Daily Current Affairs

23 August Current Affairs – Daily News



No need for third party mediation in Kashmir: Emmanuel Macron- Suhasini Haidar 


Prime Minister Narendra Modi and French President Emmanuel Macron discussed the government’s move to suspend Article 370 in Jammu and Kashmir and split the State into two Union Territories.


Briefing the media in Chantilly after one-on-one talks that lasted more than 90 minutes, Mr. Macron said France would support any policy that would give the region “stability”, adding that no one should “provoke violence” there.


Prime Minister Modi explained the decisions to me, and said that this is a sovereign issue for India. France believes that issue of Kashmir should be resolved between India and Pakistan and no other party should be involved.


Mr. Macron said at Chantilly, in talks that precede the upcoming G7 summit in Biarritz, where India has been invited as a special guest. The last time India was invited to the group of the world’s biggest economies was in 2005, when then Prime Minister Manmohan Singh had attended the then G8 meet in Scotland.


Thanking the French government for its support on security and countering “cross-border terror”, Mr Modi said India and France had finalised several steps to strengthen their strategic partnership. PM Modi also said India looks forward to the first delivery of the Rafael fighter jets in September.


In the past, India and France have walked together and fought fascism and extremism together. Today as we face challenges of terrorism and climate change etc, France and India stand together with full support,” Mr. Modi said, describing the International Solar Alliance as proof of India-France cooperation in “action, not just beautiful words”.




Afghan, Pashtun fighters poised to enter J&K: Defence sources 


Intelligence inputs have warned that Pakistan is recruiting Afghan and Pasthun fighters for infiltration into Kashmir and over 100 of them are positioned at various launchpads along the Line of Control (LoC).


“There have also been specific intelligence inputs that Pakistan-based terror group Jaish-e-Mohammad (JeM) has deployed over a dozen Afghan and Pathan terrorists for Border Action Team (BAT) attempts, comprising of Afghan militants and highly trained Special Services Group (SSG) of the Pakistan Army and for infiltration across the LoC into Lipa valley in North Kashmir.



They added that Pakistan is desperately trying to keep the LoC active in an attempt to keep international focus on Kashmir in the aftermath of recent developments there. Intelligence inputs also warned of attempts by a group of terrorists to carry out major attacks in major cities across the country


One official cautioned that violence will be calibrated and admitted that there will be some backlash in Jammu and Kashmir and other parts of the country and security forces have to prepared to meet the challenge.















Officials also said the major attempt to push in terrorists was due to the longevity issues of local recruits which has been from few days to four to five months with sustained counter insurgency operations by security forces. On the contrary, the foreign terrorists are well trained and battle hardened.


There is also a major recruitment drive in Pakistan-Occupied Kashmir, especially in areas opposite Keran, Lipa and Poonch sectors. There has been regular exchange of fire on the LoC and usually Pakistan Army resorts to ceasefire violations (CFV) to aid infiltration.




Trump suggests India should fight Islamic State in Afghanistan- Sriram Lakshman 


U.S. President Donald Trump named India as one of the countries that ought to be fighting the Islamic State (IS) in Afghanistan. He also appeared to suggest that Russia, Iran, Turkey, Afghanistan and Pakistan were countries that should be fighting the IS in Afghanistan.


The U.S. is currently negotiating an agreement with the Taliban to end the war in Afghanistan. The process has been criticised for side-lining the Afghan government and prioritising the withdrawal of some 14,000 U.S. troops over building a peace that can withstand the complex political realities of the situation.



The Afghan peace process is expected to feature in the discussions Mr. Trump will have with Prime Minister Modi at the G-7 talks this weekend in Biarritz, France.


The President also said “Europe” would have to take the “thousands” of IS fighters the U.S. was holding. Failing which, Mr. Trump said, the U.S. would release them back to their countries [he named Germany and France]. “The United States is not going to put them in Guantanamo for the next 50 years and pay for it,” Mr. Trump said.




Rajasthan ranks 1st in free medicine scheme implementation 


The National Health Mission has given first rank to Rajasthan among 16 States in the implementation of its flagship free medicine scheme. The performance of States was assessed on the basis of parameters such as stock of drugs, value of drugs about to expire and compliance with the drugs and vaccine distribution management system.


Chief Minister Ashok Gehlot had launched the scheme on October 2, 2011, during his previous tenure, for providing free drugs to patients coming to public health facilities. The initiative was aimed at


reducing out of pocket expenditure of patients suffering from cancer, heart and kidney related diseases as well as other serious ailments.


Medical and Health Minister Raghu Sharma said here on Thursday that it was the Congress regime’s “dream project” in which 104 new medicines were added after the formation of the new government in December 2018.


A record number of 712 medicines were being given at present, he said. “Since 2011, as many as 67 crore patients have benefited from the scheme. About 2.25 lakh patients get free medicines every day.


Punjab to canalise rivers with help from World Bank, ADB 


With Punjab facing the flood fury, the Amarinder Singh government has decided to canalise all rivers in the State, taking technical support from the World Bank and the Asian Development Bank.


