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Current Affairs - 18 May 2018

General Affairs 

West Bengal Panchayat Poll Results: Trinamool Congress Leads, BJP Distant Second
  • The Trinamool Congress reinforced its dominant position in rural West Bengal's local bodies, elections of which were hit by rampant violence leaving several dead. Mamata Banerjee's party bagged 9,270 seats in gram panchayats, while the BJP emerged as the main challenger in most districts, according to results available till 2 pm today.

    State Election Commission (SEC) sources said the TMC was also ahead in 2,317 gram panchayat seats for which counting is in progress.

    The BJP has won 2,079 seats and is leading in 200 seats, while the CPI(M) captured 562 gram panchayat seats and is ahead in another 113, the SEC sources said.

    The Congress won 315 seats and is leading in 61 seats, they said.

    Independent candidates have won 707 gram panchayat seats and are leading in 120 seats.

    According to the SEC, the TMC has so far won 95 panchayat samiti seats and is leading in another 65, while the other parties are yet to open their accounts.

    In zilla parishads, the TMC has won 10 seats and is leading in 25 seats.

    The BJP emerged as the main challenger to the TMC in gram panchayat in almost every districts except Murshidabad and Malda, the two Congress strongholds.

    In Murshidabad, the TMC has bagged 466 seats, followed by the Congress with 83 seats.

    The CPI(M) and the BJP have bagged 48 and 24 seats respectively in the district, SEC said.

    In Purulia, the BJP is marginally ahead of the TMC in gram panchayats with 275 seats as against the 262 won by the ruling party till 2 pm, the SEC said adding that the Congress and the CPI(M) had bagged 60 and 44 seats respectively.

    In South 24 Parganas, the TMC bagged 1,028 gram panchayat seats, followed by BJP with 177, CPI(M) with 72 and the Congress with 16.

    In East Midnapore, the TMC won 1,075 gram panchayat seats, the BJP 74, the CPI(M) 55 and the Congress 5 seats.

    The panchayat elections were held for 621 zilla parishad, 6,123 panchayat samiti and 31,802 gram panchayat seats in 20 districts of West Bengal on May 14.

    The counting of votes began at 8 am today amid tight security.

    Of the 48,650 seats in gram panchayats, 16,814 went uncontested. There was no contest for 3,059 of the 9,217 panchayat samiti seats.

    In all, 203 of the 825 zilla parishad seats were uncontested, SEC sources said.

Congress Murdered Democracy By Making Opportunist Offer To JDS: Amit Shah
  • Democracy was murdered the moment "desperate" Congress made an "opportunist" offer to the JD(S) to form the government in Karnataka for "petty political gains", BJP President Amit Shah said today while hitting back at the Congress over its "murder of democracy" accusation.

    The Congress had yesterday termed Karnataka Governor Vajubhai Vala's decision to invite BJP leader B S Yeddyurappa to form the government as "murder of democracy and trampling of Constitution".

    Responding to the accusation, Mr Shah, in a tweet, said, "The 'Murder of Democracy' happens the minute a desperate Congress made an 'opportunist' offer to the JD(S), not for Karnataka's welfare but for their petty political gains. Shameful!"

    He also cited the fall in Congress tally from 122 in 2013 to 78 seats this time and said his party's number stood at 104 seats, suggesting that the BJP has the mandate to form the government.

    "Who has the people's mandate in Karnataka? The BJP, which has won 104 seats. Or Congress which dropped to 78 seats, whose own CM and Ministers lost by big margins. JD(S) who won only 37 seats and lost their deposits on several others. People are wise to realise," he said in another tweet.

    BJP legislature party leader BS Yeddyurappa was today sworn in as the chief minister of Karnataka for a second time, after an overnight high-voltage legal battle in the Supreme Court which refused to stay his swearing-in.

    Mr Yeddyurappa has 15 days to prove his majority in the Assembly.

    The BJP has 104 MLAs in the House, eight short of the magic figure of 112. On the other hand, the Congress and JD(S), which have already announced post-poll tie-up, have won 78 and 37 seats respectively.

