Current Affairs - 9 December 2015

General Affairs 

Sushma Swaraj Arrives In Pakistan, To Hold Talks With Sartaj Aziz

• NEW DELHI:  External Affairs Minister Sushma Swaraj today arrived in Islamabad on a two-day visit during which she will hold talks with her Pakistani counterpart Sartaj Aziz and call on Prime Minister Nawaz Sharif.
  
  Immediately after arriving herein Islamabad, she said relationship between the two countries should be better and that she will hold talks with Pakistani leaders to find ways to improve bilateral ties.
  
  "I have come with the message that ties between the two countries should be good and move forward," said Ms Swaraj, who is in Islamabad to lead the Indian delegation at the 'Heart of Asia' 5th Ministerial Meeting on Afghanistan tomorrow.
  
  

  She refused to share what she would be discussing with Pakistani leaders, but said, "What will happen during the talks will be known after meeting."
  
  Invited by Pakistan to attend the multilateral meet on Afghanistan, Ms Swaraj will attend the conference tomorrow before holding talks with Mr Aziz who said the focus would be on the resumption of composite dialogue process.
  
  "Heart of Asia conference is very important for India because it is associated with Afghanistan. That is why I have come here to participate. Since it is happening in Pakistan it is necessary and appropriate for me to meet Prime Minister Nawaz Sharif and hold talks with my counterpart Sartaz Aziz to talk about improving the bilateral ties and take them forward," Ms Swaraj said.
  
  Adopting a cautious approach over the agenda of talks between Ms Swaraj and Mr Aziz, Indian officials said they will see how the meeting goes and if there will be any point of convergence.
  
  Ms Swaraj's visit comes after talks between the National Security Advisors of India and Pakistan in Bangkok on Sunday, where they discussed terrorism, Jammu and Kashmir and a range of key bilateral issues apart from agreeing to carry forward the "constructive" engagement.
  
  Mr Aziz had said yesterday that the deadlock in Indo-Pak ties had eased to some extent.
  
  During his talks with Ms Swaraj, Mr Aziz said he would discuss various matters with focus on resumption of composite dialogue process between the two countries.
  
  Ms Swaraj's trip came three years after former external affairs minister SM Krishna's visit here in 2012 when the two sides inked a visa liberalisation pact.

Poor Maintenance Among Main Reasons Of Train Fires: Comptroller And Auditor General

• NEW DELHI:  Short circuit, poor maintenance and lack of awareness are major reasons of fire in trains, according to the findings of the Comptroller and Auditor General of India.
  
  Besides the audit report found that the automatic smoke/fire detection device in the running trains are not successfully implemented.
  
  Though recommendations are made by high level safety review committee and 12th Five Year Plan for introduction of fire alarm system in coaches for early detection of fire, it has not been successfully implemented, CAG noted in its latest report tabled in Parliament today.
  
  

  A joint survey conducted by CAG and railway officials found that fire prone activities like cigarette smoking, cooking by vendors at stations, carrying of inflammable articles by unauthorised persons, accumulation of empty cardboard boxes and other waste materials were unchecked aggravating the risk of fire.
  
  The report observed that Corporate Safety Plan (CSP) envisaged bringing down the number of accidents by 80 per cent from 2001-02 to 2013 but number of accidents went up by 160 per cent during the period.
  
  The loss of human lives in fire accidents in passenger coaches steeply increased from 3 in 2001-02 to 9 in 2011-12, 32 in 2012-13 and 35 in 2013-14.
  
  It also found that the Research Designs and Standards Organisation (RDSO), the agency responsible for prescribing specifications for fire retardant materials did not have their own laboratory facilities and the proposal in 2006 to create state of the art laboratory is still in nascent stage.
  
  "The fire simulation of coach design could not be put to optimum due to non-availability of testing facilities," CAG report said.

Union Minister Nitin Gadkari Assures Arunachal Pradesh of Funds for Road Projects

• ITANAGAR:  Union Minister for Road Transport and Highways Nitin Gadkari has assured Arunachal Pradesh that all road projects including state highways and the Itanagar- Banderdewa four-lane national highway for which DPRs have been submitted, will be taken up without land compensation.
  
  The minister's assurance came when state PWD Minister Gojen Gadi accompanied by Power Minister Tanga called on him in New Delhi yesterday, Mr Gadi informed PTI over telephone today.
  
  The minister made it clear that no new proposals would be approved.
  
  Mr Gadi submitted a memorandum to the Union Minister for early release of funds for 53-km Akajan-Likabali-Bame state road in West Siang district, the foundation stone of which was laid by Mr Gadkari at Likabali on November 4, and the four-lane Itanagar-Banderdewa NH-415.
  
