Daily Current Affairs

7 August Current Affairs – Daily News



Lok Sabha endorses Centre’s decisions on Kashmir- Sandeep Phukan #GS2 #Governance


The Centre’s decisions setting new terms of engagement with Jammu and Kashmir — by reorganising it as Union Territories, ending its special status under Article 370 and 35 (A) and extending to it all the provisions of the Constitution were endorsed by the Lok Sabha on Tuesday after a debate that lasted close to seven hours.


The Lok Sabha approved a resolution abrogating special status to Jammu and Kashmir under Article 370 of the Constitution and a Bill for splitting the State into two Union Territories. The resolution was adopted by the House with 351 members voting in its support and 72 against it, while one member abstained.


The Bill to create the Union Territories of Jammu and Kashmir, and Ladakh was passed by 370 votes in favour and 70 against. Prime Minister Narendra Modi was present in the House.


Replying to the debate, Home Minister Amit Shah assured the House that the government could restore full Statehood to Jammu and Kashmir if the situation improved and expressed its willingness to engage with the local population.


We don’t want to talk to the Hurriyat, but we are ready to speak to the people of Kashmir,” he said, adding that the security forces would not be moved out of the Valley until the situation became fully normal.


Mr. Shah also asserted that the Centre’s decision did not impact in any way India’s claim over Pakistan-occupied Kashmir (PoK), and the government would continue to do so.


Lok Sabha Speaker Om Birla adjourned the House sine die (indefinitely) after the resolution and the Bill were passed. They will become law with President Ram Nath Kovind’s assent.


The Constitutional order amending the provisions of Article 370 and the bills — to create J&K and Ladakh as union territories and extend reservation benefits to certain sections — was passed by a division votes.


Removal of the special provisions according special status to J&K under Article 370 was supported by 351 members, 72 voted against it and one member abstained. In case of the J&K re-organisation bill, the government managed 370 votes in his favour.


During his reply, Mr Shah asserted that the special provisions under Article 370 denied basic rights to minorities (non-Muslims) in the Kashmir valley. He said if the families of Dr. Manmohan Singh or Inder Kumar Gujral had settled in Kashmir instead of Punjab, they could not have become Prime Ministers.



The Home Minister said Article 370 allowed Pakistan to spread terrorism in J&K that has seen 41,900 deaths since 1989. Mr Tharoor, had earlier commented that though the armed forces had met with success in dealing with terrorists, the Centre’s move may actually now allow them to cite “a new injustice’ and give a foothold to terror outfits group Al Qaeeda and ISIS.


The Home Minister also asserted that the Centre wouldn’t alter different sections under Article 371 that guarantees special provisions to several North Eastern States like Nagaland, Mizoram, Manipur, Meghalaya among others.


The House witnessed sharp exchanges between Opposition and Treasury benches through the day over a range of issues including how India’s first Prime Minister Pandit Jawahar Lal Nehru handled the accession of J&K.


When many speakers from the Treasury benches including union minister Jitender Singh (who represents Udhampur Lok Sabha seat) maintained that Art. 370 ensured prosperity only to ‘three political families’ and was inserted at the instance of Nehru, Mr. Tharoor countered that it was done with the concurrence of the then Home Minister Sardar Patel.






Revocation of Art. 370 brazen, says Congress Working Committee- Sobhana K. Nair #GS2 #Governance


Deploring the “unilateral”, “brazen” and “undemocratic” way in which Article 370 was revoked, the Congress Working Committee (CWC), in a statement, said this provision that accorded special powers to Jammu and Kashmir should have been “honoured” till it was amended constitutionally after due consultation.


Former Home Minister P. Chidambaram who read out the statement said that it was a ‘unanimous’ one. Every principle of Constitutional law, States’ rights, Parliamentary procedure and democratic governance was violated.


Article 370 was conceived and crafted by Pandit Jawaharlal Nehru, Sardar Vallabhai Patel and Dr. B.R. Ambedkar, assisted by N. Gopalaswamy Iyengar and V.P. Menon and is the Constitutional recognition of the terms of the Instrument of Accession between the State of Jammu & Kashmir and India.