    The Congress had yesterday dubbed Karnataka Governor Vajubhai Vala a "stooge" of the NDA and termed his decision as "murder of democracy and trampling of Constitution".

Open To Centre Appointing Former High Court Judges For Tribunals: Supreme Court
  • The Supreme Court has said it would be open to appoint any suitable former judge of a high court in a tribunal or commission till any legislative amendment in this regard was brought, so that such bodies "may not remain headless".

    The Supreme Court also said that a committee could be set up in two months by the Centre to consider issues, including creation of a regular cadre and laying down eligibility for recruitment for tribunals.

    "We further direct that wherever qualification required for appointment to a tribunal/commission is of a former Chief Justice or a former Supreme Court judge, and no suitable person of that category is available, it will be open to make appointment of any suitable former judge of a high court till any legislative amendment in that regard is brought out so that a tribunal/commission may not remain headless," a bench comprising Justices Adarsh Kumar Goel and Indu Malhotra said.

    "Subject to above, the constitution of the committee is left to the Government. The committee may be constituted within two months and may give its report within three months thereafter," the bench said.

    It said that the Centre might take a call after the panel gives its report and take further appropriate action.

    The bench said an affidavit of further developments be filed in the court by October 31 and posted the matter for hearing on November 13.

    The Supreme Court had on May 7 said that a committee might be set up to consider aspects like setting up of an autonomous oversight body for recruitment and overseeing the performance and discipline of the members so recruited and other related issues.

    It had said that the committee might also consider amending the scheme of direct appeals to the Supreme Court so that orders of tribunals were subject to jurisdiction of the high courts and on making benches of tribunals accessible to common man at convenient locations instead of having only one location at Delhi or elsewhere.

    The court had said that in the alternative, the committee might consider conferring jurisdiction on existing courts as special courts or tribunals.

    It had said that consideration on these issues requires urgent setting up of a committee, preferably of three members.

    The issue had cropped up before the court which was hearing a matter in which it was pointed out that appointment, norms and functioning of Debt Recovery Tribunals was not consistent with the apex court's observations passed in various judgments.

In Delhi Chief Secretary's Assault Case, Arvind Kejriwal Agrees To Being Questioned
  • Delhi Chief Minister Arvind Kejriwal has agreed to join the investigation in the case of alleged assault of Chief Secretary Anshu Prakash, the police said today.

    In a letter addressed to Station House Officer of Civil Lines Police Station, the chief minister said he would be available at 5 pm on Friday at his camp office. The police had yesterday sent him a notice to join the investigation on Friday at 11 am.

    Mr Kejriwal also informed the police that he will video record the proceedings.

    He wrote to the police that if they have issues with him video recording the proceedings, they can make arrangements and provide him the video after the questioning is over, the police said.

    Mr Prakash was allegedly assaulted during a meeting at Mr Kejriwal's official residence on February 19.

    Police have already questioned the 11 Aam Aadmi Party MLAs, who were present at the chief minister's residence for the meeting. Two MLAs Amantullah Khan and Prakash Jarwal were arrested in the case.

    Mr Kejriwal, his former advisor VK Jain and Deputy Chief Minister Sisodia were also present there.

    On February 23, a police team had examined the CCTV system installed at the chief minister's residence in the Civil Lines area and seized the hard disk. The forensic report on the hard disk is still awaited.

    The "conspiracy" of assault on Mr Prakash was "hatched" at Arvind Kejriwal's residence so it was no surprise that he would be questioned by the police, alleged Vijender Gupta, BJP legislator and Leader of Opposition in the Delhi Assembly.

    "The chief minister should cooperate in investigation instead of indulging in politics over it," Mr Gupta said.

    The alleged assault on the chief secretary had triggered a bitter tussle between the Delhi government and its bureaucracy.

Jawan Injured As Pakistan Targets Border Posts, Civilian Areas
  • Pakistan Rangers opened fire and lobbed mortars at over 15 Border Out Posts and some civilian areas along the International Border (IB) in Samba and Kathua districts of Jammu and Kashmir overnight, leaving a BSF jawan injured, an official said today.

    BSF troops guarding the borderline retaliated and the exchange of fire was going on when reports last came in, a senior BSF officer told news agency PTI.