  The memorandum also sought funds for restoration and rigid pavement works and 407-km double-lane Potin-Pangin sanctioned on BOT (Annuity) hybrid beside Pasighat-Pangin (NH-229) from 41.3-km to 57-km, among others.
  
  Mr Gadkari pointed out that whatever DPRs for highways have been submitted by the state government would be considered without land compensation and no fresh proposal would be received, Mr Gadi said.

India Records Highest Infant Deaths Due To Premature Births

• NEW DELHI:  Over three lakh babies die annually in India making it the country with highest number of infant deaths due to premature births, Health Minister JP Nadda said today.
  
  "As per World Health Organisation (WHO) Publication 'Born too Soon: The Global Action Report on Preterm Birth' out of an estimated annual 2.7 crore live births, in India 35 lakh babies are born preterm and out of these 3.03 lakh babies die due to complication of preterm birth," the Minister said while replying to a question in Rajya Sabha.
  
  He said that under National Health Mission (NHM), key interventions are being implemented all over the country to bring down infant mortality.
  
  "Under NHM, government promotes institutional delivery through Janani Suraksha Yojna cash incentive scheme for pregnant mothers and Janani Shishu Suraksha Karyakaram which entitles all pregnant women and sick infant to absolutely free and no expense treatment at public health facilities," the Minister said.
  
  He said under NHM, strengthening of newborn care services by establishing facilities for care of sick newborns such as Special New Born Care Units, New Born Stabilization Units and New Born Care Corners and provision of home-based new born care through Asha workers is provided.

Global Fossil-Fuel Emissions May Decline In 2015: Study

• PARIS:  Annual global carbon dioxide emissions from fossil fuels could drop slightly in 2015, even as India figured as the fourth top emitter in 2014, accounting for 7.2 per cent of worldwide emissions, according to a new report.
  
  The result underlines the need for action to stabilise and permanently lower global carbon dioxide emissions, the researchers said as climate talks continue in Paris.
  
  The report from the Global Carbon Project led by a Stanford University researcher identified China as the world's top carbon dioxide emitter in 2014, responsible for 27 per cent of global emissions, followed by the US (15.5 per cent), the European Union (9.5 per cent) and India (7.2 per cent).
  
  

  "In 2014, global carbon dioxide emissions from burning fossil fuels grew by just 0.6 per cent," said Rob Jackson, a professor of Earth system science at Stanford University who led the study.
  
  "This year we expect total emissions to flatten or drop slightly, despite strong growth in gross domestic product worldwide," he added.
  
  While carbon dioxide emissions have slowed during times of economic recession, this would be the first decline during a period of strong global economic growth, researchers said.
  
  "Decreased coal use in China was largely responsible for the decline in global CO2 emissions," said Corinne Le Quere of the University of East Anglia in the UK.
  
  "After a decade of rapid growth, China's emissions rate slowed to 1.2 per cent in 2014 and is expected to drop by 3.9 per cent in 2015," she added.
  
  "Whether a slower growth in emissions will be sustained depends on the use of coal in China and elsewhere, and where new sources of energy will come from," said Pep Canadell of Australia's Commonwealth Scientific and Industrial Research Organisation.
  
  "In 2014, more than half of new energy needs in China were met from non-fossil fuel sources, such as hydro, nuclear, wind and solar power," he added.
  
  This trend was also accompanied by slower global growth in petroleum use and faster growth in renewables, with wind and solar capacities achieving record increases in 2014.
  
  "The most promising finding in our report is the coupling of lower carbon emissions with a strong economic growth of more than 3 per cent," Jackson said.
  
  "Reaching zero emissions will require long-term commitments from countries attending the climate meeting in Paris this week and beyond," Jackson said.
  
  Achieving climate stabilisation will require reducing emissions to near zero, researchers said.
  
  The findings were published in the journals Nature Climate Change and Earth System Science Data.

Business Affairs 

Sensex ends 219 points down; Nifty holds 7700-mark; GAIL top loser

• Extending losses for the fifth straight session, the S&P BSE Sensex ended the day 219 points down in Tuesday's trade, while broader CNX Nifty settled just a tad above its strong support level of 7,770.

  Markets witnessed sudden crackdown in the late trade after harsh exchanges between ruling party and the opposition on Goods and Services Tax (GST) Bill suggested the bill will not see the light of the day in the winter session.

  The 30-share index ended at 25,310.33, down 219.78 points, while 50-share index closed at 7,701.70, down 63.70 points.

  Market breadth remained negative with 26 of the 30 Sensex components ending the day in red.

  Sentiment was also negative in the backdrop of Brent crude falling more than 5.3 per cent on Monday, in a belated reaction to Organization of the Petroleum Exporting Countries' (OPEC) policy meeting last week, which ended without an agreement to lower production. Brent was hovering around $41 per barrel in today's trade.

  Stock of GAIL was the worst-performer on Sensex and ended the day 5 per cent down. 