In the face of the gaffe made by its floor leader in Lok Sabha Adhir Ranjan Chaudhary, the CWC asserted that all the issues pertaining to J&K are internal matters of India and no outside interference will be tolerated.


Mr. Azad had led the charge in the Rajya Sabha on Monday. Just minutes after Home Minister Amit Shah introduced the Bill, Mr. Azad stormed into the well of the House along with other Opposition parties and



sat there for more than two hours while the debate was going on. He equated the decision to cutting the very head of the Indian nation.


In a Parliamentary Party meeting on Tuesday morning of the Lok Sabha MPs sources said that UPA chairperson stressed that the party’s opposition is on the manner in which the BJP government brought in the legislation. She did not clarify her own position on whether or not she is opposed to the revoking of Article 370 itself.




Ahead of Jaishankar’s Beijing visit, India tells China to avoid commenting on Ladakh- Kallol Bhattacherjee #GS2 #IR


The formation of the Union Territory of Ladakh under the Jammu and Kashmir Reorganisation Bill, 2019, is an internal affair of India, and India expects other countries to avoid commenting on its internal developments.


The Indian response came after Beijing said that ending the special status of Jammu and Kashmir undermined its sovereignty. “The Jammu and Kashmir Reorganisation Bill, 2019, is an internal matter concerning the territory of India. India does not comment on the internal affairs of other countries and similarly expects other countries to do likewise. The Bill describes Kargil and Leh districts as constituents of the Union Territory of Ladakh.


The Chinese Foreign Ministry had highlighted the creation of Ladakh as a union territory while criticising the Indian move to end the special status for Kashmir. Foreign Ministry spokesperson Hua Chunying said on Tuesday that change of the status of Ladakh was ‘unacceptable’ to China.






Imran Khan warns of more violence in Kashmir- Mehmal Sarfraz #GS2 #IR


Pakistan Prime Minister Imran Khan criticised India’s decision to end Jammu and Kashmir’s special status and said this would lead to more violence. “They have gone against their Constitution, against the verdict of the Indian Supreme Court, against the verdict of the Jammu and Kashmir High Court, against 17 UN resolutions, against UN General Assembly resolutions, and against the Simla Agreement,” he said.


They want to change the demography of Kashmir by revoking Kashmir’s special status. This is against Article 49 of the fourth Geneva Convention; this is a war crime. They have violated all international and local laws for their ideology.”


Mr. Khan said the decision to revoke Article 370 that gives special status to Jammu and Kashmir would lead to further violence in the Valley. The Pakistan Prime Minister warned that India and Pakistan, both nuclear-armed states, could not afford to run such risks.



Pakistan never recognised the sham Indian efforts to legalise its occupation of Jammu & Kashmir through article 370 or 35-A decades ago; efforts which have now been revoked by India itself.”






Haryana Assembly passes Bill to check organised crime #GS2 #Governance


The Haryana Assembly passed the Haryana Control of Organised Crime Bill, 2019, to make special provisions for prevention and control of criminal activity by organised crime syndicates.


The Bill was presented by Parliamentary Affairs Minister Ram Bilas Sharma and was passed by the Assembly on the concluding day of the monsoon session. The government said in view of the emerging situation of organised crime in the State, it has become imperative to introduce a similar legislation to ensure effective legal action against gangsters, leaders and members of organised criminal gangs.


According to the Bill, whoever commits an offence of organised crime and if it results in the death of any person, it will be punishable with death or imprisonment for life and also be liable to a fine which will not be less than ₹1 lakh.


In any other case, the offender shall be punished with imprisonment for a term which shall not be less than five years but which may extend to imprisonment for life and shall also be liable to fine not less than ₹5 lakh.






Don’t pack toys and food together, advises FSSAI- Afshan Yasmeen #GS3 #SnT


The Food Safety and Standards Authority of India (FSSAI) has issued an advisory asking all States and Union Territories to discourage the practice of packing of toys/gifts with food products for infants and small children as there are chances of contamination and risk of accidental ingestion.


