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Current Affairs - 05 October 2018

General Affairs 

On Rafale Deal, Congress Again Approaches Top Auditor; Submits Details
  • The Congress today approached the country's top auditor for the second time, submitting what it called "additional developments and revelations" on the Rafale deal. The party has sought a report in the matter from the Comptroller and Auditor General during a meeting last month.

    Former French president Francois Hollande had said the pitch for Anil Ambani-led Reliance Defence as the Indian partner in the 36-jet deal was made by Prime Minister Narendra Modi, the Congress said. The Joint Secretary of the Indian Air Force had sent a written dissent, which is on record, the party added.

    Mr Hollande claimed that the decision to keep out Hindustan Aeronautics Limited ot HAL was taken "as they had no other choice, that PM pitched for Anil Ambani," said senior Congress leader Anand Sharma.

    "HAL, which was to manufacture 108 planes, was to be excluded. The benefit of transfer of technology was to be declined and a private entity was to be introduced," Mr Sharma said.


    The political row over Rafale had gained momentum since last month as French journal Mediapart quoted Francois Hollande as saying that the Indian government had proposed Reliance Defence as India partner in the Rafale deal and that France had not been given a choice.

    The government has denied any wrongdoing and Defence Minister Nirmala Sitharaman claimed that Francois Hollande's claims come at a time when he himself is facing allegations that his associate had received some funds for some purpose.

    The government has also maintained that it was Dassault, the French form manufacturing the aircraft, that had picked Reliance Defence as its India partner and it had nothing to do with what was essentially a commercial pact between two private parties.

PM Modi Welcomes Putin With Hug, Focus On S-400 Missiles Deal
  • Russian President Vladimir Putin is in New Delhi on a two-day visit which is likely to focus on the signing of a 5 billion dollar deal for India to procure Moscow's most advanced air defence systems, the S-400 Triumf, despite the risk of US sanctions against countries buying Russian defence equipment. After being greeted by Foreign Minister Sushma Swaraj at the airport, Mr Putin was welcomed by Prime Minister Narendra Modi with a warm hug at his residence before the two sat down for a private meeting. On Friday, the two will hold the annual India-Russia bilateral summit.

    Following are the top 10 developments in this story:

    India wants to procure the long-range missile systems to tighten its air defence mechanism, particularly along the nearly 4,000-km-long India-China border. Vladimir Putin and Prime Minister Narendra Modi will also discuss key regional and global issues, including US sanctions on import of Iranian crude oil.

    There have been indications by New Delhi that it will go ahead with the S-400 deal notwithstanding the US sanctions.

    The US administration is required under a domestic law - Countering America's Adversaries through Sanctions Act or CAATSA - to impose sanctions on any country that has "significant transactions" with Iran, North Korea or Russia.

    The Act primarily deals with sanctions on Russian interests such as its oil and gas industry, defence and security sector, and financial institutions, in the backdrop of its military intervention in Ukraine and its alleged meddling in the 2016 US Presidential elections.

    S-400 is known as Russia's most advanced long-range surface-to-air missile defence system. The S-400 is an upgraded version of the S-300 systems. The missile system, manufactured by Almaz-Antey, has been in service in Russia since 2007.

    China was the first foreign buyer to seal a government-to-government deal with Russia in 2014 to procure the lethal missile system and Moscow has already started delivery of an undisclosed number of the S-400 missile systems to Beijing.

    Russia has been one of India's key suppliers of arms and ammunition. Sources had earlier said PM Modi and Vladimir Putin would also deliberate on impact of US sanctions on import of crude oil from Iran.

    PM Modi and Mr Putin will hold the India-Russia summit tomorrow after which agreements will be exchanged and the two leaders will make statements. This is the third meeting between PM Modi and Mr Putin this year after the informal meeting in the Russian resort city of Sochi in May and a bilateral on the sidelines of the BRICS Summit in South Africa.

    Around 20 agreements are expected to be signed between the two sides following the 19th India-Russia Bilateral Summit. Russia is one of only two countries with which India holds annual bilateral summits, the other being Japan.