The Chief Minister, who conducted an aerial survey to assess the damage caused by floods in Sultanpur Lodhi (Kapurthala) and Jalandhar areas, announced a project to realign river streams and courses, besides strengthening and widening of river embankments for a permanent solution to the problem of floods.


In Sarupwal of Sultanpur Lodhi, where the overflowing Sutlej led to a breach in the embankment, affecting 62 villages, the Chief Minister promised due compensation to the affected farmers as soon as the water receded and a special ‘girdawari’ (crop loss assessment) was completed.



Each team will comprise officials from the health, civil supplies and animal husbandry departments and ensure regular and timely supply of food, medicines and fodder. For the first time, the Bhakra, which is normally filled to its permissible storage level of 1,680 feet by September, was overflowing in August.


The Chief Minister had written to the Prime Minister on Tuesday, seeking a special flood relief package for the State.Meanwhile, Capt. Amarinder was briefed about the current situation arising out of the Satluj breach by the Deputy Commissioners of Jalandhar and Kapurthala.


They informed him that more than 18,000 packets of dry ration besides water bottles were airdropped on Wednesday in all the affected villages with the help from Army and NDRF.




Odisha govt. merges directorates with administrative departments 


In order to streamline the functioning of all directorates and speed up the process of decision making,


the Odisha government has decided to integrate different directorates with their respective administrative departments to function as composite departments with immediate effect.


According to a resolution passed by the General Administration and Public Grievance (GA & PG) Department, the integrated department shall function on the premises of the respective administrative departments/directorates as may be decided by the administrative department, keeping in view the availability of space and convenience.


The move comes days after the State government appointed senior bureaucrat Asit Kumar Tripathy as the Chief Secretary, who, upon assuming the office, said he would ensure faster movement of files in all government offices in the State.


Mr. Tripathy had said that all departments will adhere to the “5T initiative” — transparency, teamwork, technology, time and transformation.


There will be a single-file system through the Odisha Secretariat Workflow Automation System (OSWAS) and every proposal referred by the directorate shall not be required to be reinitiated or re-examined in the department.


The different sections common to both the offices shall be appropriately reorganised and officers and staff will be utilised accordingly in the composite departments to ensure better efficiency and avoid duplication of work and wastage of time.


Surplus staff, if any, shall be surrendered to the pool being managed by the administrative reforms cell of the GA & PG Department for redeployment and vacant posts at the lowest level shall be abolished as per the guidelines of the Finance Department. The staff concerned will continue to remain in their cadres and will avail all service benefits.



Necessary steps will be taken to make budget provisions for the composite department, and budget provisions for the integrated department shall be made from the next financial year in consultation with the Finance Department.


The OSWAS system operative in the Secretariat shall be modified to integrate the directorates with their respective departments immediately and the directorates will submit only electronic files after due scanning of existing files.




EPFO to restore commutation of pension 


Providing relief to 6.3 lakh pensioners, retirement fund body Employees’ Provident Fund Organisation (EPFO) has approved a proposal to restore commutation of pension, or advance part-withdrawal, under the Employees’ Pension Scheme.


The move would benefit the pensioners who had opted for commutation and got a lump sum amount at the time of retirement before 2009. The provision for commutation of pension was withdrawn by the EPFO in 2009.


Under the commutation, monthly pension used to be cut by one-third for the next 15 years and the reduced amount would be given in lump sum. After the 15 years, the pensioners were entitled to get the full pension.


In a major decision, the [EPFO’s apex decision-making body] Central Board of Trustees in a meeting held at Hyderabad on August 21, approved a proposal to recommend for amendment in EPS-95 for restoration of commuted value of pension to pensioners after 15 years of drawing commutation, which will benefit about 6.3 lakh pensioners.


Earlier, under EPS-95 [Employees’ Pension Scheme, 1995], members were able to commute one-third of their pension for 10 years, which was restored after 15 years. This facility is available to government employees.


Moreover, the trustees approved the decision to choose the exchange-traded fund (ETF) manufacturers through public bidding by October 31, 2019, and extended the term of the present ETF manufacturers (SBI MF and UTI MF) till then.




Supreme Court refers Oxytocin issue to a larger bench 


The Supreme Court referred to a larger Bench the issue of banning manufacture of life-saving drug


Oxytocin by private companies. The drug is used to induce labour in pregnant women and stall postpartum bleeding, a leading cause of maternal deaths.


The issues which arise for consideration are the unregulated and clandestine manufacture of Oxytocin, which is allegedly misused in milch animals, on one hand, and the continued supply of an essential life-saving drug, which is used as the first line drug for prevention and treatment of post-partum haemorrhage at the time of childbirth, on the other, the Bench comprising Justices AM Sapre and Indu Malhotra said, adding that this is a fit case to refer the matter to a larger Bench of three judges.