It has become a common practice for manufacturers to attract sales by adding small toys/gifts inside food packets. Several brands of chips and even chocolates come along with small toys/ gifts inside the packet. Some brands of chips packets even have tattoo stickers inside.


The advisory issued on July 22 by Shobhit Jain, FSSAI executive director (compliance division), said, “Considering the safety of the public at large, there is a need to discourage food businesses from providing any toy or gift item inside the food packages especially in case of food which is likely to be ingested directly by an infant or a small child. Such promotional free toys or gift items may be provided separately or packed separately.



As per section 3(1) zz(xi) of Food Safety and Standards Act, 2006 “unsafe food” means an article of food whose nature, substance or quality is so affected as to render it injurious to health by virtue of its being misbranded or sub-standard or food containing extraneous matter.


Quoting this provision under the Act, the advisory said: “Commissioner of Food Safety of all States/UTs are requested to make efforts for generating awareness amongst all stakeholders to discourage the practice of packing of such toys/gifts with food products for infants and small children.”


Manufacturers can offer free toys or gifts, but they should not be packed with the food product. Also, they should be not of similar shape or colour of the food product as children may swallow the tiny toys.






Consumer Protection Bill gets RS green light #GS2 #Governance


The Rajya Sabha on Tuesday passed the Consumer Protection Bill, 2019 that provides for the establishment of authorities for the timely and effective administration and settlement of consumer disputes.


The Bill, which has already been passed by the Lok Sabha, seeks to strengthen the rights of consumers and provides a mechanism for redressal of complaints regarding defects in goods and deficiency in services.


Moving the Bill for consideration and passing, Food and Consumer Affairs Minister Ram Vilas Paswan said it is a long-pending legislation, and except five, all recommendations of a Parliamentary Standing Committee have been included in the Bill.


The Bill will replace the Consumer Protection Act, 1986. Mr. Paswan said the government had dropped healthcare from the bill as several members had objected to it.


The Upper House also passed the Public Premises (Eviction of Unauthorised Occupants) Amendment Bill, 2019 for speedy eviction of unauthorised occupants of government residential accommodation


Cost of coal plants complying with green norms is ₹73,000 crore- Jacob Koshy #GS3 #Environment


It would cost India’s coal-fired power plants at least ₹73,000 crore to comply with the government’s directive to implement clean technology in existing and new plants, an analysis has shown. This could mean, at the minimum, a 10% hike in electricity bills for consumers, researchers involved say.


Current rules say that coal-fired power plants have to ensure that they curtail sulphur dioxide and nitrous oxide emissions from their smoke stack by implementing appropriate technology. While this was to be in place by 2017, it has now been extended to 2022 by the Union Environment Ministry.



For the analysis, coal plant units across the country producing about 177,000 MW of power were analysed. The plants were all commissioned on or before June 2017. India’s installed power capacity as of March 2019 is 194,000 MW.


The total capex required for pollution-control technology installation is estimated to be significant. The costs range between ₹73,176 crore if plants marked for retirement are not retrofitted and ₹86,135 crore if the retrofits were to happen across all eligible plants.


This will add between INR 0.32 per kWh to INR 0.72 per kWh (or around 9% to 21% to average tariffs) of electricity generated from these plants, depending on the load factor, the size of the unit and the remaining useful life.


According to the Central Electricity Authority, 166 GW of capacity requires retrofitting with flue gas desulphurisation (to meet sulphur oxide emission norms) and 66 GW with modifications or enhancements to reduce particulate matter emissions.


Exorbitant as the cost of retrofitting plants may be, not doing so would mean around 300,000 to 320,000 premature deaths and 5.1 crore hospital admission cases due to respiratory disorders between 2019 and 2030.


The mortality and morbidity costs attributing to PM2.5 alone were estimated to be INR 8,88,038 crore (USD 128 billion) and INR 74,184 crore (USD 11 billion) respectively during 2015-2030.






