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Current Affairs - 1 December 2016

General Affairs 

Fools Are Linking BJP's Civic Polls Victory To Demonetisation: Shiv Sena
  • MUMBAI:  Taking a dig at the BJP over its impressive performance in the first round of civic polls in Maharashtra, ally Shiv Sena today said those who link the saffron party's victory to demonetisation are "fools".

    "Those who say that people have voted the BJP to power due to the decision of demonetisation are fools. If that was the case, at least 100 candidates from that party would have been elected as council chiefs, which did not happen," the Sena said in an editorial in party mouthpiece 'Saamana'.

    The NDA partner also took a swipe at the BJP for having its campaign spearheaded by Chief Minister Devendra Fadnavis, saying ,in contrast Sena chief Uddhav Thackeray or any of the party leaders did not engage in poll campaign.

    "We wanted to instil confidence in our workers that they can fight against the pressures of money-based campaign, which we succeeded in proving. Our win assumes significance as we, in a bid to get the required numbers, did not engage in any unholy alliance," it said, adding this makes the party's win "pure".

    "We did not adopt the approach of dampening the morale of our party workers by allying with parties against whom we levelled charges of large-scale corruption," the Sena said.

    Had the Shiv Sena entered into "backdoor alliances" with parties like the Congress, NCP and the AIMIM, it too could have notched up larger numbers, Sena said.

    With the government introducing direct elections for the post of heads of municipal councils, the BJP emerged as the single largest gainer with 52 seats followed by Shiv Sena 23, Congress 19, NCP 16 and others 28.

High Court Dismisses Plea Against Rs. 2.5 Lakh Withdrawal Cap For Weddings
  • NEW DELHI:  The Delhi High Court today dismissed a petition seeking relaxation of the Rs. 2.5 lakh withdrawal limit for marriages.

    "The writ petition is dismissed," a bench of Chief Justice G Rohini and Justice Sangita Dhingra Sehgal said on the plea which had also termed as "arbitrary" the guidelines which seek detailed list of persons to whom the cash withdrawn will be paid for marriage and declaration from them that they do not have a bank account.

    The high court had on November 28 reserved its verdict on the plea saying, government has given "relaxation" wherever necessary on the demonetisation issue.

    Earlier, the Centre had opposed the plea saying the government has already given certain exemptions but some conditions were needed so that nobody can misuse it.

    "We cannot have an unmeasured and uncanalised situation. We have given exemptions. For weddings, if we will not put conditions, anybody can get a marriage card printed and go to the bank to withdraw Rs. 2.5 lakh," Additional Solicitor General Sanjay Jain, appearing for Centre, had told the bench.

    In his plea, petitioner Birender Sangwan had said the cap of Rs. 2.5 lakh withdrawal for marriages should be relaxed as there were various "customary donations" which one gives during the wedding ceremony.

    "Liberty must be given for marriages so that one can pay as per the customs. How can somebody give such an undertaking? As per the guidelines, even the priest who performs marriages has to give undertaking of not having a bank account. The parents of the bride and groom should be allowed to withdraw money from their accounts without such arbitrary conditions," it had said.

    The petitioner's counsel had also told the bench that some kind of liberty should be given to the parents of the bride and the groom to withdraw money as per their requirements and the Rs. 2.5 lakh cap should be relaxed.

    The Supreme Court is also hearing a batch of petitions against the demonetisation move announced on November 8. It is hearing the Centre's plea seeking transfer of all petitions pending before various courts across the country to either the apex court or one high court. The hearing is scheduled on December 2.

    Last week, the Delhi High Court had made it clear that it will not go into the correctness of the demonetisation policy as the apex court is already seized of it. The observation had come while the high court was hearing a plea against the weekly withdrawal cap of Rs.24,000.

Review Installations' Security: Jammu And Kashmir Governor To Forces Commanders
  • JAMMU:  Expressing serious concern over repeated terrorist attacks on security forces establishments in the state, Governor N N Vohra today asked all security forces commanders and the government to enhance surveillance and immediately review the security of all important installations.

    He disapproved of Pakistan's continuing attempts to exacerbate the situation when India was seeking to restore peace and normalcy.

    Mr Vohra asked Chief Secretary to direct districts and divisional civil and police administration to immediately review the security of all important installations and establishments in the state.

    After being briefed about the attacks by Pakistani terrorists at Ramgarh and Nagrota on Tuesday, the Governor spoke with Northern Army Commander Lt Gen D S Hooda, DGP J&K K Rajendra, GOC XVI Corps Lt Gen A K Sharma, GOC 26 Div Maj Gen S Sharma and IG BSF (Jammu Frontier) D K Upadhyaya.