    Vlamidir Putin will also meet President Ram Nath Kovind tomorrow.

Keep Gods Off Answer Sheets, University Tells Students Ahead Of Exams
  • Seeking divine intervention in trying times is not unsual, not even when it comes to cracking an examination. One university is Karnataka is not taking kindly to this habit of its students.

    The Rajiv Gandhi University of Health Sciences in Karnataka has issued a circular to all affiliated colleges, called it an examination malpractice. The first among the eight "don'ts" mentioned in the circular is mentioning the names of Gods.

    "Do not write any word/sentence - starting from page 03 like names of Gods of your faith etc", the circular reads. 

    Writing one's name, irrelevant messages, numbers or sentences, signs, symbols, letter or word and tampering with answer books would also be construed as revealing the identity of the examinee and will be treated as a malpractice, the circular adds. 

    "These directions have been issued to ensure the identity of students taking an exam is not revealed to evaluators," a college official said.

    The official added that some do it unintentionally but many of them do it with the intent of approaching an evaluator for more marks. "It's an indication indirectly," she said.

    The university official said such instructions have already been in place and the circular is only a reiteration so the students, invigilators and college managements know they exist.

    "From time to time we need to keep telling people because each year new students join," she added. 

In Bid To Develop Railway Stations, Cabinet Approves Residences Around It
  • Construction of residential complexes will now be allowed around railway stations as part of an ambitious redevelopment programme of the Indian Railways approved by the Union Cabinet on Wednesday, a source said.
    The Cabinet approval has cleared the way for the railways to commercially develop land and air space in and around stations and also provided for a longer lease tenure of up to 99 years from the previous 45 years.

    According to news agency PTI, the source said the approval for residential complexes is not a blanket one, but will be decided on a case-to-case basis.

    Senior railway officials said allowing residential development along with commercial development as part of the project will enhance its commercial viability.

    While the Cabinet approval was obtained on June 24, 2015 to redevelop 'A1' and 'A' category stations (with higher earnings and footfalls) by zonal railways for a lease period of 45 years, it failed to take off.

    Later, new model was planned by the ministry following meetings with infrastructure and real estate majors.

    Under this plan, Indian Railway Stations Development Corporation and Divisional Railway Managers will redevelop the main station facilities after which the station, along with its land parcels, will be put up for bidding.

    These residential complexes, the source said, was not for penthouses, but for smaller dwellings for people who are dependent on public transport rather than those who want to have personalised vehicles.

    "Its the principle of transit-oriented development. Building densities around transit. It will not be limited to railway employees only," the source said.

    IRSDC will be the nodal agency for the development of stations which is expected to cost Rs. 1.07 lakh crore for the redevelopment of 600 stations.

    Other then residential complexes, railways also envisages malls, shopping arcades, indoor games facilities and even space for socio-cultural events at stations.

State-Run HAL Has Lagged In Delivery Of Sukhois, Jaguars: Air Chief
  • In the midst of a raging controversy over Hindustan Aeronautics Limited or HAL not getting the offset contract in the Rafale deal, Air Force chief Air Chief Marshal BS Dhanoa on Wednesday said the state of relations between the air force and the public sector firm was not meant for public consumption but felt that the company lagged in meeting some production targets.

    "Whether we are happy or unhappy with the HAL is a matter of internal debate. It is not for public debate," he said in New Delhi in response to a media query about the state-owned aircraft manufacturer kept out of the Rafale offset deal.

    Asked what he thought of the HAL's capabilities, Air Chief Marshal Dhanoa said that the company had provided tremendous support to the air force, though it was lagging in meeting its production targets.

    "There has been a slight lag in the delivery schedule of HAL of the contract that they already executed. Sukhoi-30 are three years behind schedule as 25 aircraft are yet to be delivered."

    "Similarly, in Jaguar, we are six years behind, in LCA (light combat aircraft) we are five years behind, in Mirage-2000 upgrade we are two years behind," he said.