Article 370: Petition filed in Supreme Court against Centre’s notification on J&K #GS2 #Governance


A writ petition was filed in the Supreme Court on Tuesday challenging the August 5 notification of the Constitution (Application to Jammu and Kashmir) Order of 2019, which amends Article 370 of the Indian Constitution and scraps its 65-year-old predecessor — The Constitution (Application to Jammu and Kashmir) Order of May 14, 1954 — as unconstitutional, illegal and arbitrary.


The petition filed by advocate M. L. Sharma is likely to be mentioned before Justice N.V. Ramana on Wednesday. The Chief Justice of India and Justice S.A. Bobde, the second senior most judge, are sitting in a Constitution Bench in the Ayodhya title suit appeals. Justice Ramana is ranked third in seniority.


By junking the 1954 Order, the notification takes away the special rights and privileges enjoyed by the residents of Kashmir. It has effectively allowed the entire provisions of the Constitution, with all its amendments, exceptions and modifications, to apply to the area of Jammu and Kashmir, the petitioner contended. The 2019 notification superseded the 1954 Order and declared that “all the provisions of the Constitution, as amended from time to time, shall apply in relation to the State of Jammu and Kashmir”.



The August 5 notification has been issued under Article 370 of the Constitution. In short, the government employed Article 370, which had once protected the 1954 Order giving special rights to the people of J&K, to scrap the more than 60-year-old Order. The government justified the notification by saying that it closes the “chasm” between residents of J&K and citizens of other parts of the country.


The second part of the August 5 notification dealt with the addition of a new clause to Article 367, which amends the proviso to clause (3) of 370. Article 367 deals with the applicability of the General Clauses Act, 1897, to interpret the provisions of the Constitution.


The August 5 notification amends the expression “Constituent Assembly”, contained in the proviso to clause (3) of Article 370, to mean “Legislative Assembly”.


Clause (3) of Article 370 gives the President power to end the special rights and privileges of the people of J&K under the 1954 Order. However, the clause carried the rider that the President had to first get the consent of the Constituent Assembly of J&K before issuing such a notification. This rider or check on the President’s power was intended to give the people of the State a say in their own future.


However, the Constituent Assembly ceased to exist in 1956 and did not abrogate Article 370, which was deemed to be a permanent feature of the Constitution.


The August 5 notification tided over the obstacle of a non-existent ‘Constituent Assembly’ by amending the expression in the proviso to ‘Legislative Assembly’. An amendment in Article 370 should have undergone the constitutional amendment procedure envisaged under Article 368 of the Constitution, the petitioner said.






Afghanistan shadow over India’s Kashmir move- Kallol Bhattacherjee #GS2 #IR


India’s move to end the special status for Jammu and Kashmir indicates that the government is bracing for serious geo-strategic shifts that will unfold in South Asia over the next few months.


Though the domestic reasons for ending the special status was presented through a detailed analysis of the negative effects that the Article 370 had for Kashmir, the real reason for this hurried makeover lies in the international context.


Soon after Union Home Minister Amit Shah presented his case for turning Kashmir into a Union Territory of India, a message from U.S. Special Representative Zalmay Khalilzad stated that his talks with the Taliban in Doha, Qatar had yielded “great progress” and that he was heading to Delhi to create greater consensus in favour of peace in Afghanistan.


Taliban has alerted peace activists in Afghanistan that, as of now, an agreement with the U.S. has been finalised and both sides are expected to sign the agreement before this weekend. Earlier, the Taliban



wanted the U.S. to withdraw in nine months but the U.S., after multiple shifts, has settled for 15 months. That means the U.S. withdrawal from Afghanistan will be the major campaign card for President Donald Trump in the November 2020 election.


The implication of this peace agreement between the Taliban and U.S. will be felt across South Asia and in the West Asian region. This will be a ready acknowledgement that the Bush Jr. and Obama administration’s Afghanistan policy of the last two decades have failed and the Taliban will be the winner of the war in Afghanistan.


