Current Affairs - 15 December 2015

General Affairs 

Emergence of BJP as Third Force Will Change Future of Kerala: PM Modi

• THRISSUR:  Prime Minister Narendra Modi today asserted that BJP has emerged as the "third force" in Kerala that will replace the two fronts led by Congress and CPI(M) in the next year's Assembly elections and transform the state's fortunes.
  
  "Unfortunately, Kerala's politics is such that two coalitions have been ruling the state and looting its people. One coalition comes to power and loots. People get angry every five years and throw it out and another coalition comes.  This cycle has been continuing so far.  Both the coalitions are busy hiding each other's sins and then continue with their loot," said PM Modi.
  
  

  Likening the third force to the 'third eye' of Lord Shiva in this temple town, where the famous Wadakunathar Temple for Shiva is located, he said it would destroy the "evils" of the two fronts, an apparent reference to the Congress-led United Democratic Front (UDF) and CPI(M)-led Left Democratic Front (LDF).
  
  "Now the people of Kerala need not get angry any more.  A third force has emerged in Kerala.  It is like Lord Shiva's third eye, which will destroy the sins and free the state from the evils and corruption. The emergence of the third force will change Kerala's future and bring prosperity and peace in the state," PM Modi said.
  
  This was PM Modi's first visit to Kerala after assuming office last year. He was addressing a public meeting organised by the BJP at the Thekkinkad ground.

Government Suggests Special Force for Protection of Museums, Monuments

• NEW DELHI:  As part of a comprehensive security policy, a committee has recommended deployment of a special force for protecting the museum objects as well as monuments, Lok Sabha was informed.
  
  Besides special force, the committee has also recommended use of tools and electronic gadgets to protect cultural assets, Culture Minister Mahesh Sharma said in Lok Sabha.
  
  

  "A committee of Ministry of Culture has recommended a Special Force for protection of museum objects and protected monuments as part of a comprehensive security policy," Mr Sharma said.
  
  The committee has also recommended measures to be taken for securing cultural assets by physical deployment and with the help of tools and electronic gadgets, among others including force, he added.
  
  Currently, the minister said, cultural assets are provided with security by regular watch and ward staff, home guards, Central Industrial Security Force (CISF) and private security guards.

Hope Pending Bills are Passed in Winter Session of Parliament: Government

• NEW DELHI:  The government on Monday slammed the Congress for disrupting parliament and said it hoped that important bills will be passed before the ongoing winter session ended on December 23.
  
  "There are several important bills pending, whether it is the Goods and Services Tax bill, Real Estate bill, SC/ST bill... It was agreed that the houses will sit till late and clear the legislative business, but the opposition is not cooperating," Minister of State for Parliamentary Affairs Mukhtar Abbas Naqvi said.
  
  

  Mr Naqvi said an understanding was reached that the Rajya Sabha will sit till late on Monday and transact business, but that did not happen.
  
  "We hope that in the remaining days (of the winter session) some bills will be passed," he said.
  
  The Rajya Sabha or the upper house is the worst hit of the two houses, losing several days to disruptions over union minister VK Singh's comment, National Herald case, corruption cases like the Madhya Pradesh Vyapam scam and the alleged atrocities on Dalits in Punjab.
  
  The upper house remained stalled on Monday as well.

Government May Bring Laws on Aadhaar, Bankruptcy as Money Bills

• NEW DELHI:  The government is likely to introduce legislations on Aadhaar and bankruptcy code as money bills with a view to ensuring their smooth passage in Parliament.
  
  "We will bring as many legislation as possible in the form of Money Bills. We will follow the same procedure for the bankruptcy law," a senior Finance Ministry official said.
  
  

  While the ordinary bills are required to be approved by the Lok Sabha or the lower House as well as the Rajya Sabha or the upper House, the lower House has overriding powers on the money bills.
  
  A legislation on Aadhaar will give statutory backing to the Unique Identification Authority of India (UIDAI) which allocates Aadhaar numbers and issues cards to citizens.
  
  The UIDAI has issued about 93.18 crore Aadhaar numbers which are being used for various purposes including transfer of subsidies directly to the Aadhaar-linked bank accounts of beneficiaries.
  
  Legislation has become necessary as the Supreme Court has imposed certain restrictions on applicability of Aadhaar number with regard to implementation of the government schemes.
  
