Current Affairs - 30 November 2015

General Affairs

India May Spend $95 Billion on Railways over 5 Years: Morgan Stanley

• NEW DELHI:  India is expected to spend a whopping $95 billion (over Rs. 6.34 lakh crore) on ramping up its rail infrastructure, a step that will help in increasing the country's manufacturing competitiveness, a report says.
  
  The Indian Railways suffered in the past due to "underinvestment and poor policies", said foreign broking firm Morgan Stanley's research arm in its recent report.
  
  Morgan Stanley Research's Industrial Analyst Akshay Soni, who authored the report, believes that the "historical lack of delivery in the Railways creates scepticism, but this time could be different".
  
  Mr Soni estimated that India will spend $95 billion on railway over the next 5 years, which would result in 12 per cent GDP growth between 2014-15 to 2018-19.
  
  "Of course, the ensuing productivity gains will improve India's manufacturing competitiveness and the lower CO2 emissions on freight would help India meet its 2030 emission targets," it added.
  
  The report also sees inventory cost gains for Corporate India.
  
  It's clear that the railways is the answer to solving India's transport infrastructure challenges.
  
  According to World Bank estimates, India's logistics costs (at around 10-14 per cent of sales) are 2-3 times the best practice benchmark costs, which hurts India's manufacturing competitiveness, it added.
  
  "We believe the key reason for this is underinvestment in the Indian Railways -- with budget allocation versus roads significantly lower than global standards," it said.
  
  "Rail is a cheaper mode of transport than roads (by 20 per cent), yet the share of roads (at 57 per cent) in Indian freight movement is more than 1.5 times that of the Railways, owing to congestion on rail network and poor policies."
  
  The report cited three key reasons behind the massive decline in the share of the Railways in transporting Indian freight and to some extent, passengers.
  
  Budget allocation in rail, at just 20 per cent of roads, is significantly lower than global standards and over 60 per cent of the Railways' funds are being allocated to projects with a negative rate of return, it added.
  
  Passenger fares remain another sticky area. "Passenger fares have moved up just 28 per cent over the last decade versus a 91 per cent increase in freight rates, with passenger losses being compensated by squeezing freight customers. This has resulted in both freight moving over to road and choking internal generation of funds," the report found out.
  
  Commending Railway Minister Suresh Prabhu's role, the brokerage arm said his focus is on increasing speed of trains rather than burdening an already creaking network and he is taking an "innovative approach to funding".

Fight Against Climate Change is Responsibility of All: PM Modi

• NEW DELHI:  Preparing to attend the world meet on climate change in Paris tomorrow, Prime Minister Narendra Modi today said it is the responsibility of all to ensure that the Earth's temperature does not rise as global warming is already creating disasters like recent heavy rainfall in Chennai.
  
  He asked the people to adopt energy conservation and energy efficiency measures like the maximum use of solar-powered items.
  
  

  In his monthly radio programme 'Mann Ki Baat', Prime Minister Modi recalled his proposal for setting up a SAARC disaster response mechanism and said the recently-held 'table talk exercise and best practices seminar' in Delhi was a good beginning in this regard.
  
  "We keep receiving news about the natural disasters from every corner of the world. Such are the tragedies which have never been heard earlier or imagined. We are now experiencing the impact of fast-changing climate. In our own country, massive rains recently hit Tamil Nadu and caused losses to it as well as other states. Several people lost their lives. I offer my condolences to them," he said.
  
  "The whole world is worried about climate change. There are discussions everywhere over it and concerns are being expressed. There is acceptance for it (climate change) as an index before any work is done. The temperature of the Earth should not increase now. It is the responsibility and concern of all," he said in his 20-minute programme.
  
  His emphasis on the responsibility of all assumes significance as the developed world is placing greater onus on developing nations like India in the fight against climate change.
  
  India has been maintaining that the developed countries have been the major polluters over centuries and should assume greater role in fighting global warming by funding and transfering low-cost technology to developing nations.
  
  The Prime Minister asked people to adopt measures for energy conservation and energy efficiency so that global warming is avoided.
  
  The government is running a number of schemes, like LED bulbs, PM Modi said, asking people to take advantage of these.
  
  Giving examples of how some common people are contributing in their own way, he cited the case of one Noor Jehan of Kanpur who is apparently not much educated but has set up a factory of solar 'lalteins' (lamps).
  