    He conveyed to GOC XVI Corps and IG BSF his grief and sincere sympathy and requested that the same be conveyed to the next of the kin of the soldiers who lost their lives in the encounters with the terrorists and hoped that the injured Army and BSF personnel would recover very early.

    Chief Minister Mehbooba Mufti, who also condemned the terror attack on an army formation at Nagrota, said in a statement, that Jammu and Kashmir has suffered heavily due to the unending cycle of violence and appealed for an end to it.

    She has expressed sympathies with the families of slain soldiers and prayed for speedy recovery of the injured.

Sharad Yadav, Arun Jaitley Exchange Barbs Over Demonetisation In Rajya Sabha
  • NEW DELHI:  Janata Dal (United) leader Sharad Yadav, whose party leader Nitish Kumar has welcomed demonetisation, today joined the rest of the Opposition in the Rajya Sabha in attacking the government on hardships arising out of the ban on high denomination currency notes.

    Mr Yadav also had a heated exchange of words with Finance Minister Arun Jaitley when the BJP leader needled him to check with his party before criticising the government on the issue.

    The incident happened when members of the Congress, Trinamool Congress, BSP and Samajwadi Party protested in Parliament.

    Speaking about the terror attack in Nagrota, Mr Yadav said this has never happened that seven armymen, including two officers, have been killed, but there has been no obituary reference.

    Claiming that there have been deaths due to demonetisation, Mr Yadav alleged, "You say the demonetisation has been done in national interest, so have the 90 people, old and young, who have lost lives standing in queues (to get new currency)."

    At this, Mr Jaitley retorted: "Sharadji should first discuss within his party to know if it (the party) is in agreement with him or not."

    Mr Yadav replied saying there are no differences. "We are not against demonetisation. We are against the destruction caused by the move," he said.

    He also asked Mr Jaitley why he had not responded to his demand for condolence.

    Mr Jaitley said: "If you want discussion (on the issue), let there be discussion."

    Mr Yadav replied again, saying first there should be condolence and then we'll have a discussion. He went on to ask if Prime Minister Narendra Modi was with him or not.

Goa Chief Minister Yet To Receive Note On Sharing Of Bank Records
  • PANAJI:  A day after Prime Minister Narendra Modi asked BJP MPs and MLAs to submit their bank statements of transaction from November 8 onward to party president Amit Shah, Goa Chief Minister Laxmikant Parsekar has said he is yet to receive any such communication but assured to abide by all instructions from the Centre.

    "Every year, we have been filing return with Income-Tax department and also Lokayukta. I have heard through media...I have not received any communication that party president has said BJP ministers and MLAs should file it," Mr Parsekar said.

    "It is a very good beginning. I will tell everyone to file. Whatever is the instruction, we will obey it. I have not received any communication (so far)," he said.

    Responding to a question on Goa's aim to turn into a cashless society by December 30, Mr Parsekar said, "About 70 per cent of people, once they know the issue and they understand the process, will accept it without any hesitation."

    "Others too want to learn it. I did not find a single genuine person who has said he won't be able to do a cashless transaction. The opposition to the cashless society is political, people have understood the motive. People have welcomed it (move towards cashless society)," he said.

    To educate people about cashless transactions, Mr Parsekar said bank officials are going to various markets and introducing the concept of banking using mobile.

    "In the government departments too, Public Works Department, Water Resources Department and Power have already begun educating stakeholders on cashless transaction. Initially, there may be difficulty, but Goa has decided to switch over and become the first state (to go cashless)," the chief minister said.

    Strongly backing the demonetisation decision, Defence Minister Manohar Parrikar had recently said Goa is on its way to becoming India's first cashless society.

    "Goans are using cards (ATM/credit) in a big way. Goa will soon be the first state with cashless society fulfilling a dream of the Prime Minister," Mr Parrikar had said.

    Prime Minister Modi had yesterday asked BJP MPs, ministers and MLAs to submit their bank account statements between November 8, the day he announced the demonetisation, and December 31 to party chief Amit Shah amid allegation that he had tipped off people close to him about the impending exercise beforehand.

