25,000 more troops being deployed in J&K- Peerzada Ashiq #GS3 #Security
An additional 25,000 security personnel were ordered to be moved to Jammu and Kashmir, days after Governor Satya Pal Malik said “all was normal”, fuelling a fresh wave of speculation in the State.
According to police sources, a fresh order was directed to security personnel to “work on a build-up at the district levels across the State.” Sources said 25,000 personnel, in addition to the 10,000 troops, were being inducted and split between the Jammu and Kashmir regions.
Sources said there was also a direction to wind up the Amarnath Yatra for the time being. Even many langars (community kitchens) operating in south Kashmir were vacated on Thursday.
Over 40 companies were deployed for the Yatra. A general high alert has been sounded in the State. There is speculation around the Centre’s move to take “significant measures” ahead of the Assembly election and fear of immediate repercussions in the Muslim pockets across the State.
India evaluating Pakistan proposal for consular access to Kulbhushan Jadhav-Kallol Bhattacherjee #GS2 #IR
India is examining Pakistan’s proposal to grant consular access to Kulbhushan Jadhav, a former Navy officer, who was sentenced to death by a Pakistan military court on espionage and terrorism charges in 2017.
Raveesh Kumar, spokesperson of the Ministry of External Affairs, said the established channels were
being used to convey India’s response. “We have received a proposal from Pakistan. We are evaluating the proposal in the light of the judgment of the International Court of Justice (ICJ).
Media reports in Pakistan indicated that Pakistan had agreed to allow an Indian diplomat to meet Mr.
Jadhav at 3 p.m. Friday. However, the Ministry of External Affairs refused to confirm the reports.
On July 17, the ICJ asked Pakistan to grant “without further delay” consular access to Mr. Jadhav. India had been demanding diplomatic access ever since he was arrested on March 3, 2016. It moved the ICJ for consular access and a fair trial.
Pakistan has alleged that he was involved in terrorism-related activities in Balochistan, the largest but trouble-torn province of the country. But India has been maintained that he was abducted from Iran where he was into legitimate business.
Pakistan on Wednesday said it had arrested an Indian in Dera Ghazi Khan. Reports suggested that he had made a statement, admitting to his being an intelligence operative.
Plea in HC challenges triple talaq Bill- Soibam Rocky Singh #GS2 #Governance
Within a day of President Ram Nath Kovind giving accent to the Triple Talaq Bill, a petition was filed in the Delhi High Court challenging provisions in the new law that made giving instant oral triple talaq a criminal offence punishable with jail term of up to three years.
Social activist and advocate Shahid Ali, in his public interest litigation petition, has claimed that the Muslim Women (protection of rights on marriage) Act, 2019 was against both men and women and “amounts to institutionalised discrimination against the largest minority of India.”
Shayara Bano case
Mr. Ali said there is “huge possibility of it being misused, whenever, there is minor matrimonial discourse or claim for maintenance.”
The petition pointed out that the Supreme Court in the Shayara Bano case had already declared the pronouncement of triple talaq as invalid and unconstitutional.
“Once it is declared that the marriage shall not be dissolved by pronouncement of triple talaq, no offence is made out at all,” the petition argued.
“However, the government went many steps further… [and] has made the same a criminal offence, however, without making any arrangement in the said Act for reconciliation between the Muslim husband pronouncing the triple talaq and his wife,” the petition said.
The mere fact of not providing any measure for reconciliation between the Muslim husband pronouncing talaq and his wife is against the government’s own statement of objects and reasons attached to the Act, and also violative of the order of Supreme Court in Shayara Bano case.
Mr. Ali also argued that there are “high chances” of misuse of some Sections of the Act, since, nothing had been provided in the Act to ascertain the truthfulness of the allegations of pronouncement of triple talaq.
In the absence of any safeguards even if there is a minor discord in the marital affairs, the wife may file a false complaint that the husband has pronounced Triple Talaq upon her by oral pronunciation. This, Mr. Ali, said would result in increasing number of desertions instead of dissolution of marriage in the matter of those who are forced to live under unhappy marriages.
Noida gets its first ‘pink toilet’, 10 more to come up #GS2 #SocialIssues
Noida on Thursday got its first ‘pink toilet’ dedicated to women with facilities for sanitary napkins and baby care. The toilet, located in the Sector 50 market. “This ‘pink toilet’ has essentially been made keeping in mind the needs of women and girls. It will remain open from 8 a.m. to 8 p.m. and can be used absolutely free of cost.
There is a vending machine for sanitary napkins in the toilet and it also has a proper disposal system. More such toilets will come up in the city soon and their location is being surveyed. Ten more are expected to come up within the next two months.
Kaziranga tigers: spotlight on official-poacher nexus #GS3 #Environment
An evaluation report on India’s tiger reserves has put the spotlight on an alleged nexus between some officials of Kaziranga National Park and poachers. Kaziranga, a World Heritage Site designated by UNESCO, is more popular as the world’s best address for the one-horned rhino. It is also been a major tiger reserve covering an area of 1,080 sq km.
Prime Minister Narendra Modi had earlier this week released the management effectiveness evaluation reports for tiger reserves across the country, including Kaziranga.
The report says that some staff of Kaziranga Tiger Reserve may sometimes get involved in poaching by helping the poachers. To drive home the point, the report cites the poaching of three rhinos in as many days in November 2017 close to the Tunikati anti-poaching camp under the Burapahar Range.
“When there are 178 anti-poaching camps in a 911-sq-km area, each camp has to protect 5 sq km. Given the resources at the command of the personnel, it should not be difficult to guard the area effectively. Such poaching close to the camps leads to the suspicion of the involvement of officials.
The report also notes Kaziranga’s management weakness in coordinating with forest officials of Karbi Anglong, which runs along the southern boundary of the tiger reserve. This is because the forest
officials of Karbi Anglong, an autonomous tribal council, are not answerable to the heads of Assam’s Forest Department.
The hills of Karbi Anglong not only provide shelter to the animals of Kaziranga during high floods but also cover for poachers, the report said.