The seven issues framed by the Bench also include whether the health ministry’s last year’s notification had resulted in creating a monopoly in favour of public sector companies to the complete exclusion of private sector firms, thus resulting in discrimination, and if such a ban on private companies would achieve the purpose of preventing the unregulated and illegal use of the drug. “


The decision either way on any of these questions will have far reaching effect on the rights and health of public at large, and especially on the rights and health of teenage girls, pregnant females and milching animals.


It will also decide the scope of the powers of the central government under Section 26-A of the Drugs and Cosmetics Act qua the rights of the persons, who are engaged in business of manufacture and sale of drugs specified under the Drugs and Cosmetics Act read with Essential Commodities Act.


In effect, in my opinion, it will not be a judgment inter party but it will be in rem laying down the law on the questions,” Justice Sapre wrote in its separate, but concurring, judgment.


The SC order came on an appeal by the government challenging the Delhi High Court judgment that had quashed the health ministry’s notification of April 27 last year to ban manufacture and sale of the drug by the private sector.


As a result of the health ministry’s move, the license of the three pharma companies stood cancelled and terminated. BGP Products Operations GmBH, Mylan Pharmaceuticals and Ciron Drugs and Pharmaceuticals have been manufacturing Oxytocin injections for over three decades in India.


The three companies and others had last year moved the Delhi High Court challenging the validity of the notification that barred them from manufacturing the Oxytocin formulations for domestic use from September 1, last year. The ministry allowed only Karnataka Antibiotics to manufacture the drug, under Section 26(a) of the Drugs and Cosmetics Act.


The HC said the government did not have any scientific basis for banning the drug. It noted that the ban was both unreasonable and arbitrary; the government did neither adequately weigh in the danger to users of the drug, nor consider the deleterious effect to the public generally and women particularly, of possible restricted supply if manufacturing is confined to one unit.



The manufacturers argued that there was no relevant material or evidence placed before the government for it to arrive at a “satisfaction” to completely prohibit manufacturing and sale of the drug by them.


They submitted that neither the Drugs Technical Advisory Board nor the Drugs Consultative Committee had recommended or approved the complete prohibition on manufacturing of Oxytocin by private licensees.


They claimed that their market share is at least 50% in terms of manufacturing the drug, but they do not sell the drug directly to the end consumer and only sell by way of wholesale dealing to licensed distributors and licensed retail chemists, and use the very same chain of distribution that KAPL uses.








FATF Asia-Pacific Group may blacklist Pakistan- Suhasini Haidar 


After being greylisted at the Financial Action Task Force (FATF) plenary, Pakistan now faces being put on the “blacklist” of the FATF’s Asia affiliate, the Asia-Pacific Group (APG), that will conclude its meetings in Canberra, Australia.


While the two processes are separate, the APG blacklisting, or ‘Enhanced Expedited Follow Up’ status would definitely impair Pakistan’s chances at extricating itself from the FATF greylist that deals with countering terror-financing and money-laundering, at its Paris plenary later this year.


Sources told The Hindu that the APG meeting, which began on August 18, completed a third evaluation (MER) of Pakistan’s actions over the past five years on building anti-money-laundering and countering financing of terrorism (AML/CFT) safeguards, and found them wholly inadequate.


According to the APG’s final report, expected to be made public after the meeting ends, Pakistan failed in 32 of 40 ‘compliance’ parameters for its legal and financial systems, and failed 10 of 11 ‘effectiveness’ parameters for enforcing safeguards against terror-financing and money-laundering by UN-sanctioned entities and other non-government outfits.


As a result, Pakistan is likely to be placed on the fourth and lowest rung of the APG’s Follow-Up (FU) listing, the Enhance Expedited Follow Up, the sources said. This would make the Pakistani government’s next steps, as it faces FATF reviews in September and October much more challenging.


India is a member of both the APG and the FATF consultations and is represented by a team of officials from the Ministries of Finance, External Affairs and Home Affairs. However, the actions demanding Pakistan’s review have been pushed by the U.S., the U.K., Germany and France. Pakistan’s multi-ministerial team at the APG meeting is led by its State Bank Governor.



Last week, Islamabad had submitted a 450-page compliance document that details all the changes the government has made to existing laws, and actions against terror groups in the past year and a half.


Pakistan has claimed that it has charged Lashkar-e-Taiba/ Jamaat-ud Dawa (JuD) chief Hafiz Saeed with terror financing, and frozen all assets of the JuD and other UNSC banned outfits this year, as part of its ongoing efforts to crack down on terror.


The compliance document will be reviewed against a 27-point action plan set out by the FATF, which could decide one of three options: to remove Pakistan from the greylist, to continue to keep it on the greylist, or to downgrade it further to its blacklist.


If Pakistan stays on the greylist, or is blacklisted, it faces not only a financial downgrade and restrictions on its markets, but will have a tough time managing capital inflows from IMF and other agencies, as well as servicing debt that adds up to about 25% of the government’s revenues at present.