  The Court had permitted only voluntary use of Aadhaar for welfare programmes including Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), all pension schemes, provident fund and Pradhan Mantri Jan Dhan Yojna.
  
  Former UIDAI chairman Nandan Nilekani too had suggested that steps should be taken to remove the sense of uncertainty regarding Aadhaar.
  
  As regards bankruptcy law, Union Finance Minister Arun Jaitley had earlier indicated that the government would endeavour to bring the bill in the ongoing Winter Session of Parliament.
  
  A government-appointed panel headed by former Law Secretary TK Vishwnathan had underlined the need for a modern bankruptcy law to deal with insolvency cases within 180 days that might arise on account of business failures or economic downturns.
  
  The new law is aimed at promoting ease of doing business and spurring economic activities.
  
  The draft legislation prepared by the panel also proposes early identification of financial distress so that timely steps could be taken to revive the ailing company.
  
  The draft bill, according to the report of the panel, "seeks to improve the handling of conflicts between creditors and debtors, avoid destruction of value, distinguish malfeasance vis-a-vis business failure and clearly allocate losses in macroeconomic downturns."

Modi Government Appoints Committee To Study One Rank One Pension

• NEW DELHI:  The government today appointed a judicial committee to look into the implementation of the One Rank One Pension (OROP) scheme for ex-servicemen.
  
  The one-member committee would look into steps to be taken to remove anomalies arising out of the implementation of OROP, as notified by the government on November 7, an official statement said.
  
  The committee comprising L. Narasimha Reddy, a retired chief justice of Patna High Court, would take into account the financial impact of its recommendations before spelling out the same within six months.
  
  The committee may submit interim reports to the government before the stipulated time.
  
  The terms of reference of the committee will be to examine measures for the removal of anomalies that may arise in the implementation of the OROP, measures for the removal of anomalies that may arise out of inter-services issues of the three armed forces due to implementation of OROP, implications on service matters and any other matter referred by the central government on implementation of the OROP or related issues.
  
  The committee will devise its own procedure and may call for such information and take such evidence as may be considered necessary.
  
  "The ministries and departments of the government of India shall furnish such information and documents and other assistance as may be required by the committee," the statement said.
  
  Headquartered in Delhi, the committee will be supported by the department of ex-servicemen's welfare under the Defence Ministry.

Business Affairs 

Sensex ends 106 points up, Nifty at 7,650 after Nov WPI inflation rises

• In a volatile trading session on Monday, the S&P BSE Sensex settled 106 points higher, while broader CNX Nifty managed to hold its key support level of 7,650 after data showed the November WPI inflation moved up to (-)1.99 per cent as compared to (-)3.81 per cent in October.  

  The 30-share index ended at 25,150.35, up 105.92 points, while the broad-based 50-share index quoted 7,650.05, up 39.60 points at close.

  Market breadth remained positive with 19 of the 30 Sensex components ending the day in green.

  Investors were somewhat comforted after data released late on Friday showed industrial output grew a much stronger-than-expected 9.8 per cent in October from a year earlier, its fastest pace in five years.

  But volatility index VIX rose to near a one-month high, showing the widespread caution ahead of the US Fed's meeting, with many investors expecting the first US rate hike in nearly a decade.

  "There is some comfort coming in from domestic factors. The only concern now is Fed," said G Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm.

  Tata Motors stock ended the day 1.7 per cent lower, extending its 2.99 per cent drop in the previous session after the National Green Tribunal called for a ban on registration of diesel-run vehicles in Delhi to curb air pollution.

  Tata Consultancy Services settled the day flat after falling as much as 2.3 per cent after the company warned floods in Chennai in south India were expected to have a material impact on its revenues.

  Meanwhile, continuing with their selling spree, foreign investors have pulled out nearly Rs 5,500 crore from stock markets since the beginning of December.

  The latest sell-off comes after foreign portfolio investors (FPIs) withdrew Rs 7,074 crore from the equities last month.

  Among Asian markets, Japan's Nikkei settled the day 1.80 per cent lower, while Hong Kong's Hang Seng index closed 0.72 per cent down. China's Shanghai Composite bucked the trend and gained 2.51 per cent to log its best session in a month as November factory activity lifted sentiment.

  Dow Jones futures were trading 75 points or 0.44 per cent higher indicating a positive opening on Wall Street. On Friday,US stocks had closed sharply lower with the S&P 500 ending its worst week since August.