Assam Forest Minister Parimal Suklabaidya had informed the 126-member State Assembly that an expert committee had been formed to study the proposal for laying a second track through Deepor Beel, a wetland on the western edge of Guwahati that was listed in 2002 as a Ramsar Site.
The panel will submit its report to the National Green Tribunal, which will decide on whether or not to go ahead with the project.
Bandipur is worth a staggering ₹6,405 cr.- Mohit M Rao #GS3 #Environment
If monetary values could be assigned to tiger reserves, then the Bandipur Tiger Reserve would record a staggering ₹6,405.7 crore annually, says an economic evaluation of tiger reserves released by the
National Tiger Conservation Authority. For every rupee spent on the reserve, the rate of return through various tangible and non-tangible benefits is an incredible 700%.
The study, authored by the Centre for Ecological Services Management at the Indian Institute of Forest Management, estimates the economic valuation of Bandipur and nine other tiger reserves in the country. The objective, states the report, is to enhance tiger conservation by highlighting the holistic economic benefits of protected areas.
Researchers used an array of methods to determine the economic, scientific, educational, cultural and recreational services of tiger parks. For Bandipur, the report notes that every rupee spent on the management of the reserve sees the area generate intangible and tangible benefits amounting to nearly ₹716.3.
The park, it says, generates “flow” benefits of ₹6,405.7 crore annually — translating to around ₹4.41 lakh worth of services per hectare protected.
For instance, the cost saved by the State for conservation, protection and provisioning of water was pegged at ₹2,066.95 crore per year, climate regulation at ₹1,443.21 crore, and genepool protection of ₹1,263.74 crore annually. Other benefits include prevention of soil loss, biological control of disease, encouragement to pollination and others.
Apart from this, the stock of timber, sequestered carbon and genepool protection of species is worth a staggering ₹31,476.15 crore annually in the 1,469.69 sq. km. core and buffer areas of the reserve.
The report estimates that 3.06% of the flow benefits are accrued at the local level, while 16.01% are at the national level. The park also contributes nearly 1,121 billion litres of water to the Cauvery worth ₹2,067 crore per year; while the forests prevent soil loss and nutrient loss that would have cost ₹82.59 crore to rectify.
At the global level the reserve’s forests store 1.2 crore tonnes of carbon (worth ₹8,6958 crore), apart from sequestering 3.45 lakh tonnes of carbon annually (or ₹1,418 crore worth of social cost saved annually).
State’s five tiger reserves get an overall rating of 80.47 in performance #GS3 #Environment
Karnataka’s increase in tiger numbers comes on the back of an increase in protection and conservation
of its five tiger reserves. The Management Effectiveness Evaluation (MEE) report by the National Tiger Conservation Authority (NTCA), which ranks tiger reserves on numerous parameters, shows that the five tiger reserves in Karnataka have an overall score of 80.47, which is a 10% increase from the MEE evaluation in 2014, and reflects “better protection status” of the reserves.
The biggest improvements are in Kali and Bhadra tiger reserves, which have effectively reversed the declining grades shown in the 2014 MEE, when compared with the 2010 report. For Kali, it notes the restrictions in vehicular movement during night time as one of the reasons for the improvement.
However, the report mentions concerns that need to be addressed. For instance, in Bandipur, the NTCA
has called for immediate revival of the Eco-Development Committees (EDC) so as to increase local community participation in conservation efforts.
Of the 112 villages around the reserve, just 22 EDCs are functioning. This has led to poor local participation in conservation.
Local authorities have presented a few “immediate actionable points”, which include reviving and constituting EDCs and provision of ₹50,000 as seed money from the Bandipur Tiger Foundation to make them functional and effective.
Locals bear the brunt of human-wildlife conflict and the Forest Department was heavily dependent on their cooperation in conservation. “The EDCs also help in preventing people from entering the forests, and this reduces human-inducted pressure and disturbance to wildlife habitat.
For instance, the presence of an EDC at Mangala village, which encompasses five smaller villages, has helped in maintaining cordial relations with the staff.
25 science museum vans, rainwater harvesting at monuments among Culture Ministry’s 100-day agenda- Damini Nath #GS1 #Culture #GS2 #Governance
Installing big screens and audio systems at two dozen spots where a large number of devotees gather for prayers or aarti, rolling out 25 science museums on wheels to reach out to rural students, and digging rainwater harvesting pits at over 100 major monuments across the country are all on the Union Culture Ministry’s 100-day agenda.
As a part of the Narendra Modi government’s plan for its first 100 days after returning to power in May, Union Culture and Tourism Minister of State (Independent Charge) Prahlad Singh Patel told The Hindu
that the Ministry would be focusing on constructing three pits each at 123 sites, including the 100 monuments covered under the Adarsh Smarak scheme. He added that greening would also be carried out at these sites, with a focus on planting trees that have long lives and won’t have to be shifted for any future works.
Right now, there are many places where aarti takes place and a large number of people participate, but it is unplanned. We are in the process of providing some screens, audio systems and software. A total of 24 spots, including Har ki Pauri in Haridwar and sites in Uttar Pradesh, Himachal Pradesh and Gujarat among others, would have large screens and audio systems.
Ministry would deploy 25 mobile vans that will house science museums. So far, the Ministry operates 23 such vans, but they tend to visit State capitals and metropolitan areas only.
The 25 new vans would be deployed in the 115 “aspirational districts”, as identified by the Centre, so that children in rural areas have access to science education. The official said the programme had been able to operate 23 vans since it was started in 1965, but now the Ministry was aiming to add 25 vans in 100 days.
Normal rains likely in August, September #GS1 #Geography
The monsoon is expected to be normal in August and September. Quantitatively, the rainfall across the country as a whole during the two-month period is likely to be 100% of the Long Period Average (LPA) with a model error of plus or minus 8%. The rainfall in August is likely to be 99% of the LPA with an error margin of plus or minus 9%.
The LPA of the rainfall over the country as a whole for the second half of the monsoon season (August to September) based on the 1961-2010 period is 42.83 cm.