UN team alleges violation of rights in Kashmir 


The information blackout in Kashmir amounted to a collective punishment for the people of the region, experts of the United Nations Human Rights Council said on Thursday. In a statement, they said the communication lockdown and denial of fundamental rights to the Kashmiri people violated fundamental rights.


The shutdown of Internet and telecommunication networks, without justification from the government, is inconsistent with the fundamental norms of necessity and proportionality.


The blackout is a form of collective punishment for the people of Jammu and Kashmir, without even a pretext of a precipitating offence,” they said. They declared that they had received information about an increase in the arrest of political figures, journalists, human rights activists, and protesters.


The experts alleged that live ammunition was being used on protesters in Kashmir and that amounted to the violation of the fundamental right to life.








Myanmar not safe for return of Rohingya 


Sexual violence by Myanmar’s military against Muslim Rohingya amounts to war crimes, a UN report said on Thursday, adding that conditions are not favourable for refugees to return to the country.


The UN Fact Finding Mission on Myanmar said “soldiers routinely employed rape, gang rape and other violent and forced sexual acts against women, girls, boys, men and transgender people.” Meanwhile, a push to repatriate Rohingya refugees from Bangladesh to Myanmar fell flat as no one showed au at boarding point at Teknaf.


Rupee hits eight-month low 


A combination of global and domestic factors pulled the rupee down 26 paise against the dollar though the currency was able to cut back some losses in the closing hours of trade. The rupee ended at an eight-month low of 71.81 a dollar after slipping close to 72-a-dollar mark during the day when it touched 71.98. However, it cut some losses towards the end of the trading session.


According to dealers, all emerging market currencies, including the rupee, came under pressure after the Chinese yuan depreciated suddenly, in addition to the strengthening of the dollar index.


The weakness was accentuated by the pressure on domestic equities, with the benchmark indices falling 1.6%. Dismal growth in direct tax collection in the current fiscal, which further reflected the economic slowdown, also weighed on the rupee.



The note said despite RBI easing interest rates by 110 basis points (bps) in 2019, financial conditions had tightened and policymakers should take note, failing which such a scenario would undo the benefits of monetary easing.




Tax holiday only for start-ups with turnover up to ₹25 crore 


The Central Board of Direct Taxes (CBDT) on Thursday clarified that start-ups with an annual turnover of up to ₹25 crore will continue to get a tax holiday as specified in the Income Tax Act.


The clarification comes in the wake of considerable confusion in the industry following a circular in February by the Department for Promotion of Industry and Internal Trade (DPIIT) that defined start-ups as having a turnover of up to ₹100 crore.


This led many to believe that the tax holiday would also apply to companies with a turnover of that amount. “All the start-ups recognised by the DPIIT which fulfil the conditions specified in the DPIIT notification do not automatically become eligible for the deduction under Section 80-IAC of the I-T Act.


Therefore, the turnover limit for small start-ups claiming deduction is to be determined by the provisions of Section 80-IAC of the I-T Act and not from the DPIIT notification.”


According to Section 80-IAC of the Income Tax Act, eligible start-ups would be granted a tax deduction equal to 100% of the profits for three consecutive assessment years, out of the first seven years from the date of incorporation of the company.


CBDT disproved the confusion created by some news report claiming discrepancy that I-T law was yet to reflect DPIIT’s higher turnover threshold of ₹100 crore




Tax resolution, amnesty scheme announced


The government has announced a new scheme aimed at eliminating the bulk of pending tax dispute cases besides providing partial amnesty to those having tax dues. Finance Minister Nirmala Sitharaman had, in her Budget speech, announced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. This scheme will be operationalised from September 1 with the window being open till December 31.


“[The] government expects the scheme to be availed of by a large number of taxpayers for closing their pending disputes relating to legacy service tax and central excise cases that are now subsumed under GST (Goods and Services Tax) so that they can focus on GST.



The two main components of the scheme are dispute resolution and amnesty. The dispute resolution component is aimed at liquidating the legacy cases of central excise and service tax that are subsumed in GST and are pending in litigation at various forums.


The amnesty component of the scheme offers taxpayers the opportunity to pay any outstanding tax and be free of any other consequence under the law. The most attractive aspect of the scheme is that it provides substantial relief in the tax dues for all categories of cases as well as full waiver of interest, fine, penalty.


According to the government, the scheme offers a relief of 70% from the duty demand if it is less than ₹50 lakh and 50% if it is more than ₹50 lakh for all cases pending adjudication or appeal in any forum.


Further, in cases of confirmed duty demand, where there is no appeal pending, the relief offered is 60% of the confirmed duty amount if the same is ₹50 lakh or less and it is 40% if the confirmed duty amount is more than ₹50 lakh.” In cases of voluntary disclosure, the person availing the scheme will have to only pay the full amount of disclosed duty.


As the objective of the scheme is to free as large a segment of the taxpayers from the legacy taxes as possible, the relief given thereunder is substantial.


The scheme is especially tailored to free the large number of small taxpayers of their pending disputes with the tax administration. The government urges the taxpayers and all concerned to avail the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and make a new beginning.