Business Affairs 

Demonetisation: Will banks be able to pass the first pay-day test?
  • Tomorrow will be the first salary-day after the major announcement of demonetising Rs 500 and Rs 1000 notes. The duration of first 10 days can become a major challenge for the government and the banks.
    Banks witness maximum withdrawals in the first week of the month. According to a report by the Business Line, almost 50-70 per cent of salary withdrawn in the first seven days.
    Considering that most bills and dues are paid in the first week of the month, the employers will face a tough time providing cash to the employee. The unorganised sector, which primarily deals in cash payments is one of the worst hit sector. On the other hand, the government is trying to ease the cash crunch by providing cash to its employees.
    The central government and a few state governments have decided to help their employees by paying a certain portion of the salary in cash. However, a few state governments are even finding it hard to pay a full month's salary to its employees . 
    Post demonetisation, states are struggling with revenue generation. Chief Minister of Telangana, K Chandrasekhara Rao, has expressed his concerns on the falling revenue of the state and has requested help from the RBI to provide Rs 5 crore to pay Rs 10,000 in cash to each of  its employees.
    Will you get your salary on time?
    The private sector will also face the brunt of the cash crisis as smaller businesses will struggle with the methods of payment. To assume that the entire population of the country will adopt tech-savvy payment methods within few weeks after demonetisation is unfair.
    Corporate sector, on the other hand, will witness minimum hindrance as they already cater to a technologically sound work force.
    Expect longer queues outside banks and ATMs
    Most companies and organisations will have to deposit salaries directly to bank accounts which only means that the queues outside ATMs and banks are just going to get longer.
    Unless there is a fundamental shift in the attitude of banking methods, the country will struggle to make transactions in the coming first weeks of the month. Tenants and landlords will have to resort to bank transfers instead of cash and paying bills will have to become a digital affair.

GDP grows at 7.3% in September quarter

  • The Indian economy grew at 7.3 per cent in the September quarter of current fiscal, up from 7.1 per cent in the previous three months, mainly on improved performance of manufacturing, services and trade sectors.
    The Gross Domestic Product (GDP) or national income was 7.6 per cent in the second quarter of the last fiscal.
    According to the data released by the Central Statistics Office (CSO), the Gross Value Added (GVA), which is estimated at the basic price, showed a growth of 7.1 per cent in the second quarter of 2016-17, compared to 7.3 per in the year ago period.
    The GDP growth data is calculated under the new methodology at market price, while GVA is calculated primarily at factor cost. GDP is GVA plus taxes on products, minus subsidies on them.
    The sectors which registered growth of over 7 per cent in July-September quarter are 'public administration, defence and other services', 'financial, insurance, real estate and professional services', 'manufacturing' and 'trade, hotels and transport and communication and services related to broadcasting', the data said.
    Growth in agriculture; forestry and fishing; mining and quarrying and construction is estimated to be 1.8 per cent, (-)0.4 per cent, and 1.5 per cent respectively.

RBI caps withdrawal limit to Rs 10,000 for Jan Dhan Yojna accounts
  • Reserve Bank of India has capped the withdrawal limit on KYC complaint Jan Dhan Yojna accounts to Rs 10,000 per month.
    RBI justified the new rule saying,"With a view to protect the innocent farmers and rural account holders of PMJDY from activities of money launders and legal consequences under the Benami Property Transaction & Money Laundering laws, it has been decided to place certain limits, as a matter of precaution, on the operations in the PMJDY accounts funded through deposits of Specified Bank Notes (SBNs) after November 09, 2016."
    Highlights of the new statement released by RBI:
    • A  KYC complaint account holder will be able to withdraw Rs 10000 a month
    • Any withdrawal beyond this limit will have to go through the branch manager, who will verify the genuineness of the withdrawal amount
    • An account that is not KYC complaint fully will only be authorised to withdraw Rs 5000 a month from the amount deposited through SBNs after November 09, 2016 within the overall ceiling of Rs 10,000.