The probabilistic forecast suggests that the rainfall across the country during the second half of the Southwest Monsoon season is most likely to be normal (94-106% of LPA) with a probability of 45%. In April, the IMD had made the forecast of a normal monsoon.
The overall rainfall deficiency in the country until July 31 was minus 9%. The deficiency on June 30 was 33%. The coming two months are expected to be good as El Nino has entered a neutral phase and the
Indian Ocean Dipole (IOD) is also positive.
Currently, the sea surface temperatures (SSTs) as well as the atmospheric conditions over equatorial Pacific Ocean indicate El Nino Southern Oscillation (ENSO) neutral to borderline El Nino conditions.
“In addition to ENSO conditions over the Pacific Ocean, other factors such as the Indian Ocean SSTs (sea surface temperatures) have also some influence on Indian monsoon. Currently, positive Indian Ocean Dipole (IOD) conditions are prevailing over equatorial Indian Ocean,” it said.
El Nino is associated with heating of the Pacific waters while a positive IOD is linked to cooling of the Indian Ocean waters. Both are believed to impact the monsoon.
Is banning cryptocurrencies the solution? #GS3 #Economy
What do you think about the Garg panel’s overall guidelines? The volatility of private cryptocurrencies is one of the reasons being given to ban them.
Parag Waknis: Volatility doesn’t sound like a good rationale to ban cryptocurrencies because if cryptocurrencies are volatile, so are many other asset classes. We do not ban investments in any other asset class just because it is volatile. The decision of whether to invest in an asset or not should be left to the investor. The risk return calculation should be done by the investor, not the government.
Also, banning the consumption of a good or service doesn’t really mean that people will stop consuming it. The market for the good or service simply goes underground and becomes hard to track. The market continues to exist, but the government cannot track it or tax it to gain revenue. This applies to cryptocurrencies as well.
It is true that the price of cryptocurrencies, especially bitcoin, has been volatile. And that’s primarily because of their design. Bitcoin, for example, is designed in such a way that its supply rises rapidly first, but later very slowly, before stopping at a certain point.
You said that banning a currency would push it into the black market. That would also make it much harder for the government to regulate it, right?
PW: Yes, exactly. In most cases, if the government feels that there is enough rationale to regulate the consumption of a commodity or a service or investments in a crypto asset, the best way forward is to come up with a regulatory framework that has incentives set right for the users. Maybe you can have a tax on capital gains from investing in crypto assets, just like you have taxes on investments in other assets.
The Garg panel, while being opposed to the idea of private cryptocurrencies, still seems to be a fan of the blockchain technology. It has called for a national cryptocurrency backed by the RBI, which would probably be based on the blockchain.
Anil Antony: The Garg panel opposing cryptocurrencies seems like yet another case of a group of people not really understanding a concept and hence trying to ban it. Most people equate cryptocurrencies with blockchain, but there is a huge difference between them. The cryptocurrency is just one application of the underlying blockchain technology. The blockchain technology has a lot more potential beyond cryptocurrencies.
An issue raised against cryptocurrencies is that they aren’t really backed by an underlying commodity or a sovereign government. But do you think it’s absolutely essential that a currency needs to be backed by a commodity or an institution for it to be widely accepted in the market?
PW: No. The way we define money is that it is a generally accepted medium of exchange. So, it’s just trust that basically drives the value of money. There is nothing to back it, except trust. When two strangers have no other way of transacting with each other, when there’s no way they can verify the creditworthiness of each other, money helps. That’s all that we basically need. We need trust for that.
Now, what does a crypto asset or a cryptocurrency offer? It is right that it is not backed by anything. But it doesn’t really require any backing in the sense that, as long as people hold the expectation that a particular asset will have value, it is sufficient.
So is it the value that people think the currency will possess in the future that really drives its value?
PW: Exactly. Yes. Cryptocurrencies allow people to conduct anonymous transactions. The price of bitcoin, for example, is driven by the access to the anonymity that it offers its users. People may also want to keep their wealth in some asset that gains in value over a period of time. So that is the worth or the “right” that people are paying for when they’re buying cryptocurrencies.
There are also cases where fiat money has retained value even when the bank has ceased to exist. For example, in Somalia, the central bank and all the concerned institutions had ceased to work at some point.
But people still continued to value the Somalian currency. So there was no backing at all for the currency, but people still believed that it had value and they continued to use the currency in transactions. So the strength of a particular asset boils down to what people think about it.
When talking about anonymity, the common objection to cryptocurrencies is that they can be used to finance various criminal activities. So, do we require government regulations to prevent their misuse, or are there other market mechanisms to deal with the problem?
PW: I have done some research linked to this using money search models, where there is a set of competing monies, which could also be cryptocurrencies, and I basically show that there is a certain equilibrium where competing suppliers of cryptocurrencies would behave in a disciplined way.
Theoretically, cryptocurrency providers could issue an unlimited amount of their money. But they’re competing against each other, so the competition forces them to restrict their supply to a minimal amount that would help maintain the value of their currency. Thus the discipline imposed by market competition can prevent cryptocurrency providers from overissuing their currencies.
We can also think about discipline in terms of reputation effects. For example, if there is a paper currency, and it turns out that it can be used to finance, let’s say, crime, terrorism, or anything similar, there is the reputation of the supplier at stake.
So there are some ways by which the market can discipline cryptocurrencies. But I think regulation, in terms of having the right rewards and punishments in place, would help. Not actions like banning stuff.
- Just to add to this… right now, one of the most comprehensive sets of regulations surrounding this debate on cryptocurrencies being used for various nefarious activities is being discussed across the world. It is one of the biggest concerns everywhere. One of the most comprehensive sets of regulations for cryptocurrencies is being brought in by the European Union. The EU is putting in a bunch of regulations to tackle money laundering, and it is called the AMLD-5.
It is a bunch of norms to make crypto transactions more secure. It has a lot of very stringent KYC regulations and self-declaration laws which every holder of a crypto wallet or user needs to adhere to. Crypto exchanges are all expected to maintain a database that is transparently shared between countries.