Microplastics in drinking water not a health risk for now: WHO 


The World Health Organization (WHO) on Thursday said the level of microplastics in drinking-water is not yet dangerous for humans but called for more research into potential future risk. In its first report into the effects of microplastics on human health, WHO looked into the specific impact of microplastics in tap and bottled water.


WHO said that data on the presence of microplastics in drinking water is currently limited, with few reliable studies, making it difficult to analyse the results. The organisation has called on researchers to conduct a more in-depth evaluation into microplastics and the potential impact on human health. It has also urged a crackdown in plastic pollution to benefit the environment and reduce human exposure to microplastics.


The report said that irrespective of human health risks caused by microplastics in drinking-water “measures should be taken by policymakers and the public to better manage plastics and reduce the use of plastics where possible”.



WHO said that microplastics larger than 150 micrometres are not likely to be absorbed by the human body but said the chance of absorbing very small microplastic particles, including nano-sized plastics, could be higher, although it said data is limited.


The report warns of other dangers ahead: if plastic emissions in the environment continue at the current rate, microplastics could present widespread risks for aquatic ecosystems in a century, which could in turn increase human exposure.


Experts recommend wastewater treatment, which can remove more than 90% of microplastics in water by using treatments such as filtration.


WHO said those measures would have a double advantage as it would also address the problem of faecally contaminated water by removing microbial pathogens and chemicals that can cause deadly diarrhoeal diseases.




From drones to social media, big data helps mitigate impact of complex disasters in Asia 


Technological innovations — from unique digital identities for drought-hit farmers to use of data from drones and social media — can better predict increasingly complex disasters in the Asia-Pacific region and limit their impact on vulnerable people, the UN said in a report on Thursday.


Rising global temperatures have increased the frequency and intensity of floods, cyclones and droughts in the region, making it harder to accurately forecast and monitor them, according to the report by the UN‘s Asia-Pacific social agency (Unescap).


But “big data innovations — using the large data sets from mobile phone tracking to satellite platforms – reveal patterns, trends, and associations of complex disaster risks.


These help us understand, monitor and predict the risk of extreme and slow-onset events, and address the key challenges of the new climate reality,” she said. The Asia-Pacific region is particularly vulnerable to climate-related threats, with more fatalities and greater economic damage from disasters.


Since 1970, natural disasters in the region have killed two million people – 59 per cent of the global death toll for that period, according to Unescap. Disasters also cause more damage in Asia and the Pacific, measured as a percentage of GDP, than the rest of the world, and this gap has been widening.


But technological innovations are already reducing some of that vulnerability, the report said.


Tiziana Bonapace, director of Unescap’s disaster risk reduction division in Bangkok said, “Technology can help identify and locate those most at risk, to warn them ahead of a disaster, and deliver targeted relief afterwards.”.



While extreme weather is the new normal, the number of deaths from climate-related events is decreasing due to advances in technology, including better early warning systems and measures to mitigate impact,” she said.


Big data refers to the analysis of very large data sets to reveal patterns, trends and associations. The data can come from a range of sources, including satellite imagery, drone videos, simulations, crowd sourcing, social media and global positioning systems.


Flood and cyclone forecasting now relies on computer simulations, with machine learning helping predict the location and severity of floods.


Sensor webs and the Internet of Things have enabled efficient earthquake early-warning systems, while remote sensing via satellites and drones provide quick assessments of damage and people affected, and help prioritise relief efforts.


Alisjahbana saidm “The substantial reductions in mortalities and economic losses due to typhoons in north and east Asia over the last three decades can be attributed to big data applications. Similarly, India’s digital ID system has helped deliver targeted benefits to millions of small and marginal farmers affected by drought.


The system assigns a unique identity number to Indian citizens, linked to their biometric data, and has been used to help reduce fraud and improve efficiency in getting government benefits to those in need, backers say.


Such technological advances are expected to become more important as warming temperatures cause a rise in the number and duration of heat waves and droughts, particularly in semi-arid and arid areas in north and central Asia, the Unescap report said.


Cyclone intensity and flooding is also expected to increase, with serious impacts for coastal areas in South-East Asia, and extreme rainfall also a threat for south Asia.




Russia launches test of new rocket booster, sends humanoid robot into space 


All eyes were on the International Space Station yesterday as NASA astronauts performed a spacewalk to install a new docking port that will allow commercial vehicles to latch onto the orbiting laboratory. Meanwhile, Russia was preparing for some serious work of its own, carrying out a crucial test of its new rocket booster which is expected to replace the stalwart Soyuz-FG rocket sometime in 2020.


That mission kicked off at 8:38 a.m. local time from Russia’s launchpad in Kazakhstan, successfully sending an uncrewed Soyuz capsule skyward on a path toward the International Space Station. The



vehicle was empty of any human travelers, but it did have one inhabitant: a humanoid robot strapped into the commander’s seat.