    "As far as overall production goes, they (HAL) have met all production targets. In the last financial year, they have met their production target...It is because of their support that we could maintain such a high serviceability and high rate of dispatch of aircraft," the IAF chief said.

    Questions were raised about the capability of HAL when a private firm was preferred over it for the approximately Rs. 30,000 crore offset contract. The state-owned firm was the expected first choice for the contract.

    The opposition has been accusing the Centre for denying HAL the contract and giving it to a newly-incorporated private firm.

    The government has denied any role in the offset contract, saying it was Dassault Aviation, the French manufacturer of the Rafale aircraft, that made the choice.

    Air Chief Marshal Dhanoa, too, on Wednesday said that it was a "corporate decision" made by the manufacturer (Dassault) to give the offset contract to a private firm.

    "The manufacturer has to choose the offset partner. The government or the IAF has nothing to do with it," he said.

Business Affairs

New IL&FS board meet: Will consider all options to revive company, says Uday Kotak
  • Infrastructure Leasing & Financial Services (IL&FS), a debt-laden infrastructure financing and construction company, will consider all available options to revive the firm, its new non-executive chairman said on Thursday.

    The new board of IL&FS does not underestimate the challenge, Uday Kotak told reporters.

    The government replaced the company's entire board on Monday after recent defaults on some of its debt obligations triggered declines in stock and debt markets, leading to concerns about broader risk in the country's financial sector.

    "We have listed down various options available to us as the next steps," said Kotak, who is also the managing director of Kotak Mahindra Bank.

    "Depending on the various assessment of facts, we will be able to take a view on which of the roads to take and there are two or three or four options clearly available with us and you will see them unfold over the new few days and weeks," he said.

    It would take time to revive the company and the new board would try to ensure a fair value for the assets of IL&FS, Kotak said.

    The new board was made aware that there are 348 entities of the IL&FS group, which underscores the task at hand, Kotak said.

    The board also appointed Vineet Nayyar, a former civil servant with a reputation for turning companies around, as its managing director.

    Nayyar, currently executive vice-chairman of Tech Mahindra, helped revive failed computer services company Satyam, also following government intervention.

    The Mahindra group acquired Satyam in 2009.

    Nayyar was also the founding chairman of the state-run gas firm GAIL India Ltd.

All you need to know about Sandeep Bakhshi, the new MD & CEO of ICICI Bank
  • Private sector ICICI Bank's new MD & CEO Sandeep Bakhshi is a man of few words. The 57-year-old Bakhshi, who was brought in as a crisis manager in June this year when Chanda Kochhar went on for an indefinite leave, was already running the bank as its chief operating officer. His reporting was directly to the board members. With Kochhar finally leaving the bank, Bakhshi is the new MD & CEO of the largest private bank in terms of consolidated assets of over Rs 11 lakh crore. Bakhshi has a clear 12-13 years to give to the bank as the retirement age is 70 years in the private sector banks. This long tenure is expected to bring stability and clarity for the institutional investors.

    In a career spanning over three decades, Bakhshi's rise at the private bank was steady. In the initial years, Bakhshi managed the project finance and other businesses when the ICICI Group was a developmental financial institution. He was given a challenging assignment early on in his career when the Group was foraying into sunrise businesses like general insurance in the early 2000 decade. Bakhshi ran the company profitably. ICICI Lombard today is listed on the bourses with a market valuation of Rs 35,000 crore. Bakhshi was briefly brought in the bank as a deputy managing director when Kochhar was in charge. That was after the global financial meltdown. He was later moved to life insurance subsidiary where V Vaidyanathan left to turn entrepreneur. ICICI Prudential Life insurance was a big subsidiary and Bakshi was given charge to handle the sudden exit of its MD & CEO. Bakshi focused on making the company more digital as that was bringing in a big disruption in the industry. Today, ICICI Prudential life is a profitable company with good market valuations.

    Bakhshi was groomed under both N Vaghul and K V Kamath. He was influenced the most by Vaghul's leadership. Bakhshi was among the handful of leaders picked by Vaghul and Kamath to head businesses independently. The talent pool of ICICI Group is well known in the market. In fact, ICICI professionals like Zarin Daruwala, Renuka Ramnath, V Vaidyanathan, Sonjoy Chatterjee, and Kalpana Morparia are all heading big financial services business. Ramnath and Vaidyanathan have turned entrepreneur.