  These 'lalteins' are rented out to about 500 households for Rs 100 each per month while the charging costs about Rs 3-4 daily, he said.
  
  Hailing Noor Jehan, PM Modi said she is working as per the meaning of her name -- 'giving light to the world'.
  
  "Her work can be an inspiration for all those want to fight climate change," he added.
  
  While talking about Chennai rains and the disaster caused there, the Prime Minister said while the state government is trying to tide over the situation, the Centre is working shoulder-to-shoulder with it.
  
  A central team has gone to Tamil Nadu to assess the damage, he said while expressing confidence that the state will keep moving forward despite this crisis.
  
  In the context of climate change, a caller from Jalandhar highlighted the problem of burning of crop residue.
  
  Responding to this, PM Modi said the problem was not confined to Punjab and Haryana but it was there all over the country as farmers find it to be the easiest way to dispose of the crop residue.
  
  He asked farmers to have a rethink on this while telling them that the residue can be used as fertiliser as has been done by many from the agriculture community.
  
  PM Modi noted that till about 15 years back, the natural disaster was seen only in the context of crop failure due to drought. "But now its form has changed. We have to build capacities at all levels. Civil society, citizens and small organisations will have to build scientific capacities."
  
  He recalled that after Nepal earthquake earlier this year, he had called up Pakistan Prime Minister Nawaz Sharif and proposed that all SAARC nations should have a joint exercise for disaster preparedness.
  
  "I am happy that a 'table talk exercise and best practices' seminar was held recently in Delhi. This is a good beginning," the Prime Minister said.

Questions Rise Over $100 Billion Climate Change Financing Progress

• NEW DELHI:  A day before the crucial climate conference in Paris, Economic Affairs Secretary Shaktikanta Das today questioned the "correctness" of an OECD report claiming significant progress on a roadmap for USD 100 billion a year climate change financing by 2020.
  
  During the recent Lima World Bank / IMF meetings, India had raised the issue of a roadmap for USD 100 billion a year climate change financing by 2020.
  
  Mr Das has stated that India had also raised questions on the "correctness" of the recent OECD report, which has claimed that significant progress had already been made.
  
  He expressed his views in his foreword to a discussion paper titled 'Climate Change Finance, Analysis of a Recent OECD Report: Some Credible Facts Needed' prepared by the Climate Change Finance Unit, Department of Economic Affairs.
  
  "...our Climate Change Finance Unit , Department of Economic Affairs, Ministry of Finance and its experts have mentioned that the OECD report appears to have overstated progress," the Finance Ministry said in a statement.
  
  The discussion and the review paper suggests that much more work has to be done, it said.
  
  Mr Das has further said that "we need to establish more credible, accurate, and verifiable numbers on the true size of the mobilisation of climate change finance commitments and flows from developed to developing countries".
  
  The OECD in partnership with Climate Policy Initiative (OECD-CPI) recently released a paper 'Climate Finance in 2013-14 and the USD 100 billion goal'.
  
  The paper has claimed significant progress towards that goal. The preliminary estimates were that the mobilisation of climate change finance from developed to developing countries had reached USD 62 billion in 2014 and USD 52 billion in 2013, equivalent to an annual average over the two years of USD 57 billion.
  
  The discussion paper examined "carefully the OECD report's accuracy, methodology and verifiability of the numbers reported. It finds serious problems on all counts".
  
  Numbers were derived on self-reported basis from self-interested players, and open to "gaming" and exaggeration. The discussion paper added that the views and analysis contained do not necessarily reflect the views of the government of India.

'Be Tolerant', BJP Tells Congress After Chidambaram's Remark on Salman Rushdie's Book Ban

• NEW DELHI:  A day after former Finance Minister and Congress leader P Chidambaramtermed the ban on Salman Rushdie's novel The Satanic Verses as 'wrong', the Bharatiya Janata Party (BJP) asked why it took him 27 years to admit it and advised the opposition party to be a "little tolerant".
  
  "The question arises that after close to nearly three decades why was there a need to do so (to admit the mistake).
  
  If it is reflective of Congress' thinking, then one needs to see it in a larger perspective and everyone, which includes Congress particularly, needs to be a little tolerant," BJP spokesperson Nalin Kohli said.
  