It is not foolproof, but the EU has started creating a bunch of regulations that could become stronger over time. This could be the best way to go forward rather than putting a blanket ban on cryptocurrencies, because the presence of cryptocurrencies is very important for the further development of the blockchain.
When you impose a blanket ban on private currencies, thus effectively nationalising the market for cryptocurrencies, what exactly are the implications for innovation?
- In 2018, in the Silicon Valley alone, almost $2.9 billion worth of private venture funds have gone into blockchain start-ups. In tech hubs across the world, we are seeing billions pumped into the blockchain technology. In this scenario, if we decide to put a blanket ban on all cryptocurrencies, then our technology entrepreneurs will suddenly lose the incentive to work in the sector.
You simply can’t just build blockchain applications out of thin air. Right now, currencies are the only viable practical application of the blockchain technology even though it can be extrapolated to a lot of other sectors. So, for the sake of innovation, I think even if the government is bringing in a state-backed currency, it will be better if the other currencies are also allowed to operate with sufficient regulations.
Also, when we are speaking about a country like India, in terms of size, cryptocurrencies constitute a very, very minor share of the total amount of money that is already being used to carry out various activities in the black economy. But the potential rewards that could come out of the blockchain technology are big.
If cryptocurrencies form such a minuscule part of the black economy, why are policymakers so concerned about cryptocurrencies being used to finance criminal activities?
- I would say nobody really expected cryptocurrencies to become such a big factor in such a short period of time. Right now, the global market capitalisation of cryptocurrencies is almost $120 billion.
And that’s just the tip of the iceberg, it could get way bigger over time.
What impact will cryptocurrencies have on the central bank’s control over monetary policy? Is there a good case for a national cryptocurrency issued by the central bank, as proposed by the Garg Panel?
PW: People will move to alternative assets and seek more anonymity only if they lose trust in government institutions. So, as long as the trust is maintained, monetary policy doesn’t face any particular threat from cryptocurrencies.
When it comes to a central bank-issued digital currency, there is a loose consensus, especially among monetary economists from the New Monetary School, that there is no case for governments issuing cryptocurrencies because it would create a lot of problems in the form of contradictions in existing regulations and the government will have to deal with severe mismatches in regulations.
Secondly, there are reputation effects. A digital currency issued by the RBI that gets misused by criminals can affect trust in the existing fiat currency protocol. I don’t think a central bank would want to take that risk.
Rajya Sabha passes National Medical Commission Bill #GS2 #Governance
The Rajya Sabha cleared the National Medical Commission (NMC) Bill with a crucial amendment brought in by the government to increase representation of States in the new body, as demanded by the Opposition.
The Bill was passed by a voice vote. The Lok Sabha had earlier cleared the proposed law on July 29. The NMC will replace the Medical Council of India (MCI).
In his reply to the debate, Union Health Minister Harsh Vardhan said the State Medical Council representation was being increased from five to nine members and State University representation from six to 10 members.
Seeking to alleviate concerns on NEET, Mr. Vardhan said it was already an institutionalised mechanism for the successful conduct of tests in 13 languages. Its syllabus was decided by considering the curricula of State Boards and it was being improved continuously.
The new body, after the law is implemented, will be constituted in nine months and in the next three years, it will set up the mechanism for conducting the common final year examination or the National Exit Test (NEXT) for all MBBS students. Based on the results, the students will get their degrees and licence to practise (after an internship). Performance in the Theory paper will decide eligibility for admission to post-graduation courses.
On the issue of NMC deciding fee/other charges of 50% seats in private institutions, the Minister clarified that the body would make rules to cap the fees for other seats. The State would enter into memoranda of understanding with private colleges to regulate fee structure for the other 50% seats.
Clarifying the doubts on proposed issuance of limited licences to Community Health providers to practise medicine, Mr. Vardhan said the concept had already been implemented in many countries, including developed nations. Stringent measures had been introduced to punish quacks.
President Ram Nath Kovind gives assent to triple talaq Bill #GS2 #Governance
President Ram Nath Kovind has given his assent to the Triple Talaq Bill that makes giving instant oral triple talaq or talalq-e-biddat a criminal offense with provisions of jail term up to three years. The triple talaq law or the Muslim Women (Protection of Rights On Marriage) Act, 2019, has come into effect retrospectively from September 19, 2018.
To check misuse, the government argued, the police takes cognisance only if the complaint is filed by the aggrieved woman or any of her relation by blood or marriage. The Bill also provides for bail by a magistrate but only after hearing the aggrieved woman.
The aggrieved woman is entitled to demand a maintenance for her and her dependent children under the Act.
India unhappy with U.S. aid to Pakistan #GS2 #IR
India on Thursday expressed “grave concern” over the recent U.S. military assistance to Pakistan, and stated that it had conveyed its concerns to Washington.
We have taken up the matter with the U.S. Ambassador in Delhi, as well as with the U.S. government in Washington through our Ambassador. We have expressed grave concern over U.S. military assistance to Pakistan.
The U.S. side has told us that the proposed sale does not indicate any change in the U.S. policy of maintaining a freeze in military assistance to Pakistan.
The U.S. had publicly stated that the proposed sale was intended to enable it to continue technical and logistics support services to assist in the oversight of the operations of F-16 fighter aircraft in Pakistan’s inventory.
However, official sources emphasised that the concern expressed was not just for the supply of F-16 parts, but for the “signs of growing military cooperation and resumption of military supplies” by the U.S. to Pakistan.
Last week, days after Pakistan Prime Minister Imran Khan’s visit to Washington, the State Department approved a military assistance package for “continued support” of the F-16 programme.
The State Department has made a determination approving a possible Foreign Military Sale to Pakistan for Technical Security Team (TST) in continued support of the F-16 programme for an estimated cost of $125 million,” the Defense Security Cooperation Agency said in a statement after delivering the required certification notifying Congress of the possible sale on July 26.
Pakistan, which has long operated the F-16s, recently deployed them against India during the aerial engagement on February 27, a day after the Balakot air strike by India.