  Shares of oil explorers such as ONGC, Cairn India, GAIL and Oil India fell up to 6 per cent, reacting to the steep slump in oil prices witnessed on Monday.

  "The weakness in crude is good for India. But the global weakness in commodities indicates that the global growth could slow down further," said HDFC Securities in an email to clients.

  Emerging markets are bracing for the Fed to raise interest rates for the first time in nearly a decade after its two-day meeting on December 15-16.

  Foreign investors have sold a net $1.6 billion in shares since the start of November, though they remain buyers of $3.3 billion so far this year.

  All major Asian markets ended lower in trade today. China's Shanghai Composite slipped 1.89 per cent to settle below 3,500. Hong Kong's Hang Seng index dipped 1.34 per cent, down 298 points, while Japan's Nikkei lost 205.55 points to end at 19,492.60.

  Overnight, US stocks closed in the negative zone on the back of resource and energy stocks coming under pressure amid notable decline in commodities and oil prices. 

  Lowdown on markets today

  02:24 pm

  Sensex at 25,400.79, down 129.32 points

  Nifty at 7,732.85, down 32.55 points

  01:12 pm

  Sensex at 25,400.79, down 129.32 points

  Nifty at 7,732.85, down 32.55 points

  11:43 am

  Sensex at 25,434.11, down 96.00 points

  Nifty at 7,742.25, down 23.15 points

  9:21 am

  Sensex at 25,451.12, down 78.99 points

  Nifty at 7,747.85, down 17.55 points

Govt ready to impose more curbs on steel imports

• The government is readying to impose more curbs on steel imports, including introducing a safeguard duty, after a 20 per cent import tax failed to contain losses for producers such as Steel Authority of India.

  SAIL, JSW Steel and Essar Steel have complained that surging imports from Indonesia, China, Japan, Russia, Ukraine and South Korea were squeezing their market share and profit margins.

  In October, steelmakers asked the government to impose a safeguard duty for four years on imports of hot rolled flat sheets and plates of alloy or non-alloy steel, and set a minimum import price, to contain cheaper steel imports.

  The Directorate General of Safeguards, a branch of the finance ministry that can impose temporary import curbs, said on Tuesday that it found prima facie evidence that increases in imports "have caused or threatening to cause serious injury to the domestic producers".

  In a statement on its website, the directorate said it has asked foreign companies and other stake holders to submit their views within 30 days before taking a decision.

  Indian companies, struggling to compete due to high borrowing and raw materials costs, have in recent months successfully lobbied to get duties on some products and quality checks strengthened.

  In September, India imposed the 20 per cent import tax on some steel products as the government initiated an investigation into rising imports from China, Japan, South Korea and Russia.

  Government sources said the steel ministry has also supported local manufacturers' demand to impose a minimum floor price for steel imports to curb cheaper imports.

  Imports of iron and steel declined slightly to $6.9 billion during April-October period in the current financial year 2015/16 from $7.1 billion a year ago, Commerce and Industry Ministry data show.

  The government has asked the industry to submit figures on the cost of production so that it could consider a floor price for imports, said one official, with knowledge of policy decisions.

RBI may hold rates in 2016 on inflationary risks, says Nomura

• The Reserve Bank of India is likely to keep repo rate unchanged in 2016 as CPI inflation may remain above its target of 5 per cent by March 2017, says a report.

  "With inflation expectations still elevated, we expect RBI to keep policy rates on hold in 2016 and instead focus on greater transmission," Nomura said in a report.

  As disinflationary forces stabilise - oil, rural wages, negative output gap, MSP - the report expects underlying core CPI inflation to remain above RBI's 5 per cent target in March 2017.

  "Headline CPI inflation should rise above 6 per cent due to higher housing allowances," it said. In the fifth bi-monthly monetary policy review last week, RBI kept the repo rate unchanged at 6.75 per cent.

  RBI will use the space for further accommodation, when available, while keeping the economy anchored to the projected disinflation path that should take inflation down to 5 per cent by March 2017, it had said in the policy statement.

  According to a report by Bank of America Merrill Lynch, RBI will go for a 25-basis point cut at its February policy meet.

  Nomura further said it expects GDP growth to rise to 7.8 per cent y-o-y in 2016, from 7.3 per cent in 2015, aided by private and government consumption and a slight pick-up in investments.

  "We estimate India's potential growth at around 8 per cent, which implies that the output gap will gradually narrow over the course of 2016, before closing fully by the first quarter of 2017," the report said.

  It, however, sees risks from implementation of the 7th Pay Commission recommendations, which it said would mean higher inflation (transitory) and fiscal challenges.

  "We expect quantity and quality of fiscal consolidation to suffer," the report added.