  

  He, however, said caution needed to be exercised by all as "Constitution puts reasonable restrictions on the freedom of expression".
  
  Noted author Amitav Ghosh said he was glad that Mr Chidambaram, who was Minister of State for Home in the Rajiv Gandhi government when it had banned Mr Rushdie's book in October 1988, accepted that it was a wrong decision.
  
  Lawyer and activist Prashant Bhushan said he agreed with Mr Chidambaram entirely. "These kinds of books are literary pieces and in my view there is no occasion to ban such book," he said.
  
  Congress leader Manish Tewari said the former Union minister was absolutely correct and that time had come for the country to move beyond proscribing books and other creative material. "We need to create tolerant ethos in this country," he said.
  
  "I have no hesitation in saying that the ban on Salman Rushdie's book was wrong," Mr Chidambaram had said while speaking at the Times LitFest on Saturday.

Parliament to Discuss Intolerance, But Gaps Appear in Opposition Ranks

• NEW DELHI:  The winter session of Parliament got off to a smooth start on November 26, with lawmakers debating various provisions of the Indian Constitution on the 6th Constitution Day and the 125th anniversary of its architect, Dr BR Ambedkar. But will Parliament once again witness disruptions as the discussion on growing intolerance gets underway on Monday?
  
  There is a clear divide in the Opposition on the matter.
  
  At the all-party meeting held on November 25 in the backdrop of actor Aamir Khan's remarks on "growing intolerance", the opposition parties had made a strong pitch for an early discussion on the issue. They have insisted that the returning of awards by writers, artistes and filmmakers should not be taken lightly.
  
  

  Today, Congress' K C Venugopal, who has given a notice to start the discussion, avoided a response. His colleague in the Rajya Sabha Rajeev Shukla said: "The intolerance issue will be certainly raised along with inflation."
  
  But Sultan Ahmed of West Bengal's ruling Trinamool Congress says raising issues for debates shouldn't transform into disruptions.
  
  "We want the House to discuss every issue including intolerance, but there should no disruption," Mr Ahmed said, adding, "Disruptions are also a kind of intolerance!"
  
  Trinamool's stance holds out hope for the government which is keen to pass the Goods and Services tax -- Modi government's flagship legislative agenda -- in the current session of Parliament.
  
  To get the Congress on board, Prime Minister Narendra Modi has already held a chai-pe-charcha with Congress President Sonia Gandhi and his predecessor Dr Manmohan Singh on Friday.
  
  The Congress is yet to formally spell out its stand after the Prime Minister's meeting with their party president but Mukhtar Abbas Naqvi, the junior minister for Parliamentary Affairs, expressed optimism.
  
  Speaking to NDTV, Mr Naqvi said: "The issues that are related to the development of the country don't belong to any party. I am sure all parties will come forward for the development of the country."
  
  Both PM Modi and Union finance minister Arun Jaitley have also expressed confidence that the GST bill will be passed after holding a series of meetings with the opposition parties last week.

Business Affairs 

GST tax regime operational in over 100 nations

• The goods and services tax (GST) regime is operational in 160 countries in the world, including the European Union, Australia, Canada, Brazil and South Africa and China.

  The empowered committee of state finance ministers had gone for a week's visit to Australia recently to study the implementation of the GST in the country.

  The high-powered committee has made eight study trips abroad, on many occasions visiting more than one country, since it started deliberations on the path-breaking tax reform.

  The rationale of these visits was to dispel the fear psychosis amongst states that their financial powers would be eroded with the introduction of GST.

  There have been sharp differences between some states and the Centre over the proposed tax reform and the rift tends to widen due to political reasons when the state government is ruled by an opposition party.

  According to tax experts the Australian model held valuable lessons for India. The debate in India for the past eight years has been about who decides the tax rates and who holds veto power. The implementation of the tax hinges on coordination between the Centre and the states. The federal models of Canada and Australia are two systems from which adaptations can be made to the Indian model.

  In the case of Canada where the federal government imposes the tax and it is optional for provinces to adopt it. However, in Australia the federal government imposes a national tax, administers it and distributes the entire revenue among the provinces.

  Last year, the state finance minister's committee made a nine-day trip to Beijing and Shanghai in September. The first trip of the committee was in 2006 to the UK, Canada and Italy, for 11 days.

