, disenchantment has set in. Businesses are getting restless with slow progress in removing the hurdles that have stymied growth.
  
  PARLIAMENTARY PARALYSIS

  Political acrimony, meanwhile, has left Parliament paralysed. The last session ended without passage of a single reform legislation.

  Shilan Shah, India economist at Capital Economics, described the wash out session as a "missed opportunity".

  Yet India is on mend. Robust growth in indirect tax receipts points to a nascent revival in manufacturing sector. Foreign direct investments are up 30 per cent from a year earlier.

  However, the improvement in the economy is in large measure due to a crash in global commodity prices, which has cooled inflation and helped narrow the fiscal and current account deficits.

  Sure, urban consumption demand is picking up, but rural consumers remain glum. With capacity utilisation rates showing no signs of improvement, firms are not in a hurry to invest in new plants and machinery.

  Festering problem of bad loans, meanwhile, has impeded credit flow and delayed full transmission of interest rate cuts. The Reserve Bank of India (RBI) has cut the policy repo rate by 75 basis points since January, but banks, in response, have lowered lending rates by just 30 basis points.

  "Key structural reforms remain crucial for a sustained pickup in economic growth," analysts at YES Bank said in a note.

Govt to amend RBI Act by Feb, set up monetary panel

• The government plans to change the Reserve Bank of India(RBI) Act before the end of the fiscal year so it can set up a new committee to direct the country's monetary policy , retiring Finance Secretary Rajeev Mehrishi told Reuters on Monday.

  The committee would be comprised of appointees from the government, the Reserve Bank of India and independent members appointed by the government, but any changes have to be approved by the parliament, which has blocked other government bills."An attempt will be made to bring in the Act by December. If it cannot be done by December then of course by February." Mehrishi said in an interview on Sunday just before his last day in the job.

  The central bank and finance ministry have been trying to resolve differences over the panel's composition - chiefly over the balance of representation between government and RBI appointees.

  The finance ministry last month signalled a willingness to retreat from a blueprint that would have ensured its effective control over a seven-member committee.

  RBI Governor Raghuram Rajan has said the central bank and government have reached a "broad consensus" on the composition of a rate panel'' without disclosing details. Mehrishi said the composition of the panel would reflect the views of Rajan, the government and lawmakers, but details would be disclosed first to the parliament.

  "His views have been noted and would be taken into account in making any decision. But what the decision is does not depend solely on the RBI governor ," Mehrishi said.

  The government also plans to set up an independent public debt management agency (PDMA), mainly under New Delhi's control, in the current fiscal year, which ends next March. He further said the finance ministry had agreed in principle with the RBI to allow Indian bonds to be settled through Euroclear - the world's largest securities settlement system, as part of efforts to boost capital inflows and deepen the bond market.

  "It is a Foreign Exchange Management Act (FEMA) requirement so RBI has to consult the government.So we will respond to RBI. I think this week or latest by next week," he said.

  RBI officials were not immediately available for comment.

  RATES OUT OF SYNC

  Mehrishi said the RBI's high policy rate - now at 7.25 per cent - was out of sync as it was encouraging inflows of volatile "hot" money into Indian markets.

  "We have to find some kind of (middle way) via media where we do not incentivise the parking of hot money in India.'" Mehrishi said.

  Finance Minister Arun Jaitley has called for lower rates to boost domestic demand and investments. However, under a historic monetary policy overhall agreed to between the RBI and the government in February, RBI Governor Rajan has a specific mandate to control inflation, meaning price stability takes priority in policy making.

  Mehrishi said high interest rates were putting pressure on companies to borrow money abroad and making government borrowing more expensive.

  However. he said the central bank was the best judge to decide policy rates which have to be seen from monetary policy perspective as well as liquidity in the market.

3 reasons why markets are losing faith in China's economy

• For decades, Chinese economic policymakers have drawn praise for keeping their economy growing strongly through turbulence, such as the Asian financial crisis of 1997-1998 and the worldwide financial tumult of 2008. But investors have begun to lose faith in Beijing's economic management.
  
  Three reasons why:

  • A STOCK MARKET DEBACLE: As China's economy slowed, the government decided to deploy the stock market to ease the pain. State-run media talked up stocks, and individual investors responded by buying shares and igniting a 150 per cent run-up in the Shanghai Composite stock index in the year through June. The hope was that Chinese companies could issue shares into a rising market and use the proceeds to shrink debts. But the stock bubble burst June 12. Shanghai stocks plummeted 37 per cent. The government sought futilely to intervene, suspending trading in hundreds of companies and banning big investors from selling stakes for six months. The intervention undermined Beijing's pledge to give market forces a bigger say in the economy and left policymakers looking clumsy and ineffectual.
  • A BUNGLED DEVALUATION: On August 12, China surprised investors by marking down the value of its currency, the yuan. The government said it was responding to market forces: Investors had signaled that the yuan was overvalued. But skeptics worried that the devaluation was a desperation move to jolt the economy - a sign that the economy was weaker than thought. The move followed a report that exports had plunged in July. A cheaper yuan gives Chinese companies a price advantage in foreign markets. Since the devaluation, China has intervened to keep the yuan from falling too fast, confusing markets and renewing doubts about Beijing's commitment to market forces.
  • MURKY STATISTICS: Chinese economic statistics have long been viewed as dubious. Premier Li Keqiang once acknowledged that the statistics on economic output were "man-made" and worthless. China watchers tended to shrug off the uncertainty as long as it was clear that the economy was booming. But now there's concern about what's really happening. Economists are looking at alternative measures of economic performance, such as electricity consumption. The London firm Consensus Economics asked several economists for forecasts based on the unconventional measures. These forecasters saw the Chinese economy growing just 5.3 per cent in the year up to the fourth quarter of 2015. Conventional forecasts have the economy growing closer to 7 per cent.

General Awareness

Railway Minister Advocates Launching of Zero Accident Mission

• • Advocating ‘zero accident mission’, Railway Minister Suresh Prabhu asked other countries to make India their base for manufacturing as the government will be investingUSD 120 billion over the next five years to develop the railway services. This would require the railways to adopt an integrated approach involving use of cost-effective advanced technology and trained manpower.

    Targeting investment from abroad, he appealed to foreign companies and their representatives participating in the convention to come to India, collaborate and manufacture, highlighting that India has the advantage of skilled manpower, big market and a large manufacturing base.

    With the Indian Railways adopting modern signalling and telecommunications solutions like centralized operation of signalling system, electronic interlocking, LED signals and block proving by axle counters, signalling and telecommunications professionals, industry representatives and companies like Efftronics, RTVision, Railel, Huawei, TechnoSatComm, Siemens, Thales, Hitachi, Frauscher, EMC and other participated in the convention.

    Background:

    Addressing the concluding session of the two-day International Railway Convention on ‘Advances in Command, Control and Communication Systems for Main Line, Metro and High Speed Transit Systems’, Mr. Prabhu said that the main thrust of any transport organisation should be on safe and secure transportation with zero scope for accidents. The convention was organized by Institution of Railway Signal and Telecommunication Engineers (IRSTE) and Institution of Railway Signal Engineers (IRSE) in association with the railways.

    Significance:

    • New advances in command, control and communication systems can play a very vital role in evolving safe and secure operation environment on Indian Railways where there should be no scope for accidents even in case of human errors.
    • Furthermore, this will certainly boost the Make in India campaign too.