The robot is called Fedor, which is actually short for ‘Final Experimental Demonstration Object Research, and it’s carrying a tiny Russian flag as it cruises toward its final destination. The robot will only be staying aboard the ISS for a little over a week, but it has plenty of work to do once it arrives.


In the future, robots could play a major role in human exploration of the cosmos, and Fedor is one small step toward that future. The robot is a prototype that has been tested in a number of different applications, including firing guns during a demonstration in Russia.


This space-worthy variant of the robot won’t be wielding any weapons during its stay aboard the ISS, but it will be put to the test in other ways. It’s designed specifically to exist aboard the delicate ISS without breaking anything, and researchers are eager to learn about how the robot deals with microgravity.


Once its brief testing period has wrapped, the robot will be loaded back onto the Soyuz capsule and will return to Earth in early September.




India Inc looks to govt for stimulus, but fiscal space limited as revenue falters 


India Inc’s clamour for a stimulus to restart the investment cycle points to a near unanimous view within the industry — that government has to do the heavy lifting first before it can expect the private sector to restart investments. But for the Centre to spend its way out of the downturn, 2019-20 is a particularly bad year given the already stretched fiscal situation and revenue numbers that seem to be faltering early into the year.


At least five of the top industry leaders who participated in a meeting called by Finance Minister Nirmala Sitharaman on August 8 on reviving growth pitched for a “stimulus package” of varying proportions, besides flagging specific problems relating to NBFC lending and sectors such as steel and automobiles.


SBI chairman Rajnish Kumar too indicated Sunday that credit demand remained subdued and that there was need for a stimulus in the economy. Infrastructure majors such as Tata Steel, L&T and KEC International have all pointed to the centrality of government spending and improved liquidity conditions in restarting the growth cycle.


The emerging consensus about the requirement of government stimulus to boost growth, however, will face the hurdle of slowing revenue collections and the limited fiscal space for the government to deviate from its fiscal consolidation roadmap.


The government has already started the year by spending less — in the first three months of the 2019-20, 61.4 per cent of the budgeted fiscal deficit has been utilised, 7.3 percentage points lower than the comparable target a year ago, as lower capital expenditure took place as revenues declined. The steady



slide in investment activity has been progressively intensifying — evidenced by a nearly 30 per cent drop in capital expenditure by the government in the June 2019 quarter.


Tax revenue growth is progressively turning out to be far slower than the required run rate, reflective of the consumption slowdown in the economy.


The demand for the fiscal stimulus by industry is more by way of higher spending on infrastructure sectors such as roads and railways that could have a multiplier effect on downstream industries and the economy as a whole, given that the opportunity for a stimulus of the other kind — a major sectoral reform push that catalyses private investments — has been missed in Budget 2019-20.


At a review meeting on the economy called by Prime Minister Narendra Modi immediately after his Independence Day address, discussions are learnt to have focused on low-hanging, high visibility measures that could impact a stimulus, such as a fund to wrap up housing projects that are in their final stages but are held up, and a warehousing push, which featured in the BJP manifesto.


It is learnt that Finance Ministry officials highlighted the lack of room for big spending, as is being sought by industry. Global headwinds compound matters further, given the inversion of a key part of the US yield curve for the first time in 12 years, alongside Germany and China reporting weak economic data last week, prompting recession fears.




Why Amazon fires are worrying 


Over the last several days, the Amazon rainforest has been burning at a rate that has alarmed environmentalists and governments worldwide. Mostly caused by farmers clearing land, the fires have thrown the spotlight on Brazil President Jair Bolsonaro’s policies and anti-environment stance.


Where are the Amazon fires happening?


Started in the Amazonian rainforests, the fires have impacted populated areas in the north, such as the states of Rondônia and Acre, blocking sunlight and enveloping the region in smoke. The smoke has wafted thousands of miles to the Atlantic coast and São Paulo, according to the World Meteorological Organization.


Brazil’s National Institute for Space Research (INPE) has reported that forest fires in the region have doubled since 2013, and increased by 84% compared to the same period last year. This year alone there have been 72,843 fires, it said, and more than 9,500 of those have happened over the past few days.


How did the Amazon fires start?


The weekly Brasil de fato reported that Bolsonaro’s anti-environment rhetoric has emboldened farmers, who organised a “fire day” along BR-163, a highway that runs through the heart of the rainforest. The



weekly quoted a report by local newspaper Folha do Progresso, that local farmers had set fire to sections of the rainforest a few days ago to get the government’s attention. “We need to show the President that we want to work and the only way is to knock it down. And to form and clear our pastures, it is with fire.




Alberto Setzer, a researcher at INPE, told Reuters that this year, the region did not experience extreme dry weather. “The dry season creates the favourable conditions for the use and spread of fire, but starting a fire is the work of humans, either deliberately or by accident.”


The Amazon fires are so large that they are visible from space. NASA released images on August 11 showing the spread of fires and reported that its satellites had detected heightened fire activity in July and August.


Why are the Amazon fires a cause for concern?