  Subsequently, the committee headed by then West Bengal finance minister Asim Dasgupta visited Australia and Singapore in May 2007 and Brazil and the UK in August of the same year. France, Belgium, Spain and Luxembourg were part of an 11-day trip in 2011.

  This was followed by a 15-day tour of Canada and Japan in September 2012 and 12 days in South Africa in July 2013.

SKS Microfinance cuts interest rate by 1 per cent, says won't crimp margins

• SKS Microfinance further slashed its interest rates by 1 per cent on Friday, for all future disbursals, to 19.75 per cent with effect from December 7, saying it does not see any impact on margins as the move reflects declining cost for the company.

  Announcing a 100 basis points (bps) reduction in lending rates, the only listed small lender claimed that no micro lender in the world offers sub-20 per cent interest rate to borrowers.

  "Our margins will have no impact as we are passing on the benefit of lower cost of funds which we have gained from reduction in our cost of borrowing," SKS Microfinance president S Dilli Raj told PTI.

  The firm had earlier slashed rate by 1.25 per cent in September.

  The new rates will be effective from December 7 for new loans, he added and explained that considering the short-term tenure of MFI (Microfinance institutions) loans by the time the tedious process of repricing is done, the loan would have been paid back.

  In a statement released earlier, the company said the reductions are consistent with its policy of passing on the cost advantages accruing from reduction in the cost of borrowing and economies of scale to its borrowers.

  Its marginal cost of borrowing stood at 11.3 per cent in the September quarter as compared to 13.6 per cent in the financial year 2014, Raj said, referring to the regulatory stipulations which mandate that the spread should not be more than 10 percentage points.

  "Marginal cost of borrowing for the second half of the current fiscal year is expected to be lower than 11.3 per cent, given that we have accessed refinance worth Rs 100 crore from Mudra at 10 per cent and issued commercial papers at 9.5 per cent per annum in October and November," Raj said.

  Of the overall borrowing, around 17 per cent is from commercial papers and bonds and 70 per cent from banks, SKS Microfinance managing director and chief executive M R Rao said.

  Rao further said that the non-core or the fee income business contributes 9 per cent to the company's overall profit and 1.8 per cent of the loan portfolio.

  In the quarter to September, SKS' gross loan portfolio stood at over Rs 5,434 crore.

  The company registered a 5.3 per cent quarter-on-quarter drop in cost to income to 47 per cent in the second quarter as compared to 52.3 per cent in the first quarter.

  As of September end, the company had a net worth of Rs 1,203 crore and a capital adequacy of 24.6 per cent. Cash and cash equivalents stood at Rs 834 crore.

  The market lapped up the news and the SKS counter rallied over 7.2 per cent to close at Rs 454.65 on the BSE on Friday.

Transporting coal via waterways can save Rs 10,000-crore per year, says Nitin Gadkari

• Inland waterways can not only boost the movement of goods and passengers across the country, but will also help in saving about Rs 10,000 crore annually in transporting coal, Shipping Minister Nitin Gadkari said on Saturday.

  The minister, who also holds the charge of Road Transport and Highways, added that he is hopeful of Parliament's nod on the bill to convert 111 rivers across India into National Waterways in the current Winter Session.

  Inland waterways will help in saving logistics costs and boost movement of goods and passengers across the country. Besides, they will also save around Rs 10,000 crore per year while transporting coal, a crucial resource, Gadkari said at the annual session of industry chamber PHDCCI in New Delhi.

  The waterways is a cheaper and environment friendly medium for transporting of goods, he said adding one HP moves 150 kg on road, 500 kg on rail and 4,000 kg on water besides one litre of fuel moves 24 tonne/km on road, 85 tonne/km on rail and 105 tonne/km on water.

  "I am hopeful that Parliament will approve the bill to convert 111 rivers across India into National Waterways," he added.

  The Minister pointed out that port sector in India has turned around under the present government and those managing ports have been directed to improve the performance.

  "We expect the ports to register a profit of Rs 6,000 crore this fiscal, which the government will invest to create assets to spur growth," Gadkari said.

  He said that infrastructure sector in India would witness massive changes and transformation in the next few years as the government is converting many four-lane roads and highways into eight lanes as well as a large number of national highways will be turned into express ways.