    Bakhshi's elevation is expected to be smooth as he is the senior most professional in the group. Unlike Kochhar's elevation when many seasoned professional left the bank, Bakhshi's senior management team is much junior to him. Vishakha Mulye heads the wholesale banking. Anup Bagchi looks after the retail business. Vijay Chandok takes care of SME and international business. Insiders say Bakhshi commands respect from the team members. His management style is all about delegation. "He allows the team to do the talking," says an insider. Unlike K V Kamath and Kochhar, Bakhshi is also media shy. He is also not a growth manager, but focuses on growth with profitability. Insider informs his message to team when he took over as COO was to focus on customers.

    Some say the biggest limitation of Bakshi will be his banking experience as he was away in subsidiaries in the last two decades. The deterioration in asset quality and retail banking (digital) growth will be the focus area of Bakhshi in the immediate future.

Battle for Essar Steel: Supreme Court allows Numetal, ArcelorMittal to make fresh bids
  • The Committee of Creditors of the beleaguered Essar Steel have been granted a final eight-week window by the apex court to finalise a bid, failing which the steel company will go into liquidation. The Supreme Court today exercised its extraordinary power under Article 142 of the Constitution to allow ArcelorMittal and Russia's VTB Capital-backed Numetal to submit fresh bids for Essar Steel provided they clear their NPA dues in two weeks.

    So basically, steel tycoon Lakshmi Mittal-led ArcelorMittal has to clear the Rs 7,000 crore outstanding debt of the two companies it previously held stakes in, namely Uttam Galva and KSS Petron, in order to be considered eligible to bid.
    A bench comprising Justices RF Nariman and Indu Malhotra held that both the firms were ineligible to bid under amended Insolvency and Bankruptcy Code (IBC) but granted them a fresh opportunity after taking note of the CoC's plea that it does not want liquidation of Essar Steel.

    According to Mint, the top court also diluted the role of the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT), adding that they would step in only after resolution plans were approved by a majority (66%) of the CoC in the eight-week deadline.

    This litigation period will be excluded from the 270-day deadline prescribed for the resolution process under the IBC.

    In September, ArcelorMittal had moved the Supreme Court challenging the NCLAT's ruling that Numetal's second bid was eligible but the same by ArcelorMittal would qualify only if it clears all outstanding dues of the defaulting firms it was previously associated with.
    The company argued that it was eligible for bidding as at the time of putting in its bid it was no longer promoter of Uttam Galva or KSS Petron. Furthermore, ArcelorMittal reportedly wanted the dues repayment to be dependent on bankers negotiating exclusively with it for Essar Steel.

    "It's a vindication of the stand taken by the committee of creditors and one must give credit to the fact that they have stuck to their guns on this one because ultimately the Supreme Court has validated what their initial position was," Suharsh Sinha, partner at AZB & Partners, told BloombergQuint.

    Numetal's first bid had been rejected by Essar Steel's lenders due to the 25% share owned by Rewant Ruia, the son of Essar Steel founder Ravi Ruia, since he was deemed a related party. The Insolvency and Bankruptcy Code (IBC) doesn't allow the participation of bidders connected to companies that have defaulted on debt. JSW Steel bought out this contentious stake ahead of the second bidding round.

    ArcelorMittal's ineligibility in the first round stemmed from the fact that it had sold its 29% stake in Uttam Galva, which was also facing insolvency proceedings, just weeks before submitting its bid for Essar Steel.

    Under Section 29A of the IBC, promoters of companies which have been classified as non-performing assets for over a year cannot participate in the resolution process of any company unless the dues are repaid. Both contenders had since been challenging their ineligibility, while questioning each's others eligibility, at different courts.  The latter boasts the third biggest debt pile (around Rs 49,000 crore) among the first 12 companies identified by the RBI for insolvency proceedings last June.