The Amazon rainforest is a repository of rich biodiversity and produces approximately 20 per cent of oxygen in the Earth’s atmosphere. It is also home to indigenous communities whose lives and homelands are under threat due to encroachment by the Brazil government, foreign corporations and governments with economic interests in the resource-rich region, and local farmers.


In a 2017 study, the University of Leeds found that carbon intake by the Amazon basin matches the emissions released by nations in the basin. The burning of forests, therefore, implies additional carbon emissions. Research by scientists Carlos Nobre and Thomas E Lovejoy suggests that further deforestation could lead to the Amazon’s transformation from the world’s largest rainforest to a savanna, which would reverse the region’s ecology.



A National Geographic report said the Amazon rainforest influences the water cycle not only on a regional scale, but also on a global scale. The rain produced by the Amazon travels through the region and even reaches the Andes mountain range.


Moisture from the Atlantic falls on the rainforest, and eventually evaporates back into the atmosphere. The report said the Amazon rainforest has the ability to produce at least half of the rain it receives. This cycle is a delicate balance.


What environmental protections do Brazil’s laws provide, and what has changed in recent times?


Under Brazil’s Forest Code of 1965, farmers could purchase Amazon land but could farm only 20% of it. Following the collapse of the military dictatorship in 1988, a new constitution gave indigenous populations legal ownership of their land and the right to reject development of their land.


In 2012, the Forest Code was revised to reduce the area of deforested land required to be restored, and to reduce penalties for illegal deforesting. In 2018, Brazil’s Supreme Court upheld these changes.


Bolsonaro, who took office in January 2019, had promised during his election campaign that his government would open up the Amazon region for business. The Amazon has large reserves of gold and other minerals.


Along with aggressive policies of promoting agribusiness, Bolsonaro has opposed protections for indigenous tribal land. A few months before he won, The Washington Post reported that Bolsonaro had recommended exploiting the country’s natural resources by tapping into the Amazon basin.


After the victory, he wwas quoted as saying: “Brazil should not sit on its natural reserves because a handful of Indians want to conserve it.”


Since the 1960s, the Amazon has witnessed large-scale deforestation because of cattle-ranching, logging, power projects, mining and farming. Agribusiness products in 2016 represented 46% of Brazil’s exports. Conservationists believe that for Brazil’s government, short-term economic interests pushed by lobbies take precedence over environmental concerns.


How has the government reacted to the concerns over the fires?


Bolsonaro has dismissed the INPE findings and said it was the time of the year when farmers burn the land for farming. In July, he fired INPE scientist Ricardo Galvao for publishing agency data that showed the accelerated rate of deforestation, calling the figures a lie and the images manipulated. Al Jazeera English quoted Bolsonaro as saying that “a report like this one that does not match the truth can cause a great damage to the image of Brazil”. INPE has defended its data.


How has the international community reacted?


Germany and Norway have suspended funding for programmes that aim to stop deforestation in the Amazon and have accused Brazil of doing little to protect the forests. Indigenous groups and environment activists have led protests and criticised Bolsonaro for his comments and policies.




Why ordnance factory workers are on strike 


Since Tuesday, more than 80,000 workers of the 41 ordnance factories across the country are on strike, protesting against the proposed restructuring of the Ordnance Factory Board (OFB). These factories manufacture weapons, ammunition, explosives and other equipment like armoured vehicles for the defence forces as well as foreign clients. Production at all these has come to a halt.


Why restructure


The 200-year-old OFB is currently a department under the Defence Ministry. The government plans to convert it into one or more corporate entities fully owned by the government, like the other public sector units.


At least three expert committees — T K S Nair Committee (2000), Vijay Kelkar Committee on Defence Reforms (2005), and the Raman Puri Committee (2015) — had suggested such a move. A fourth committee, headed by Lt Gen D B Shekatkar, did not go as far to suggest corporatisation but recommended regular performance audits of all ordnance units. The argument is that corporatisation would improve efficiency, make products cost-competitive and enhance quality.


The present set-up and methods of OFB are inconsistent with requirements of the modern age which call for flexibility at top managerial levels. Being an arm of the government, the OFB and its factories cannot retain profits, and do not have any incentive to make any.


So, OFB in its present structure of a departmental organisation may not be appropriate for carrying out production activities and competing with rivals in the private sector who have all the managerial and technical flexibility,” a Defence Ministry official said.


Restructuring has been discussed many times with employee bodies, inconclusively.


How the plan progressed


Corporatisation of ordnance factories was listed as one of the 167 “transformative ideas” to be implemented in the first 100 days of the Narendra Modi government’s second term. These ideas were proposed in early July based on the recommendations of the Sectoral Group of Secretaries in consultation with the relevant Groups of Ministers.


OFB’s top officials were called for a meeting with Defence Minister Rajnath Singh and ministry officials on July 18, during which a decision to finalise the plan was taken. Officials say a Cabinet note to give effect to corporatisation had been prepared, and circulated to stakeholder ministries for consultation.