Sensex rises 258 points, Nifty closes above 8,200 level
  • The market rose on Wednesday amid positive global cues as a deal to cut output by OPEC looked close in sight. The US growth data also brought cheers as the economy grew at 3.2 percent in Q3, the fastest in two years.  
    The price of oil is rallying as OPEC countries discuss how to cut the cartel's production levels and support the market.
    The international benchmark for crude oil, Brent, was up $2.37 at $48.75 a barrel on Wednesday, recovering steep losses from the day before, as the cartel's oil ministers met in Vienna. 
    The strong market movement comes ahead of the Q2 GDP data scheduled to be released later in the day.
    While the Sensex rose 258 points at 26,652 level, Nifty  rose 82.35 points to 8,224 points. Nifty closed above 8,200 level for the first time since November 11, 2016.
    On the 30-stock Sensex, 23 closed higher with ICICI Bank (3.62 per cent) and Maruti Suzuki (3.39 percent) rising the most.
    While the SBI stock closed 2.15 per cent higher, the L&T stock rose 2.07 per cent on the BSE.
    Welspun Corp was the top gainer on the BSE, rising 13.76 percent on the back of rising volumes of shares traded.
    The firm recorded rise in volumes by more than 13 times. Around 26 lakh shares changed hands on the BSE in today's trade.
    The JK Lakshmi Cement stock too rose 9.65 percent to Rs 412 on the BSE. 
    Market breadth was positive with 1,765 stocks closing higher against 202 ending in the red on BSE.
    Bank stocks rose the most with Bank Nifty rising 404 points and BSE bankex rising 458 points at close. ICICI Bank and IndusInd Bank  stocks rose the most on the BSE.

Top economists are divided on demonetisation: Who said what?
    Amartya Sen: Demonetisation was a despotic act
    Nobel Laureate and eminent economist Amartya Sen said, "The demonetisation of currency was a despotic act as the government broke the promise of compensation that comes with a promissory note." "Demonetisation goes against trust. It undermines the trust of entire economy," Sen further said.
    Earlier while speaking to The Indian Express, Professor Sen said, "Only an authoritarian government can calmly cause such misery to the people - with millions of innocent people being deprived of their money and being subjected to suffering, inconvenience and indignity in trying to get their own money back."
    Terming the move as authoritarian, Sen told Express: "Telling the public suddenly that the promissory notes you have, do not promise anything with certainty, is a more complex manifestation of authoritarianism, allegedly justified - or so the government claims - because some of these notes, held by some crooked people, involve black money. At one stroke the move declares all Indians - indeed all holders of Indian currency - as possibly crooks, unless they can establish they are not."

    Kaushik Basu:
     Demonetisation is likely to fail
    "Demonetization was ostensibly implemented to combat corruption, terrorism financing and inflation. But it was poorly designed, with scant attention paid to the laws of the market, and it is likely to fail. So far its effects have been disastrous for the middle- and lower-middle classes, as well as the poor. And the worst may be yet to come," leading economist Kaushik Basu wrote in The New York Times.
    He further said that when the government announced demonetisation, it justified the measure as a way to curb terrorism financing that relies on counterfeit rupee notes, as well as to dampen inflation.
    "Both these justifications are flawed. Catching fake notes already in circulation neither helps trap the terrorists who minted them nor prevents more such money from being injected into the economy. It simply inconveniences the people who use it as legal tender, the vast majority of whom had no hand in its creation," Basu wrote.

    Dr Manmohan Singh: 
    Demonetisation can bring GDP down by 2 per cent
    Former Prime Minister Manmohan Singh slammed the demonetisation of Rs 500 and Rs 1,000 notes and called it a "monumental mismanagement" that might bring GDP down by 2 per cent.
    "In my opinion that the way the scheme has been implemented will hurt agricultural growth in our country, will hurt small industry, will hurt all those people who are in the informal sector of the economy. And my own feeling is that the national income, that is the GDP, can decline by about 2 per cent as a result of what has been done. This is an underestimate," Dr Singh said.
    Dr Singh also highlighted how this move was affecting the people from marginalised sector. He said: "Prime Minister has said that we should wait for 50 days. Well, 50 days is a short period. But for those who are poor and from the deprived sections of the society even 50 days torture can bring about disastrous effects. And that's why about 60 to 65 people have lost their lives, maybe more. And what has been done can weaken and erode our people's confidence in the currency system and in the banking system."
    Arvind Virmani: Demonetisation is a useful method of flushing out black money
    Economist and former Indian representative to the IMF Arvind Virmani reportdely said that demonetisation is a useful method of flushing out black money, given that a large percentage of cash holding is in these two denominations.
    "The manner in which it was implemented is not surprising - such actions are always secret till announced, so that insiders do not take advantage of the information at the cost of the outsiders," The Wire quoted Virmani as saying.
    Speaking on its short-term impact on business community, Virmani said: "How it will affect requires a deeper study, but the first thing one knows is when you demonitise such a large proportion of currency, the immediate effect is a collapse of retail trade in goods and services.
    He further said the currency needed for everyday transactions has to be replaced quickly. "The longer that is delayed, the more the negative effect," he said.
    Bibek Deb Roy: Criticism of demonetisation not fact-based 
    In an interview to India Today, member of the Niti Ayog Bibek Deb Roy responded to the critics of demonetisation and said that critics are unaware of the situation on ground, the extent of financial inclusion that has been undertaken by the Modi government, and how the revenue generated will help in enhancing public investment.
    Debroy told PTI that economists who live out of India normally do not have accesss to the latest data, and are hence more prone to drawing conclusions that may not hold true in the present situation.
    "They (economists living abroad) base their understanding essentially on reading English newspapers. Otherwise, how would they know? English language newspapers understood many things wrongly," PTI quoted Debroy as saying.
    Roy also reacted on comments of former World Bank Chief Economist Kaushik Basu on demonetisation. He said: "Where does Dr Basu work now? He is based in US. I have a great deal of respect for him…That someone who is away from India may not necessarily be aware what is happening in India."