Rains, global growth risks behind downward tilt’- Manojit Saha #GS3 #Economy
What has changed in the last three months for growth projections to be revised downward by 20 bps to 6.9%?
DKJ: Firstly, the weather gods have not been very favourable. July and August are the two critical months and July was not a great month. Our base forecast assumed monsoon will be normal and well-distributed as projected by the IMD, which is not the case as it turned out to be.
So we have given it a downward tilt. Second is the global environment. The way global central banks are cutting rates indicates there is a downside risk to global growth. The recent IMF forecast also spills over to us.
What are the upside and downside risks to the growth forecast of 6.9%?
DKJ:Well, upside does not seem to be visible right now. Downside is clearly if August monsoon does not play out well, that is going to pull down growth further. Or, if oil prices start rising. Because global growth is weak and geo-politics has a role to play. What happens to oil prices will be a mixture of downward drift from weakening growth but possibly an upward drift from geo-political issues that are playing out currently. So, oil is a risk.
Finally, the financial sector is also not fully capable of supporting growth. So, that also remains a risk which needs to be carefully monitored. The short-term indicators in the first quarter are weaker than what we expected, which will pull overall growth down for the financial year.
You have mentioned sluggish high frequency indicators as a factor for growth revision.
Can you throw some light?
DKJ: You look at the PMIs, IIP growth, export growth — these are numbers that come out on a monthly basis and on top of that core inflation has come out quite weak. That is a reflection of weakness in demand.
- To have an idea of the micro picture and the corporate level, we looked at 800 listed companies, which is a fairly large sample of corporate India. What we noticed is that, after 4-5 years, the revenue and EBIDTA growth in 2018-19 had gone into double digits, increased from a average of 6-7% to 11% in 18-19. Added to that was the benefit of commodity prices, based on which the profitability was also fairly robust, at around 8-9%.
But, what has happened in the last few quarters is that the underlying sentiment has weakened. We have also seen weakness in income levels. If we were to take the employee cost of these 800 companies as a proxy, we are seeing a sequential decline from low teens to mid-single digits over the last few quarters. This means income growth is low and that is adding to sentiments being weak and compounded by the entire crisis in the NBFC sector which typically provides a fillip to consumption.
All of these have resulted in slower growth in consumer discretionary spend, and especially where the ticket size is higher, we are seeing a sharp drop. In the lower price segment of consumer discretionary, like AC or refrigerator, or consumer staples like FMCG, we are seeing a slowdown, but the pace is relatively less severe there.
What needs to be done for sentiments to improve?
- For all of these to revive, one needs the sentiment needs to improve. Probably the financing piece should also ease. Also, there should be more growth and income visibility for both urban and rural India. That looks difficult this year. Because of this, we are anticipating the corporate revenue growth to moderate to 7-8% this year from 11% last year and the profitability also to be about 7-8%.
What is the policy prescription for reviving investment demand?
- For investment demand to kick in, corporate capacity utilisation levels need to be much higher. We are seeing that the trend is slightly inching up, closer to mid-70s, whereas in the past we have seen fresh capex kicking in only when it is closer to 80%. While we are close to it, we are still sometime away. If the overall sentiments are good, you would see some capex, but the sentiment is weak.
The second is corporate credit profiles have improved in the last three four years. In the ideal situation, better credit profile and relatively benign interest rate scenario, one would have seen some green shoots, but because the sentiment is weak and peak capacity utilisations still not reached, we believe capex cycle is another 18-24 months away.
Do you think only monetary stimulus is sufficient for reviving growth? Or, is fiscal stimulus need of the hour?
DKJ: Fiscal room is very limited. We have breached the FRBM target in the last two years. So, to spend your way of the current downturn is difficult. That is why you are leaning more on the monetary policy.
But monetary policy cannot in itself revive investment demand. Since consumption demand is slowing down, as a result capacity utilisation which was improving, will now be stable or may also decline, depending on how deep the slowdown goes. Clearly in this environment, where there is uncertainty, investors typically hold back investments. First casualty of uncertainty from a business perspective is investments.
Manufacturing expands faster on fresh orders #GS3 #Economy
Manufacturing activity expanded at a quicker rate in July due to an increase in new orders and the resultant scaling up of production by companies. The Nikkei India Manufacturing Purchasing Managers’ Index came in at 52.5 in July, up from the 52.1 in June. A reading over 50 indicates an expansion while one below 50 denotes a contraction.
Companies scaled up production in response to a quicker upturn in factory orders. This, coupled with optimistic growth projections, underpinned job creation and an uptick in input purchasing.”
Rising from 52.1 in June to 52.5 in July, the IHS Markit India Manufacturing Purchasing Managers’ Index was consistent with a further strengthening in the health of the sector. “The latest reading was slightly higher than the average for calendar year 2018 (52.3), but below its long-run trend (53.9).”
The report said consumer goods producers led the upturn in July, for the third consecutive month, adding that even the intermediate goods makers saw a stronger improvement in business conditions in July.
The capital goods sub-sector dipped into contraction, with lower sales causing reductions in output and quantities of purchases, while job creation came to a halt,” the report said.
Survey participants linked the uptick in growth to a pick-up in demand, mostly stemming from successful marketing efforts, competitive pricing and favourable public policies. Ms. de Lima added that the underlying data showed that the main impetus for sales growth was coming from the domestic market, with international orders increasing the least in 15 months.
New export orders also continued to rise, but here a slowdown in growth was noted,” the report said. “In fact, external sales rose to the least extent since April 2018 as factories took a hit from subdued global trade flows.
New research could show the way to deciphering Indus script- Shiv Sahay Singh #GS1 #Culture
A majority of the Indus Valley inscriptions were written logographically (by using word signs) and not by using phonograms (speech sounds units).
The paper, titled Interrogating Indus inscription to unravel their mechanism of meaning conveyance, points out that the inscriptions can be compared to the structured messages found on stamps, coupons, tokens and currency coins of modern times.