  Nomura expects a slight slippage in the fiscal deficit to 3.6 per cent of GDP in 2016-17 as against the target of 3.5 per cent and a smaller rise in government-funded capital expenditure.

  With higher domestic growth and real effective exchange rate appreciation, the report expects marginal current account deficit widening to 1.3 per cent of GDP in 2016, from 0.9 per cent in 2015.

RBI says looking into debt-for-equity swap provision for lenders

• The Reserve Bank of India (RBI) is looking into a provision it introduced in June to help lenders managed stressed assets, RBI's deputy governor S.S. Mundra said on Tuesday, arguing it was too soon to write off the debt-for-equity swap tool as a failure.

  Strategic Debt Restructuring (SDR) aims to allow banks to take majority ownership of troubled firms and look for new owners. It allows banks to classify the debt in question as "standard", rather than bad, during the 18 month process.

  To date, SDR has been invoked in 9 cases but none has yet sold assets or significantly reduced debt.

  "It is a work in progress. You will hear...more from us on this soon," Mundra told reporters in New Delhi. "We are looking into it."

Optimistic about passage of GST: Raghuram Rajan

• Optimistic about the passage of long pending GST bill in the Parliament, Reserve Bank of India Governor Raghuram Rajan has told American investors that continued focus on fiscal consolidation and inflation will mean they will reach their targeted goal.

  In an interaction with American financial institutional investors in New York last week at an event organised by US India Business Council (USIBC), Rajan said another priority of the RBI is to clean up banks and their non-performing assets.

  Rajan said RBI's continued focus on fiscal consolidation and inflation will mean that they will reach their targeted goals, according to a USIBC media statement.

  Another priority is to clean up banks and their non-performing assets, he said. Intention is to give banks more powers to allow for greater recovery of money and give relevant stakeholders an active role in the resolution process, he observed.

  During the interaction, Rajan said he is optimistic about the passage of GST and the opportunities for compromise that will help realise the goals of the GST - a unified tax market, improvement in tax collection and broadening the tax base, USIBC said.

  Led by USIBC chairman and president and CEO of MasterCard, Ajay Banga, the discussion focused on issues such as inflation and fiscal deficit management, recent rate cuts and monetary policy, deepening capital markets, modernising India's capital markets to mobilise investment in Indian infrastructure and world-class companies.

  Industry's desire for reforms also included further development of a corporate debt market, improved infrastructure trusts and debt fund structures, long-term rupee-denominated government securities, and an updated external commercial borrowing regime, USIBC said.

  USIBC applauded the Indian government for its recent reform introduced in private sector banking that permits the total foreign holding in private banks to have a composite cap of 74 per cent and eliminates existing sub-limits for FDI and FII capital (which were at 49 per cent).

  Banks and investors will have greater flexibility to raise capital and to meet the stringent capital adequacy norms. This reform is a critical step in supporting credit growth in the financial markets and the Indian economy, USIBC said.

  "As global commercial institutions and investors, we remain profoundly committed to India as we continue to provide a variety of long-term resources including capital, technology, and know-how which will help advance the Prime Minister's goals of financial stability, economic growth, digital access, and financial inclusion," Banga said.

  USIBC president Mukesh Aghi said the Indian financial markets are an important driver for the country's economic growth. "There needs to be a level playing field for global participants in India's financial markets with clear, nationality-neutral regulations across all asset classes," he said.

General Awareness

RBI abandoned COR of 56 NBFCs from conducting business

• • The Reserve Bank of India has cancelled the certificate of registration (COR) of 56 non-banking finance companies (NBFCs).

    • These companies cannot transact in the business of an NBFC as laid down under the Reserve Bank of India Act, 1934.
      
      
      

    Companies included in cancellation list

    • Bajaj Finance is already an NBFC and Bajaj Finserve is a core investment company.
    • ABNL Investment share in Aditya Birla Nuvo’s net profit was at 0.17 per cent.
    • Future Ventures India has now transformed into Future Consumer Enterprise, a sourcing-to-supermarket food company of the Future Group.

    Apart from above, companies like Compact Lease Financing, Vapi Investments, Shree Holdings, Neelkanth Fintrade included in the bar list from conducting business.

    About NBFC
    A Non-Banking Financial Company (NBFC) is a company registered under theCompanies Act, 1956 that provide banking services but do not hold a banking license. These institutions are not allowed to take deposits from the public.

    • In a bid to bring NBFC norms in line with banks, RBI had unleashed tighter rules in Nov 2014 for NBFCs that will require higher minimum capital & have less time to declare bad loans and proper criteria for appointment of directors.
    • Minimum net owned fund required by NBFC – Rs 200 lakh

    According to Section 45I-A of the RBI Act, the central bank may cancel a certificate of registration granted to an NBFC if it ceases to carry on the business of an NBFC or fails to comply with any condition subject to which the certificate of registration had been issued to it.