  Lowdown on markets today

  02:45 pm

  Sensex at 25,050.82, up 6.39 points

  Nifty at 7,616.70, up 6.25 points

  01:05 pm

  Sensex at 25,153.50, up 109.07 points

  Nifty at 7,650.45, up 40.00 points

  10:30 am
  Sensex at 25,120.63, up 76.20 points

  Nifty at 7,640.70, up 30.25 points
  

  9:20 am

  Sensex at 24,936.43, down 108 points

  Nifty at 7,580.05, down 30.40 points

Markets to rebound over next year but analysts less optimistic: Poll

• India's stocks are expected to more than regain recent lost ground over the coming year, a Reuters poll found, but analysts trimmed their outlook for the second time in six months in a reflection of the slow pace of reforms and global headwinds.

  Tracking a global selloff, markets have lost about 5 per cent since August and are nearly 9 per cent lower so far in 2015, hurt also by the government's inability to pass key bills on tax and land acquisition reforms.

  Still, Monday's poll taken over the past week showed the Sensex is likely to recover and rise to 27,500 by end-June 2016, an increase of 10 per cent from Friday's close but is almost exactly where it started this year.

  Similar polls in September and June had foreseen the index higher by mid-2016, compared with the latest consensus.

  The index is then forecast to rise to 29,900 by the end of 2016. That will be close to the record high of 30,024.74 hit on March 4 this year.

  The BSE Sensex was among the world's best performers in 2014, rising almost 30 per cent after Prime Minister Narendra Modi took office on promises of reforms to boost growth.

  But the government's inability to make a lot of headway and expectations the US Federal Reserve will start raising rates this week have seen investors dump emerging market assets, including Indian shares.

  Foreign investors sold a net $1.7 billion in Indian shares and debt in November, pushing the currency lower. The Indian rupee hit a more than two-year low against the greenback on Friday.

  Still, with expectations a goods and services tax and land acquisition bills will be passed into law, analyst see a fillip to the economy and stocks over the coming year.

  A Fed rate hike would also reduce market uncertainty after investors agonized over US monetary policy all year.

  "Our markets (Indian shares) should start doing better from next year, with impact on the economy by the measures taken by the government and a clear trajectory from the Fed," said Neeraj Dewan, director at Quantum Securities Private Limited.

  Reserve Bank of India Governor Raghuram Rajan said on Friday the central bank was ready for "any eventuality" from the Fed meeting this week.

  India's stock market has generally outperformed other emerging markets over the past two years.

  Economic growth in Asia's third largest economy picked up in July-September, outpacing China on improving domestic demand and manufacturing activity.

  That acceleration helped persuade the RBI to keep rates unchanged last month after it had lowered the repo rate by 125 basis points this year, including a larger-than-expected 50 basis point cut in September.

Retail inflation rises for 4th month to 5.41% in November

• Annual consumer price inflation accelerated to 5.41 per cent in November, picking up pace for the fourth straight month, government data showed on Monday.

  The print was almost in line with the forecast made my economists polled by Reuters. Retail prices were up 5 per cent year on year in October.

  Retail food inflation in November came in at 6.07 per cent, sharply higher than 5.25 per cent recorded a month ago.

Wholesale prices fall again in November, but food costlier

• The wholesale prices fell for a 13th straight month in November, but a sharp pickup in food prices and a pending wage hike for millions of government employees are likely to keep policymakers worried about potential inflationary risks.

  The wholesale price index (WPI) declined an annual 1.99 per cent last month, driven down by tumbling oil prices, government data showed on Monday.

  Wholesale food prices in November gained 5.20 per cent year-on-year, compared with a provisional 2.44 per cent rise in October.

  At 5:30 p.m., November figures for the consumer price index (CPI), which the central bank closely tracks for setting monetary policy, will be released.

  Consumer prices are tipped to have gained for the fourth consecutive month in November, rising an annual 5.4 per cent on the back of a jump in food costs.

  Higher food prices and anticipated higher government salaries are widely expected to stoke price pressures, making it tougher for the central bank to keep retail inflation around 5 per cent by March 2017.

  "The Reserve Bank of India (RBI) faces a tough challenge in meeting its medium-term CPI inflation target, suggesting that the rate-cutting cycle has now come to an end," said Shilan Shah, an economist with Capital Economics.

  After easing monetary policy aggressively this year, the RBI kept the key repo rate on hold at 6.75 per cent earlier this month.