    "Pakistan Rangers violated the ceasefire and resorted to heavy and unprovoked mortar shelling and firing along the IB on 10 to 15 BoPs in Samba and Kathua districts since last night", the officer said.

    In the exchanges, a BSF jawan suffered injuries and has been hospitalised, the officer said.

    On May 15, a 28-year-old BSF jawan was killed as Pakistani troops violated the ceasefire by opening fire on forward posts to help infiltrators cross the International Border (IB) in Samba sector.

    Troops also foiled four infiltration bids along the IB since Sunday.

    The BSF jawan's death took the number of persons killed in over 700 incidents of Pakistani shelling along the IB and Line of Control (LoC) in the State to 33, the highest this year. The deceased included 17 security personnel.

Business Affairs

Japan's Softbank can't seem to get enough of Indian startups; in talks to invest in Zomato
  • Back in October 2014, eyebrows were raised when the founder and Chief Executive Officer of SoftBank Group Masayoshi Son committed to investing $10 billion in India within a decade. He has since walked the talk - investing in Ola, Flipkart, Paytm, OYO, as well as Snapdeal and - and has reportedly already crossed the $8 billion mark.

    And now, even as the Japanese conglomerate mulls over the big question of whether to exit Flipkart or not, it is busy sniffing around a whole new pie: India's booming food tech space. According to The Economic Times, the Japanese conglomerate held an exploratory discussion with Zomato earlier this week regarding a possible investment. Let's not forget that a few months earlier, the big buzz was that SoftBank was exploring a possible funding of up to $200-250 million in Bengaluru-based Swiggy. A final decision on the candidate it will back in the food delivery space is reportedly expected by the end of the year.

    It is not the only international player to show interest in this vertical. In February, Ant Financial Services Group, Chinese behemoth Alibaba's subsidiary, invested $200 million in Zomato, propelling it into the desi unicorn club. Then there's Uber Eats, which was launched in India last May by the world's biggest ridesharing cab company Uber.

    The reason for all this interest is obvious since the food delivery business in India is on the roll. In fact, research portal Statista predicted that revenue in this segment will post a CAGR of 16.7 per cent in the next few years, resulting in a market volume of $5.7 billion by 2022. Given the size of the pie, competition was sure to heat up - and it has, to the point that it's almost a throwback to the red-hot days of 2014-15, when food tech startups were proliferating and raking in moolah. The sector had reportedly seen investments to the tune of $500 million in 2015, followed by a rough period of consolidation and correction.

    Currently, all the top players in the domestic food delivery space are busy beefing up their respective war chests. According to the daily, Uber is expected to invest $200 million into UberEats in India, Ola has earmarked an identical amount to grow FoodPanda, which it acquired last December. Furthermore, both Zomato and Swiggy are in talks for yet another financing round - not including SoftBank's interest.

    Citing sources in the know, the report added that Swiggy is in the final stages of closing an investment round of about $250 million. This comes just three-odd months after it raised $100 million in its Series F funding from Naspers and Meituan-Dianping, the world's largest on-demand delivery platform. The new funding round is likely led by Russian billionaire Yuri Milner's DST Global along with US-based hedge fund Coatue Management and its existing investors South Africa's Naspers and China's Meituan Dianping, and is expected to value Swiggy at about $1.1-1.2 billion. Meanwhile, China's largest e-commerce firm Alibaba Group Holding Ltd is looking to directly back Zomato in a $200-million financing round, which will value the start-up at $1.5 billion.

    "Between the four companies, there's almost $800 million to $1 billion of funds likely to be allocated to this sector. The cash burn is going to go up at a fast clip as each of them wants to outbid the other," a source told the daily.

    That's great news for the consumers because it means that more discounts and promotions are on the cards.

Rupee gains for second day after hitting 16-month low of 68.11 against US dollar
  • The rupee has had a rough ride of late but the good news is that it continued to strengthen for a second day today. The rupee opened eight paise higher at 67.72 against the US dollar this morning. It proceeded to gain 13 paise in the morning trade before slipping again and is currently at 67.70.