    Surjit Bhalla: Demonetisation is a "bold step" and bigger than GST
    Surjit Bhalla terms the demonetisation move a 'bold step'. "There should be no question that this BJP policy is bold and courageous. The trading community has long been identified as the BJP's core constituency and Prime Minister Narendra Modi has gone against this powerful support group. So let us give Modi a considerable amount of credit for taking a bold step for the country - genuinely in the name of the nation," he wrote in The Indian Express.
    He also argued the the fight against corruption and black money in India has just begun. "If successful, this will go down as the biggest reform in India, bigger than the GST (though the two are related) and bigger than the industrial policy reform of 1991. But, and there is a but, while the policy is very effective in its attack on past black money, it is silent on the creation of money."
    "Most of the spending of this black money is for expenditures on gold, purchase of foreign exchange, and purchase of real estate. Transfer of money abroad into 'anonymous' accounts is now a difficult exercise for all the world's black money residents. Gold purchases and hoarding are also becoming more difficult. So, the prime outlet for big-time black money use is real estate," he added.

    General Awareness

    World Economic Forum reports-India’s Ranks 102th among 136 economies in terms of enabling cross border trade

    • According to the ‘Global Enabling Trade Report 2016’ of World Economic Forum (WEF), India has improved its ranking by four places to 102nd position among 136 economies in terms of enabling cross border trade.
      • Among the BRICS nations, India, China and South Africa have improved their ranking from the previous edition.
      • While India’s position has jumped four slots to 102, that of South Africa has improved three places to 55 while that of China stood at 61 compared with the previous ranking of 63.
      • However, Brazil’s ranking has slipped to 110 from the earlier 97 while that of Russia dropped to 111 from the 105th position.
      List of top 10 economies enabling cross border trade
      1 Singapore
      2 Netherlands
      3 Hong Kong
      4 Luxembourg
      5 Sweden
      6 Finland
      7 Austria
      8 United Kingdom
      9 Germany
      10 Belgium
      Among other economies US is placed at the 22nd position, Pakistan (122nd), Bangladesh (123rd), and Nigeria (127th)
      • With regard to India, the report said most problematic factors for import include high cost or delays caused by domestic transportation, crime and theft, corruption on the border and burdensome import procedures.
      • Global Alliance for Trade Facilitation’s Director Philippe Isler said businesses and entrepreneurs in many developing and emerging economies are being constrained from the global marketplace due to costly as well as inefficient border processes.
      • The report revealed that increased integration into the global economy has made the Association of Southeast Asian Nations (ASEAN) region a more accessible market for trading goods than either the European Union or the US.
      WEF Founder and Executive Chairman Klaus Schwab said that free trade remains the most powerful driver of global economic development and social progress. The challenge for leaders today is to confront protectionism, but they also have a duty to make trade a source for more inclusive growth.
      The ‘Global Enabling Trade Report 2016’
      The ‘Global Enabling Trade Report 2016’- published by WEF and the Global Alliance for Trade Facilitation assesses the performance of 136 economies by way of Enabling Trade Index (ETI).
      • The index assesses the extent to which economies have in place the factors facilitating the free flow of goods over borders and to their destinations.
      • The Enabling Trade Index measures the factors, policies and services that facilitate the trade in goods across borders and to destination. It is made up of four sub-indexes:
      1.Market access
      2.Border administration
      3.Transport and communications infrastructure
      4.Business environment
      World Economic Forum (WEF)
      The World Economic Forum is a Swiss nonprofit foundation, committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas.
      • Headquarters: Cologny, Switzerland
      • Founder: Klaus Schwab
      • Founded: 1971

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