  While a crash in global commodity prices has tamped down prices in India, the central bank remains worried about elevated household inflationary expectations.

  It is also expected to contend with a potentially weakening rupee should outflows from emerging markets gather pace if, as widely anticipated, the Federal Reserve hikes US interest rates this week.

  As a result, very few expect aggressive rate cuts in 2016.

Indian banks will get more resilient despite bad debt: Moody's

• Growth in the Indian banking system, which has been under pressure in recent years, will be more resilient, Moody's Investors Service said on Monday.

  "Slower GDP growth is most pronounced for small and open economies such as Taiwan, Singapore and Hong Kong. In contrast, growth in India and Vietnam banking systems that have been under pressure will be more resilient," the rating agency said in a report on Asia-Pacific banks, titled '2016 Outlook Stable, But Risks Will Rise'.

  Of 16 banking systems in the Asia-Pacific for which Moody's has an outlook in place, 13 have stable and three-China, Hong Kong and Mongolia-have negative.

  According to Moody's, the operating environment is becoming more challenging in most Asia-Pacific banking systems as the banks feel the impact of subdued global growth, which in turn is exacerbated by weaker demand in China.

  The investors service noted despite the pressure on asset quality, the major reason why most Asia-Pacific banks have stable outlook is the strength of their loss-absorbing buffers.

  The investors service predicted that as the credit cycle turns, corporate credit metrics will likely weaken, potentially leading to higher corporate 'problem' loans.

  "The share of debt owed by vulnerable companies is highest in India, Sri Lanka, Korea and China," Moody's noted.

  It said the outlook for banks in the Asia-Pacific is generally stable in 2016, but for many of the region's banking systems, asset quality and profitability would worsen.

  "This deterioration is explained by our expectation of slower GDP growth in the Asia-Pacific, potential further pressure on currencies and high levels of corporate and household debt in some countries," said Stephen Long, Managing Director for Moody's Financial Institutions Group in the Asia Pacific.

  "Bank ratings will remain broadly stable because of good capital levels as well as strong funding and liquidity profiles, as most systems are deposit funded, but the risk for ratings are skewed to the downside in the event of an economic slowdown in the region that is sharper than expected."

  Long said he expects real GDP growth in the Asia-Pacific of 4.5 per cent in 2016 unchanged, but below the 4.8 per cent recorded in 2014 manly because of the slowdown in China. 

General Awareness

Varanasi & Jaipur become members of UNESCO Creative Cities Network

• • Jaipur and Varanasi has made India’s maiden entry to theCreative City Network of the United Nations Educational, Scientific and Cultural Organization (UNESCO).

    • Irina Bokova (Director-General of UNESCO) has announced the designation of 47 cities from 33 countries as new members of the UNESCO Creative Cities Network.
    • Jaipur (Rajasthan) is added in the Crafts and Folk Art category.
    • Varanasi (Uttar Pradesh) is added in the Music category.

    Varanasi – Combination of a Temple city with rich Tradition in Music
    Varanasi was advocated as an ideal example of India’s intangible Cultural heritage.

    • The Varanasi school of music or the Benaras gharana named after the city along with the semi classical genres like Hori, Chaiti, Tappa, and Daadra are rich in musical heritage.
    • The city has over 250 music institutions private & public, 10 auditoria, 55 venues of art promotion and nearly 12000 students of music.

    Jaipur – City with Rich variety in Craft
    36 varieties of crafts were identified including the ones related to Sculpture, Pottery Textiles and Jewellery making. Right from King Sawai Jai Singh II of Jaipur in 18th Century to his successors, the city has been nurtured as a centre of artistic excellence.

    • 30% of the city’s economy is sustained by small scale craft industries.

    About UNESCO Creative City Network
    It was launched in 2004 and comprises 116 Member Cities with an aim to foster international cooperation with and between cities committed to investing in creativity as a driver for sustainable urban development, social inclusion and cultural vibrancy.

    • The UNESCO Creative Cities Network covers 7 creative fields: Crafts and Folk Arts, Design, Film, Gastronomy, Literature, Media Arts, and Music.

    Keys

    • Nicknames for Varanasi – Spiritual capital of India, Religious capital of India, City of Lights, City of Temples, City of Learning, Oldest living city on Earth and Holy City.
    • Nicknames for Jaipur – Pink City & Paris of India.