    The rupee on Tuesday crashed by 56 paise to close below the psychologically-important 68 level against the US dollar at the interbank foreign exchange market - the lowest since January 2017. Blame it all on soaring global crude prices, macro concerns like rising inflation, the uncertainty at the Karnataka polls and sustained foreign fund outflows. Foreign investors and funds pulled out over Rs 15,500 crore from the Indian capital market in April, making it the steepest outflow in 16 months.

    However, the domestic currency recovered yesterday and closed at 67.80, up 27 paise on suspected RBI intervention. According to The Economic Times, the apex bank might have sold $300-400 million proactively in the first 10 minutes on Wednesday to prevent any further fall in the rupee against the dollar.

    Meanwhile, oil prices have hit their highest level since November 2014, with Brent crude creeping ever closer to $80 per barrel as supplies tighten and demand remains strong. According to Reuters, US bank Morgan Stanley said it had raised its Brent price forecast to $90 per barrel by 2020.

    That's bad news for India as well as the rupee. Since India is a net crude oil importer, such a price hike will inflate the import bill and disrupt the fiscal position. India's current-account deficit, which already widened to $13.5 billion in Q3 FY18, up 87 per cent over the previous quarter, is reportedly forecast to hit its highest level in six years this fiscal. Moreover, as pointed out by Kotak Securities, a high deficit means the country has to sell rupees and buy dollars to pay its bills. This reduces the value of the rupee.

    But things may not get that bad. Asian Development Bank (ADB) in a recent report projected crude oil prices to remain around $65 a barrel in 2018 and $62 a barrel in 2019, which is a welcome relief from the current levels. "Oil prices are determined by demand and supply. We are seeing some fluctuation in oil prices, but unless overall fundamental demand supply changes happen, we don't see any substantial deviation from this baseline forecast," said ADB Chief Economist Yasuyuki Sawada. He added India need not worry much about currency fluctuation at the moment thanks to the forex reserves. The latter rose by $503.6 million to touch a life-time high of $424.864 billion in early April.

Sensex falls 239 points to 35,149, Nifty at 10,682 on profit-booking, high crude oil prices
  • The BSE Sensex fell 239 points to end at 35,149 as nervous investors took money off the table amid political wrangling in Karnataka. Muted quarterly earnings, crude oil prices inching closer to $80 per barrel, mixed cues from global markets and unabated foreign fund outflows were other factors behind the sharp fall, brokers said. 

    BJP legislature party leader B S Yeddyurappa was sworn in as the chief minister of Karnataka for the second time, after an overnight high-voltage legal battle in the Supreme Court. However, the apex court made it clear that the swearing-in and the government formation would be subject to the final outcome of the case before it. 

    The 30-share Sensex resumed higher at 35,483 and advanced to a high of 35,510. However, it slipped on profit-booking and touched a low of 35,087, before finally settling at 35,149, down 238 points, or 0.67 per cent. This is the benchmark's lowest closing since May 4 when it had closed at 34,915. 

    VK Sharma, head, private client group and capital market strategy at HDFC Securities said,  "The Nifty slipped 58 points or 0.54% to close at 10,683. While the markets opened strong but gradually drifted into the red late morning and remained range bound as better than expected results from Bajaj Capital enabled the markets recover some lost ground. But the markets started falling like a stone as Brent Crude pierced the $ 80 mark. A close below the 10,700 mark is considered a week close. The Nifty is now on a weak wicket. The weekly settlement of the Bank Nifty weighed on the sentiment also. The Bank Nifty fell 0.41%. The FMCG sector index was the worst performer falling 1.28%. Ironically, the advance decline ratio was positive after a gap of seven sessions as the weakness was limited to the large cap stocks. The Mid-cap index gained 0.37%. And the small cap index rallied." 

    The gauge had lost 168.83 points in the previous two sessions. The NSE 50-share Nifty also lost 58 points, or 0.54 per cent, to 10,682, after shuttling between 10,777 and 10,664. Foreign portfolio investors (FPIs) net sold shares worth Rs 699 crore, while domestic institutional investors (DIIs) bought shares worth Rs 229 crore yesterday, as per provisional data.