    Last month, while challenging NCLAT's ruling, ArcelorMittal also sweetened its bid to Rs 42,000 crore. Thereafter, Numetal, which had offered Rs 37,000 crore, asked the Supreme Court for a chance to match ArcelorMittal's bid. The third contender in the race for Essar Steel, Anil Agarwal-led Vedanta Group, has reportedly offered around Rs 30,000-35,000 crore.

Star vs Trai and the broadcaster's dilemma
  • The Indian broadcasters have a bag full of worries. The challenge for them is not just to stay relevant at a time when digital platforms are taking consumers away from television, regulator TRAI is also causing enough worries for them.

    In April this year, the regulator in a bid to bring in transparency had proposed a new tariff framework (which was stayed by the Supreme Court), wherein it would become mandatory for the broadcasters to offer a uniform a-la-carte pricing and they no longer would be able to bundle their not so well performing channels with their high performing channels and FTA channels.

    So, if consumers wish to watch Star Plus or Colours, they are forced to subscribe to other channels from the broadcaster's bouquet, because they are bundled together as a package.

    As per the TRAI ruling, the consumers would have the luxury to only pay for just what they want to watch. "The TRAI ruling is certainly in the interest of the consumer, but it will hurt the interests of the broadcasters," points out Pankaj Krishna, CEO of media analytics company, Chrome. The broadcasters prefer the bundling approach so that they can push their channels to as many homes as they can.

    "If Star Movies has a reach of 40 million homes, its reach could fall to 2 million if the TRAI ruling is implemented. Not everybody would necessarily want to subscribe to the channel in a-la-carte environment," Krishna further explains. If the reach of the channel drops it will not just be loss of subscription revenue, it will also impact advertising revenue, as one of the most important criteria for an advertiser to invest money in a channel is its reach.

    No wonder the country's biggest broadcast network, Star India, has moved the Supreme Court against this ruling. The court's verdict is expected any day and if it goes against Star, it is going to be a huge loss for the broadcasters at large. The regulator has also proposed a set of norms against carriage fees that the broadcasters pay the cable operators to carry their channels.

    As per a Chrome report, the carriage fee paid by each channel is in the region of Rs 6-7 per subscriber, per annum. As per the TRAI ruling the carriage fee can't be more than 20 paise per subscriber and a broadcaster which has a reach of more than 20 per cent will not be allowed to pay carriage fees. But the irony here is that the broadcasters are more than willing to pay carriage fee in order to ensure that more consumers view their channel.

    In response to the TRAI ruling of having a uniform a-la-carte pricing and not being able to club their FTA channels with their pay channels, broadcasters such as ZEE Entertainment had converted their FTA channels into pay channels on cable and DTH networks but they continued as FTA channels on the government-run DD Free Dish.

    But as per the TRAI ruling, all cable and DTH operators have to offer the first 100 FTA channels at a flat rate of Rs 130, and this has become a concern for the distribution companies because the same channels are absolutely free on DD Free Dish.

    "Earlier, DD catered mostly to rural markets, but today with a reach of close to 40 million it is no longer a rural phenomenon. If DD offers FTA channels free then DTH and cable operators could lose customers," points out a senior official of a leading DTH operator.

    The Supreme Court verdict on the TRAI ruling is bound to have a huge impact on the broadcast industry. Will TRAI succeed in bringing in the much needed transparency into the system? Let's wait and watch.

Govt to take Rs 10,500 crore hit due to Rs 1.5 excise duty cut
  • The central government will bear a revenue loss of around Rs 10,500 crore due to today's cut in excise duty on petrol and diesel prices. The government has reduce the central excise duty levied on petrol and diesel by Rs 1.50. The consumers, however, will see an effective drop of Rs 2.50 in fuel prices since the government has asked the oil marketing companies to cut another Re 1 per litre.