  "Necessary permissions and approvals for undertaking such assignments have been completed," he added.

  The Minister called upon the industry to participate in making dry ports, as the country's 14 states have the potential for such ports. To achieve this the willing land owners would have to give their land on which the proposed ports would be built to reduce the logistics and transportation costs especially for imports and exports, he added. 

RBI to fine tune gold monetisation scheme

• The RBI is set to "fine tune" the Gold Monetisation scheme as the initial response to the scheme has been lukewarm.

  "We need some fine tuning (Gold monetisation scheme)," RBI Governor Raghuram Rajan told reporters.

  Till November 18, the gold monetisation scheme had garnered 400 grams of physical gold. The country has over 20,000 tonnes worth over Rs 52 lakh crore of idle gold with households and institutions.

  Gems and jewellery industry representatives last week met Economic Affairs Secretary Shaktikanta Das and discussed ways to make the scheme attractive.

  The industry associations urged the government to allow BIS certified jewellers to act as collection agents for gold monetisation scheme and the Finance Ministry had given an in-principle nod to the suggestion.

  At present, there are 3.5 lakh jewellers in the country, of which 13,000 are BIS-certified.

  With regard to Sovereign gold bond, the Governor said "response to the scheme has been good and encouraging".

  As many as 63,000 application totalling Rs 246 crore has been received under the first tranche of Gold Bond scheme which closed on November 20. The allotment of bonds will happen on November 30.

  "This is an excellent response for an innovative product," Shaktikanta Das tweeted Friday.

Gold, silver extend losses on weak global cues, low demand

• Gold extended its slide for the second straight day as prices tumbled by Rs 195 to Rs 25,615 per 10 grams at the bullion market on Saturday, taking weak cues from the global market and easing demand from jewellers.

  Silver also fell by Rs 150 to Rs 34,100 per kg on poor offtake by industrial units and coin makers.

  Bullion traders said a weakening global trend where gold fell to the lowest in five years after speculation that US policy makers will raise interest rates next month helped boost the dollar, curbing the metal's appeal as an alternative asset.

  Besides, muted demand from jewellers and retailers on the domestic front weighed on the precious metals, they said.

  Globally, gold declined 1.3 per cent to settle at $1,056.20 an ounce in New York in yesterday's trade. Earlier, the price fell to $1,051.60, the lowest since February 2010. Silver also fell 0.9 per cent to $14.04 an ounce.

  In the national capital, gold of 99.9 per cent and 99.5 per cent purity slumped Rs 195 each to Rs 25,615 and Rs 25,465 per 10 grams, respectively. The precious metal had shed Rs 10 yesterday.

  Sovereign followed suit and eased by Rs 100 to Rs 22,100 per piece of eight gram.

  Tracking gold, silver ready declined by Rs 150 to Rs 34,100 per kg and weekly-based delivery by Rs 125 to Rs 33,700 per kg.

  However, silver coins continued to be traded at previous level of Rs 48,000 for buying and Rs 49,000 for selling of 100 pieces.

General Awareness

India emits only 3.96% of global carbon dioxide emission – Mospi report

• • According to a report released by the ministry of statistics and programmer implementation, India emitted 1,146 million tonnes of carbon dioxide in 2008 while the total emissions from the globe were 28,962 million tonnes.

    • As per Govt data, India emits only 96% of the global carbon dioxide emissions.

    As per UNDP Human Development Report 2007/2008, India’s share of CO2 in the total emissions in the world is very insignificant in per-capita terms. The per-capita emission of an Indian citizen is 1.2 tons of carbon dioxide whereas his counterpart in USAcontributing 20.6 tons.
    
    

    India’s Goal for climate change
    Earlier India has declared a voluntary goal of reducing the emissions intensity of its GDP by 20-25%, over 2005 levels by 2020.

    • Now in recognition of the growing problem of climate change, India now plans to reduce the emissions intensity of its GDP by 30-35 % by 2030 from 2005 levels.

    Impact of climate change on agriculture could result in problems with food security and maythreaten the livelihood activities upon which much of the population depends.

    What is Climate Change?
    Climate change is a change in the statistical distribution of weather patterns when that change lasts for an extended period of time.

    • Climate change is caused by factors such as biotic processes, variations in solar radiation received by Earth, plate tectonics, and volcanic eruptions.