In a statement, the Defence Ministry said: “Corporatisation of OFB will bring OFB at par with other defence Public Sector Undertakings (PSUs) of the Ministry of Defence. This is in the interest of OFB as it



will provide operational freedom and flexibility to the OFB which it presently lacks. Besides, the interests of the workers will be adequately safeguarded in any decision taken on the subject.”


Employees’ unease


One of the fears of employees is that corporatisation is a step towards privatisation. They fear job losses. They also argue a corporate entity would not be able to survive the unique market environment of defence products.


“Converting the Ordnance Factories into a corporation is not commercially viable because of fluctuations in orders, long gaps between orders, uneconomical order quantity, and life cycle support required for 30-40 years after introduction of equipment. The experience of the past two decades is that corporatisation is a route to privatisation.


Therefore, ordnance factories should continue as a departmental organisation,” says a letter sent to Defence Minister Rajnath Singh by the general secretaries of the three main employee federations that are leading the strike, affiliated respectively to the RSS, the CPM’s CITU, and the Congress party’s INTUC. The federations have also refuted the government’s claims that the OFB units lacked innovation and were unproductive.




Renewable energy status to ocean energy gets MNRE nod 


In a decision expected to boost to ocean energy in India, the Ministry of New and Renewable Energy (MNRE) clarified that ocean energy shall be considered “renewable energy”. Various forms of ocean energy like tidal, wave and ocean thermal energy conversion (OTEC) shall now be eligible as an option for states to meet their non-solar renewable purchase obligations (RPO), according to the Ministry.


“This step has been taken by the Ministry after some renewable energy developers sought clarification in this regard,” MNRE said in a release, which followed Minister of State for Power and New and Renewable Energy RK Singh’s approval of a proposal to this effect.


“A variety of different technologies are currently under development throughout the world to harness this energy in all its forms,” read the Ministry’s release, adding that deployment is currently limited but the sector has the potential to grow.


“As the government steps up its efforts to reach the objectives to contemplate its renewable energy and climate change objectives post 2022, it is opportune to explore all possible avenues to stimulate innovation, create economic growth and new jobs as well as to reduce our carbon footprint. As on date, India does not have any installed ocean energy capacit, according to a government official.



The total identified potential of tidal energy is about 12,455 mega watt, with potential locations identified at the Khambat and Kutch regions of Gujarat and large backwaters where barrage technology could be used, according to the Ministry.


Preliminary estimates peg the total potential of wave energy in India along the country’s coast to be about 40,000 MW. OTEC has a theoretical potential of 180,000 MW here, “subject to suitable technological evolution”, it added.


The Gulf of Cambay and the Gulf of Kutch in Gujarat on the west coast show potential for tidal energy production. However, the capital cost for tidal energy is “very high” due to high civil construction and high power purchase tariffs, the Ministry clarified.




India appeals against certain parts of rulings by WTO dispute panel 


India is challenging certain parts of rulings given by the WTO’s dispute settlement panel on a solar case against the US, according to a communication by the World Trade Organization.


Though India has won this case against the US as most of the ruling is in favour of India, New Delhi has challenged certain issues of law and legal interpretation covered in the panel’s report or ruling.


India hereby notifies the dispute settlement body (DSB) of its decision to appeal to the appellate body certain issues of law and legal interpretation covered in the panel report entitled US Certain Measures Relating to the Renewable Energy Sector which was circulated on 27 June 2019.


India has stated that it appeals and requests the appellate body to reverse the findings and conclusions of the panel with respect to the errors of law and legal interpretations contained in the report related to certain areas.


The panel erred in holding that India did not make a prima facie case that the Minnesota solar thermal rebate under measure 10 had ongoing effects, and therefore, constituted a matter before the panel that required examination in order to provide a positive solution to the dispute.


In June this year, a WTO dispute resolution panel ruled in favour of India in a case against the US saying that America’s domestic content requirements and subsidies provided by eight of its states in the renewable energy or the solar sector are violative of global trade norms.


The US has also challenged this ruling in the WTO’s Appellate Body, which is above the dispute settlement panel. In September 2016, India had dragged the US to the WTO’s dispute settlement mechanism over the issue.



Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware and Minnesota were the eight states providing subsidies.


India had stated that the measures are inconsistent with global trade norms because they provide less favourable treatment to imported products than domestic products, and because the subsidies are contingent on the use of domestic over imported goods.


Parties to a dispute can appeal a panel’s ruling. Appeals have to be based on points of law, such as legal interpretation — they cannot re-open factual findings made by the panel. Each appeal is heard by three members of an Appellate Body, comprising persons of recognised authority and unaffiliated with any government.


Each member of the appellate body is appointed for a fixed term. Generally, the Appellate Body has up to 3 months to conclude its report.


The Geneva-based body can uphold, modify or reverse legal findings and conclusions of WTO’s dispute panel and its reports. If the body’s ruling goes against India, the country will have to comply with the order in six-seven months.



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