Discovered from nearly 4,000 ancient inscribed objects, including seals, tablets, ivory rods, pottery shards, etc., the Indus inscriptions are one of the most enigmatic legacies of the Indus Valley civilization which have not been deciphered due to the absence of bilingual texts, extreme brevity of the inscriptions, and ignorance about the language(s) encoded by Indus script.
This article mainly focuses on understanding how Indus inscriptions conveyed meanings, rather than on deciphering what they conveyed.
For the study, Ms. Mukhopadhyay has used the digitized corpus of Indus inscriptions compiled by well-known epigraphist and Indus scholar Iravatham Mahadevan. She studied it using computational analyses and various interdisciplinary measures.
Analysing the brevity of the inscriptions, the rigid positional preferences maintained by the signs of the inscriptions, and the co-occurrence of restriction patterns demonstrated by certain classes of Indus signs, she infers that such patterns can never be phonological co-occurrence restrictions.
Phonological co-occurrence restrictions refers to two or more sound units that cannot be pronounced together. “A very compelling, nearly unassailable proof of the logographic nature of Indus inscriptions comes from the co-occurrence restriction patterns maintained within them,” the paper states.
In the publication that runs into 37 pages, Ms. Mukhopadhyay classifies the signs into nine functional classes. Based on various archaeological evidence, she further claims: “The inscribed seals and tablets were used in some administrative operation that controlled the commercial transactions prevalent in the trade-savvy settlements of the ancient Indus valley Civilisation.
These inscriptions can be compared to the messages found on stamps, coupons, tokens and currency coins of modern times, where we expect formulaic texts that encode certain type of information in some pre-defined ways, rather than freely composed narrative.”
A common perception among some scholars is that the Indus script is logo-syllabic, where one symbol can be used as a word sign at one time and as a syllable-sign at another. This method, where a word-symbol also gets sometimes used only for its sound value, is called the rebus principle.
For example, you can combine the pictures of a honey bee and a leaf to signify the word “belief” (bee+leaf). According to Ms. Mukhopadhyay, though many ancient scripts use rebus methods to generate new words, the inscriptions found on the Indus seals and tablets have not used rebus as the mechanism to convey meaning.
The researcher said that the popular hypothesis that the seals were inscribed with Proto-Dravidian or Proto-Indo-European names of the seal-owners does not hold water. It is not that no other Indus scholar has proposed the logographic theory before.
Mr. Mahadevan himself tried to read these inscriptions logographically for decades, just that the logographic theory was not articulated well enough. Ms. Mukhopadhyay said her current work could serve as a basis in future for the deciphering of the script.
Japan approves growing human organs in animals for first time- Agence France-Presse #GS3 #SnT
Scientists in Japan will begin trying to grow human organs in animals after receiving government permission for the first study of its kind in the country.
The cutting-edge — but controversial — research involves implanting modified animal embryos with human “induced pluripotent stem” (iPS) cells that can be coaxed into forming the building blocks of any part of the body.
It is the first step in what researchers caution is a very long path towards a future where human organs for transplant could be grown inside animals.
The research led by Hiromitsu Nakauchi, a professor of genetics at Stanford University, is the first of its kind to receive government approval after Japan changed its rules on implanting human cells into animals.
Japan had previously required researchers to terminate animal embryos implanted with human cells after 14 days and prevented the embryos from being placed into animal wombs to develop.
But in March those restrictions were dropped, allowing researchers to seek individual permits for research projects. “It took nearly 10 years, but we are now able to start the experiment. The research involves generating animal embryos — mice, rats or pigs — that lack a particular organ such as a pancreas.
The modified embryos are then implanted with human iPS cells that can grow into the missing pancreas. The embryos would be transplanted into wombs where they could theoretically be carried to term with a functioning human pancreas.
Significance of US Federal Reserves rate cut and its impact on India #GS3 #Economy
Late Wednesday evening India time, the United States Federal Reserve announced a quarter-percentage-point cut in interest rates — the first rate cut in 11 years.
What makes this rate-cut action — the first since the global financial crisis broke in 2008 — more significant is that barely six months previously, the US Fed was on a hawkish rate-hike trajectory, moving in the direction of bolstering the debt-laden American economy.
Why the rate cut by the Fed?
The Fed has cited concerns about the global economy and muted US inflation among the key reasons for the decision to cut rates, and signalled a readiness to lower borrowing costs further if needed. At the same time, the central bank has underlined that the US economy grew “at a healthy pace” over the first six months of the year.
Financial markets had expected the quarter-percentage-point rate cut, which lowered the US central bank’s benchmark overnight lending rate to a target range of 2%-2.25%.
Does the cut indicate a shift in policy?
The cut in policy rates follows months of pressure from US President Donald Trump, who has been pushing the American central bank for a cut in rates to stoke growth. Powell has repeatedly pledged to follow economic data, and has resisted the nudges from the President — only to change course sharply now.
“Information received since the Federal Open Market Committee met in June indicates that the labour market remains strong and that economic activity has been rising at a moderate rate,” the Fed said in its statement. “Job gains have been solid, on average, in recent months, and the unemployment rate has remained low.”
The Federal Open Market Committee (FOMC) is a panel within the Fed that is responsible for setting policy rates. The ambiguity in the Fed was reflected somewhat in the vote on the decision, with two members of the 10-member FOMC opposing the decision to cut rates.
The decision failed to impress Trump, who has been calling for a big rate cut. The President scoffed at Powell, posting on Twitter: “What the Market wanted to hear from Jay Powell and the Federal Reserve was that this was the beginning of a lengthy and aggressive rate-cutting cycle which would keep pace with China, The European Union and other countries around the world… As usual, Powell let us down… We are winning anyway, but I am certainly not getting much help from the Federal Reserve!”
What will be the impact on emerging market economies, including India?
Theoretically, a rate cut in the US should be positive for emerging market economies (EMEs), especially from a debt market perspective. Emerging economies such as India tend to have higher inflation and, thereby, higher interest rates than those in developed countries such as the US and Europe.