Sebi sends PNB warning letter for tardiness in disclosing details related to the Nirav Modi scam
  • The Punjab National Bank on Tuesday got rapped on its knuckles by market regulator Securities and Exchange Board of India (Sebi) for its tardiness in complying with various mandatory norms in the wake of the Nirav Modi fraud.

    In a warning letter addressed to PNB's Company Secretary Balbir Singh, Sebi noted that there were delays of 1-6 days by PNB in making disclosures to the stock exchanges pertaining to the complaints or reports filed with Reserve Bank of India and the Central Bureau of Investigation (CBI). The letter specifically points to the disclosures belatedly made by PNB to stock exchanges during February and March this year "regarding certain fraudulent transactions with respect to Nirav Modi group, Gitanjali group and others". This, according to the regulator, flouted several regulations complied under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

    Sebi further claimed that "PNB has not made any provision /disclosure with respect to fraud of Rs 280 crore in the financial statements for the quarter ended December 2017", which went against Clause I of Part A of Schedule IV read with Regulation 33(1)(e) of SEBI (Usting Obligations and Disclosure Requirements) Regulations, 2015.

    "The aforesaid non-compliances are viewed seriously and PNB is hereby warned and advised to be cautious in future to ensure compliance with all applicable provisions of the SEBI LODR (Listing Obligations and Disclosure Requirements) Regulations," added the warning letter, which has been posted by the bank on stock exchanges as part of regulatory filing.

    This development comes on the heels of PNB reporting the highest quarterly loss ever posted by an Indian bank and two CBI charge-sheets featuring its former MD & CEO Usha Ananthasubramanian along with three other top officials in connection with the Rs 13,000 crore LoU scam. Bad news indeed comes in threes.

NuMetal offers Rs 37,000 crore for Essar Steel, wants 2nd round of bids opened
  • Russia's VTB Capital-based NuMetal Ltd today told the company law appellate tribunal, NCLAT, that it has offered over Rs 37,000 crore for Essar Steel in the second-round of bidding, which should be opened and the highest bidder be selected from it.

    ArcelorMittal, the only other bidder to have put in a bid for Essar Steel in the first round in February, however, opposed the opening of the second round of bids and wanted only the first round of bids to be considered.

    At a hearing of counter petitions field in the National Company Law Appellate Tribunal (NCLAT), senior advocate Mukul Rohatgi appearing for NuMetal said that the second round would help to maximise value for lenders.

    Essar Steel is being auctioned after the company defaulted on payment of about Rs 49,000 crore loan to lenders.

    Rohatgi submitted that the resolution professional, who is conducting the auction of Essar Steel, should open the second round of bids as it would help realise the maximum value for the assets.

    "Our bid in the second round is much higher at Rs 37,000 crore. Let there be competition," he said.

    Both NuMetal and ArcelorMittal put in a second round of bids after the first bids were opined to be invalid --- NuMetal because of it being 25 per cent owned by Aurora Trust of Ruia family, the promoters of Essar Steel; and ArcelorMittal because of it being holding shares in loan defaulting companies Uttam Galva Steel and KSS Petron.

    The insolvency and bankruptcy law bars participation by promoters of delinquent companies in bidding for assets being auctioned.

    For the second round of bid, VTB Bank sought to severe ties with Ruia family by buying out Aurora Trust's stake in NuMetal.

    Appearing for ArcelorMittal, senior advocate Abhishek Manu Singhvi opposed NuMetal's plea saying the second round of bid had become "infructuous" after the world's largest steelmaker paid Rs 7,000 crore to cure its ineligibility.

    ArcelorMittal transferred Rs 7,000 crore to an escrow account of SBI to clear outstanding loans of Uttam Galva and KKS Petron.

    A two-member bench of NCLAT, headed by Chairman Justice S J Mukhopadhaya, which was hearing the matter, directed the case to be list on May 22 for next hearing.

    It also said that NCLT Ahmedabad could also extend the period of Corporate Insolvency Resolution Process.

    Under the present law, the insolvency proceedings to be completed within 270 days. This period is ending on May 28.

    In the second round of bidding, mining baron Anil Agarwal's Vedanta Resources also joined the race. Also, JSW joined NuMetal for the bid.