    "Centre's revenue collection is intact due to expansion of tax base not due to rate hike. The total impact of the excise duty cut on us for the entire fiscal would have been Rs 21,000 crore. Since this will be applicable only for around half the fiscal, the decision will put a burden of Rs 10,500 crore on us, which is only 0.05 per cent of the fiscal deficit. Absrobing this burden of Rs 10,500 crore while maintaining the fiscal deficit target, I am confident will not be a problem with the increased collections," Jaitley said.

    Justifying the minimal relief in fuel prices, Jaitley said "We have to react to the situation and give relief without impacting the fiscal deficit. We cannot do it at the cost of financial position and give it when it can absorb it."

    The Centre currently levies a total excise duty of Rs 19.48 per litre on petrol and Rs 15.33 per litre on diesel. VAT varies amongst states. The Central government had raised excise duty on petrol by Rs 11.77 a litre and that on diesel by Rs 13.47 a litre in nine instalments between November 2014 and January 2016 to shore up finances even though the global oil prices fell.

    As per the Congress party, the centre has increased excise duty by over 300 per cent in the past three years. The deal commission comes out to be around Rs 3.66, while VAT varies among states. For Delhi, VAT on petrol, including VAT on dealer commissioner, is around Rs 17.80.

    Experts believe Rs 2.5 cut is nothing but a token relief. Market analysts also say the government is playing to the gallery by cutting fuel by a minimal margin at a time petrol and diesel have been increased by Rs 5.17 and Rs 4.83 respectively, in the past one month alone.

General Awareness

    First Regional Conference on ‘Women in Detention and Access to Justice’
    • What to study?

      For Prelims: About the conference.
      For Mains: Women in prisons- concerns, challenges, issues, need for reforms.

      Context: The Bureau of Police Research and Development (BPR&D), Ministry of Home Affairs is organising the First ever Regional Conference at Shimla on ‘Women in Detention and Access to Justice’ in collaboration with the Prison Department, Himachal Pradesh.

      Objectives of the conference:

      This conference is organised with a view to provide a platform for the prison personnel of all ranks at the national level to share their candid views on various operational as well as administrative issues not only with their counterparts, but also with other experts of national repute in this field.
      The conference also seeks to identify best practices and standards in the working of Correctional Administration to meet new challenges in the present day’s context to bring out prison reforms in objective terms.
      This event would also promote research and developmental activities on the functioning of the Correctional Administration across the country on the one hand and nudge to develop a scientific approach among the various Correctional Administration in a professional manner.

      Stats:

      As of 2015, there are 4,19,623 persons in jail in India, of which, 17,834 (about 4.3%) are women. Of these, 11,916 (66.8%) are undertrial prisoners.
      There is an increasing trend in the number of women prisoners – from 3.3% of all prisoners in 2000 to 4.3% in 2015.
      A majority of female inmates are in the age group of 30-50 years (50.5%), followed by 18-30 years (31.3%).
      Of the total 1,401 prisons in India, only 18 are exclusive for women, housing 2,985 female prisoners. Thus, a majority of women inmates are housed in women’s enclosures of general prisons.
       Need for reforms:

      Women in prisons face greater hardships than their male counterparts due to many factors such as social stigma, financial dependence on their families or husbands etc. These difficulties are further exacerbated when the woman has children.
      Women have to face numerous problems in prisons owing to inadequacy of female staff which often translates to the reality that male staff becomes responsible for female inmates, which is undesirable.
      Women are not provided with meals that are nutritious and according to their bodily requirements.
      Women are at a most disadvantageous position when it comes to their reintegration in society after release. Many are abandoned or harassed post-release, mainly due to the stigma attached with incarceration, which is even more pronounced in cases of women.
      Women also tend to lose ties with their children over the years, due to inadequate child custody procedures. Also, a robust grievance redressal mechanism was required to tackle cases of sexual harassment, violence and abuse against women in jails.

      Way ahead:

      Reforms are needed for improving the lives of women under incarceration including the elderly and the disabled, addressing a wide range of issues pertaining to pregnancy and childbirth in prison, mental health, legal aid, reintegration in society and their caregiving responsibilities among others. In this regard, changes in the National Model Prison Manual 2016 have also been suggested to bring it in line with international standards and norms.

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