As a result, FIIs would want to borrow money in the US at low interest rates in dollar terms, and then invest that money in bonds of emerging countries such as India in rupee terms to earn a higher rate of interest. When the US Fed cuts its interest rates, the difference between the interest rates of the two countries increases, thus making India more attractive for the currency carry trade.
A rate cut by the Fed would also mean a greater impetus to growth in the US, which could be positive news for global growth. But this could also translate into more equity investments in the US, which could temper investor enthusiasm for emerging market economies in a proportionate manner.
How did the stock markets react; why?
Indian stocks tanked on Thursday. While domestic factors such as dismal July car sales data and slower GDP growth projections played a role in the selloff, one of the major factors was Powell’s characterisation of the rate cut as a mid-cycle adjustment. Markets have taken this as a sign that sharp further cuts were not imminent.
Thursday’s sell-off dragged benchmark indices to fresh five-month lows, with the BSE Sensex slipping below the 37,000 mark. The broader Nifty50, too, breached the 11,000 mark in the intra-day trade.
Bonds in India too, fell as investors trimmed bets on aggressive interest-rate cuts in high-yield markets after the signal from the US Fed.
The sharp fall in yields of government securities over the past month have already priced in the Fed’s action. A major 50 bps cut by the RBI expected next week will likely trigger a further rally in the bond market.
(As investors buy government bonds, prices increase, and yields fall. A lower yield indicates lesser risk, but if the yield offered by a bond is higher than what it was when issued, there is a chance that the government that issued the instrument could be financially stressed and may be unable to repay the capital).
According to analysts, there are also concerns that if Asian emerging market currencies such as the rupee continue to weaken sharply against the dollar, that may result in central banks such as the RBI turning more cautious about cutting the policy rate too aggressively.
The Fed’s tempered outlook on rate cuts found a reflection in the US markets. The Dow Jones Industrial Average and the S&P 500 lost over 1% after the statement.
Asian markets traded mostly lower Thursday, with Hong Kong’s Hang Seng falling 0.7% and the Shanghai Composite 0.8%. Japan’s Nikkei, however, bucked the trend. Britain’s FTSE 100 fell 0.2% and Germany’s DAX dropped 0.1%. But France’s CAC 40 rose 0.4%.
In a statement issued at the end of its two-day policy meeting, the Fed said it had decided to cut rates “in light of the implications of global developments for the economic outlook as well as muted inflation pressures”. It “will act as appropriate to sustain” the record-long US economic expansion, the central bank said.
A cut up to at least 75 basis points in the Fed funds rate had been expected by the end of the year, with the rate-cut cycle beginning from August. (One bps is equivalent to one-hundredth of a percentage point.) Fed Chairman Jerome Powell, however, underlined that the rate cut was merely a “mid-cycle adjustment to policy”, thus ruling out multiple sequenced cuts in rates.
The rise of unemployment rate, within various religious groups #GS3 #Economy
Union Minister for Minority Affairs Mukhtar Abbas Naqvi presented in Lok Sabha data on the rates of unemployment across major religious groups over the last three unemployment surveys conducted by the National Sample Survey Organisation (NSSO) and the Periodic Labour Force Survey (PLFS).
The three sets of data correspond to the Employment and Unemployment Surveys conducted over the 66th Round (between July 2009-June 2010) and 68th Round (between July 2011-June 2012) by the NSSO as well as the PLFS (between July 2017-June 2018).
The unemployment rates have been disaggregated for males and females as well as urban and rural areas.
Workers in the “usual status” category include (a) persons who worked for a relatively large part of the 365 days preceding the date of the survey, and (b) persons from among the remaining population who had worked for at least 30 days during the reference period of 365 days preceding the date of the survey.
Category (a) refers to “principal status” and the category (b) to “subsidiary status” and the “usual status” definition includes both. As such, usual status is a more relaxed measure of unemployment. For instance, some of the unemployed under “principal status” might be working in a subsidiary capacity.
What ICJ ordered; Pakistan has ‘offered’ to India #GS2 #IR
Pakistan has “offered” India consular access to Kulbhushan Jadhav, who has been in jail in Pakistan since March 2016. The former Indian Navy officer was sentenced to death by a Pakistani military court on charges of espionage and terrorism. Late Thursday evening, India was “evaluating” the Pakistani proposal.
The Hague-based International Court of Justice (ICJ) had ordered on July 17 that Pakistan must undertake an “effective review and reconsideration” of Jadhav’s conviction and sentencing, and grant consular access to him without delay. The ICJ upheld India’s stand that Pakistan is in egregious violation of the Vienna Convention on Consular Relations, 1963.
What is the concept of “consular access”?
Consular access simply means that a diplomat or an official will have a meeting with the prisoner who is in the custody of another country. Usually, during the meeting, the diplomat will first confirm the identity of the person, and will then ask some basic questions — on how he/she is being treated in custody, and what he/she wants.
Depending on the response, the diplomat/official will report back to his/her government, and the next steps will be initiated.
The principle of consular access was agreed to in the 1950s and 60s. The Vienna Convention on Consular Relations (VCCR) was framed in 1963, at the height of Cold War. This was a time when “spies” from the US and USSR were caught in each other’s countries and across the world, and the idea was to ensure that they were not denied consular access.
All countries agreed to the principle, and more than 170 have ratified the Vienna Convention, making it one of the most universally recognised treaties in the world.
But, its implementation has faced challenges. While international law has long recognised the right of missions to assist and protect its nationals detained abroad, the ability of a consulate to provide effective aid has been heavily dependent on the prompt receipt of information of the detention, and timely access to the detainee.
Under Article 36 of the VCCR, at the request of a detained foreign national, the consulate of the sending State must be notified of the detention “without delay”. The consulate has the right “to visit a national of the sending State who is in prison, custody or detention, to converse and correspond with him and to arrange for his legal representation”.
No time interval is indicated for granting consular access. But it must be provided in all cases where a foreigner is “arrested or committed to prison or to custody pending trial or is detained in any other manner”, regardless of the circumstances or charges.