    The appellate tribunal was hearing two cross-appeals by Arcelor Mittal and Numetal.

    Russia's VTB Capital-backed Numetal Ltd has challenged a lower court order allowing rival ArcelorMittal to clear bank dues of associate companies so that it can become eligible to acquire Essar Steel. ArcelorMittal, on the other hand, has challenged its disqualification from bidding.

    General Awareness

    National Policy on Biofuels – 2018
    • Context: The Union Cabinet has approved National Policy on Biofuels – 2018.

      Salient Features:

      Categorization: The Policy categorises biofuels as “Basic Biofuels” viz. First Generation (1G) bioethanol & biodiesel and “Advanced Biofuels” – Second Generation (2G) ethanol, Municipal Solid Waste (MSW) to drop-in fuels, Third Generation (3G) biofuels, bio-CNG etc. to enable extension of appropriate financial and fiscal incentives under each category.

      Scope of raw materials: The Policy expands the scope of raw material for ethanol production by allowing use of Sugarcane Juice, Sugar containing materials like Sugar Beet, Sweet Sorghum, Starch containing materials like Corn, Cassava, Damaged food grains like wheat, broken rice, Rotten Potatoes, unfit for human consumption for ethanol production.

      Protection to farmers: Farmers are at a risk of not getting appropriate price for their produce during the surplus production phase. Taking this into account, the Policy allows use of surplus food grains for production of ethanol for blending with petrol with the approval of National Biofuel Coordination Committee.

      Viability gap funding: With a thrust on Advanced Biofuels, the Policy indicates a viability gap funding scheme for 2G ethanol Bio refineries of Rs.5000 crore in 6 years in addition to additional tax incentives, higher purchase price as compared to 1G biofuels.

      Boost to biodiesel production: The Policy encourages setting up of supply chain mechanisms for biodiesel production from non-edible oilseeds, Used Cooking Oil, short gestation crops.

      Expected benefits:

      Import dependency: The policy aims at reducing import dependency.

      Cleaner environment: By reducing crop burning & conversion of agricultural residues/wastes to biofuels there will be further reduction in Green House Gas emissions.

      Health benefits: Prolonged reuse of Cooking Oil for preparing food, particularly in deep-frying is a potential health hazard and can lead to many diseases. Used Cooking Oil is a potential feedstock for biodiesel and its use for making biodiesel will prevent diversion of used cooking oil in the food industry.

      Employment Generation: One 100klpd 2G bio refinery can contribute 1200 jobs in Plant Operations, Village Level Entrepreneurs and Supply Chain Management.

      Additional Income to Farmers: By adopting 2G technologies, agricultural residues/waste which otherwise are burnt by the farmers can be converted to ethanol and can fetch a price for these waste if a market is developed for the same.

      Significance of Biofuels:

      Globally, biofuels have caught the attention in last decade and it is imperative to keep up with the pace of developments in the field of biofuels. Biofuels in India are of strategic importance as it augers well with the ongoing initiatives of the Government such as Make in India, Swachh Bharat Abhiyan, Skill Development and offers great opportunity to integrate with the ambitious targets of doubling of Farmers Income, Import Reduction, Employment Generation, Waste to Wealth Creation.

      Classification of Biofuels:

      1st generation biofuels are also called conventional biofuels. They are made from things like sugar, starch, or vegetable oil. Note that these are all food products. Any biofuel made from a feedstock that can also be consumed as a human food is considered a first generation biofuel.
      2nd generation biofuels are produced from sustainable feedstock. The sustainability of a feedstock is defined by its availability, its impact on greenhouse gas emissions, its impact on land use, and by its potential to threaten the food supply. No second generation biofuel is also a food crop, though certain food products can become second generation fuels when they are no longer useful for consumption. Second generation biofuels are often called “advanced biofuels.”
      3rd generation biofuels are biofuel derived from algae. These biofuels are given their own separate class because of their unique production mechanism and their potential to mitigate most of the drawbacks of 1st and 2nd generation biofuels.

      What’s important?

      For Prelims: Sustainable biofuels, Mission Innovation and Biofuture platform.
      For Mains: Biofuels- significance, challenges and solutions.

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