Indian diplomats in Islamabad were discussing the terms and conditions of the consular access to be provided to Jadhav.
The key issues on the table: how many Indian officials would conduct Jadhav’s interview; for how long would they meet him; would Pakistani officials other than security personnel be present as well; would there be a glass partition between them and Jadhav; would they be allowed to have physical contact with him, etc.
After the ICJ order, the Pakistan Foreign Ministry had said Jadhav had been informed of his rights under Article 36, Paragraph 1(b) of the VCCR. It had said that Pakistan would grant consular access to him “according to Pakistani laws”, the modalities for which were being worked out.
India is arguing that Article 36, Paragraph 1(a) of the VCCR says “consular officers shall be free to communicate with nationals of the sending State and to have access to them. Nationals of the sending State shall have the same freedom with respect to communication with and access to consular officers of the sending State”.
India has asked Pakistan to grant “full consular access” to Jadhav in “full compliance and conformity” the ICJ verdict and the Vienna Convention. India wants to ensure that the meeting does not become a sham like the one in December 2017, when Jadhav’s mother and wife visited him.
One tribunal for all river water disputes: why the proposal, how it will work #GS2 #Governance
Lok Sabha gave its approval to a proposal to set up a permanent tribunal to adjudicate on inter-state disputes over sharing of river waters. The Bill cleared by Lok Sabha seeks to make amendments to the Inter-State River Waters Disputes Act of 1956 that provides for setting up of a separate tribunal every
time a dispute arises. Once it becomes law, the amendment will ensure the transfer of all existing water disputes to the new tribunal. All five existing tribunals under the 1956 Act would cease to exist.
Why the change
The main purpose is to make the process of dispute settlement more efficient and effective. Under the 1956 Act, nine tribunals have so far been set up. Only four of them have given their awards. One of these disputes, over Cauvery waters between Karnataka and Tamil Nadu, took 28 years to settle.
The Ravi and Beas Waters Tribunal was set up in April 1986 and it is still to give the final award. The minimum a tribunal has taken to settle a dispute is seven years, by the first Krishna Water Disputes Tribunal in 1976.
The amendment is bringing a time limit for adjudicating the disputes. All disputes would now have to be resolved within a maximum of four-and-a-half years.
The multiplicity of tribunals has led to an increase in bureaucracy, delays, and possible duplication of work. The replacement of five existing tribunals with a permanent tribunal is likely to result in a 25 per cent reduction in staff strength, from the current 107 to 80, and a saving of Rs 4.27 crore per year.
The current system of dispute resolution would give way to a new two-tier approach. The states concerned would be encouraged to come to a negotiated settlement through a Disputes Resolution Committee (DRC). Only if the DRC fails to resolve the dispute will the matter be referred to the tribunal.
How it will work
In the existing mechanism, when states raise a dispute, the central government constitutes a tribunal. Under the current law, the tribunal has to give its award within three years, which can be extended by another two years. In practice, tribunals have taken much longer to give their decisions.
Under the new system, the Centre would set up a DRC once states raise a dispute. The DRC would be headed by a serving or retired secretary-rank officer with experience in the water sector and would have other expert members and a representative of each state government concerned.
The DRC would try to resolve the dispute through negotiations within a year and submit a report to the Centre. This period can be extended by a maximum of six months.
If the DRC fails to settle the dispute, it would be referred to the permanent tribunal, which will have a chairperson, a vice-chairperson and a maximum of six members — three judicial and three expert members.
The chairperson would then constitute a three-member bench that would consider the DRC report before investigating on its own. It would have to finalise its decision within two years, a period that can be extended by a maximum of one more year — adding up to a maximum of four-and-a-half years.
The decision of the tribunal would carry the weight of an order of the Supreme Court. There is no provision for appeal. However, the Supreme Court, while hearing a civil suit in the Cauvery dispute, had said the decision of that tribunal could be challenged before it through a Special Leave Petition under Article 136 of the Constitution.
Crisil cuts India’s GDP growth estimate for FY20 by 20 bps #GS3 #Economy
Ratings agency Crisil on Thursday slashed its estimate of India’s gross domestic product (GDP) growth by 20 basis points (bps) to 6.9 per cent for the fiscal 2019-20, in the wake of a host of downside risks including weak monsoon, slowing global growth and sluggish high-frequency data for the first quarter.
The slowdown would be pronounced in the first half, while the second half should find support from expected monetary easing, consumption, and statistical low-base effect, Crisil said at the releaseof its report on India’s FY20 outlook titled ‘Uphill Trek’.
Agricultural terms of trade are also expected to improve with a pick-up in food inflation. In addition, farmers would benefit from income transfer of Rs 6,000 per year announced by the Centre, and farm loan waivers in a few states,” it said.
Ashu Suyash, managing director and CEO, Crisil, said, “Given the crosswinds, the sops announced so far might not be enough to pitchfork growth in this fiscal to, or above, the past 14-year average of 7 per cent per annum. Policy action looks more attuned to consumption than investment demand, which means consumption will be the first to ascend as the tide turns.”
“The crucial question, therefore, is whether a trough is in sight. Given the fiscal constraints, public spending is unlikely to have the heft to pull growth above 7 per cent. And some of the recent, and much-needed, reforms would pay off only over the medium term.
There would, therefore, be some near-term onus on monetary policy to stimulate. But how effective that can be is the big question,” said Dharmakirti Joshi, chief economist, Crisil. India’s GDP had grown at an impressive 8.2 per cent in fiscal 2017, the fastest in a decade.
This was followed by disruptions stemming from policy initiatives and reforms, and rising global uncertainty including from trade disputes – which together triggered a cyclical downturn.
Then, the non-bank (including housing finance companies) crisis, which began late last fiscal, and stress that ensued, slowed disbursals and further impacted household demand, which had already moderated amid lower incomes, weak sentiment and rising costs (fuel prices and insurance for automobiles), Crisil said.
With access to funding becoming a challenge and non-banking financial institution caught up in managing liquidity, their growth halved to a multi-year low in the second-half of last fiscal, and remains impacted.