This will also be a landmark for Pakistan, which partially explains the silence that Prime Minister Imran Khan has maintained over Kashmir since the Indian announcement to end the special status of the State.


Mr. Khan’s stance shows that Pakistan is waiting anxiously till its biggest strategic assets — the Taliban


— seal the deal with the U.S. The Taliban have a historical parallel going back to the 1980s.


In 1988, following the Geneva Accords of 14 April, South Asia went into a tailspin with Pakistan trying to use some of the resources secured for the Afghan Mujahideen fighters to Kashmir where insurgency peaked subsequently creating the years of violence.


Thanks to quiet diplomacy, parts of the Afghan Mujahideen were in contact with India and the governments of Rajiv Gandhi, V.P. Singh and P.V. Narasimha Rao maintained contact with them, which they used to India’s advantage. In comparison, India has not yet made any major overture to the Taliban, which is being guarded by Pakistan zealously.


The immediate outcome of the U.S.-Taliban deal will be the visible display of American disinterest in South Asia. For the last two decades, the U.S. has been a critical balancer in South Asia. With this superpower eager to exit its biggest regional outpost, it is obvious that the regional rivals will clash.


This is the context in which India firming up its grip in Kashmir has been seen. The issue, however, is if Pakistan would like to go down the path of promoting cross-border militancy, as it did in the 1990s when the Lashkar-e-Taiba became a major terror force backed by masters in Islamabad. The coming months are expected to be tough for India, to say the least.


The volatile 1990s were managed with the help of local Kashmiri politicians like the Abdullahs, Muftis and deep sources among militants, who are unlikely to find the same political space in the territory that has been reduced to a Union Territory of India.


With space for democratic politics restricted in Kashmir, a lot depends on what role the “old” Kashmiri dynasties will play in the region and who will be the new discoveries of India in the political field of Kashmir.


India can, however, play its hand in Kashmir undisturbed only if Pakistan decides to sit back, which is unlikely after scoring a major strategic victory on its Taliban front. It remains to be seen what will be the impact of the Taliban-U.S. pact on the Ashraf Ghani government in Kabul, which is seeking renewed legitimacy through the upcoming election that the Taliban has opposed. In brief, India has made a move,



but it is far from achieving its strategic goals that appear under the shadow of powers beyond its control.






J&K Assembly — like, unlike Delhi #GS2 #Governance


The Jammu and Kashmir Reorganisation Bill, 2019, just passed by Parliament, paves the way for formation of the Union Territory of J&K. It will join two other Union Territories — National Capital Territory of Delhi and Puducherry — which, through Article 239 A of the Constitution, have a Legislative Assembly to enact laws on certain subjects and a Council of Ministers headed by a Chief Minister to aid and advise the Lieutenant-Governor on subjects related to such legislation. For subjects outside the purview of the Assembly, the Lieutenant-Governor does not need the aid and advice of the Chief Minister.


Some key subjects where the model proposed for Jammu & Kashmir is similar to that of Delhi, and where there are variations between the two:


Extent of legislative power


Section 13 of the Bill states that the provisions contained in Article 239 A of the Constitution that are applicable to Union Territory of Puducherry shall also apply to the Union Territory of Jammu and Kashmir. The UT Assembly has the power to enact laws on matters under the State List and the Concurrent List, barring subjects that are exclusively under the ambit of the Union Government.


The Seventh Schedule has 61 subjects in the State List — law & order, health, land, local government etc


— and 52 in the Concurrent List such as forests, wildlife protection, social security, employment, etc.


In the J&K Bill, Section 32 proposes that the Assembly can make laws on any subjects in the State and Concurrent lists except on state subjects relating to “public order” and “police”. Therefore, all laws on these two subjects will be directly under the Centre. This is the case in Delhi, too.


In Delhi, by insertion of Article 239AA and by virtue of the Sixty-ninth Constitutional Amendment passed by Parliament, the Assembly cannot legislate on matters in entry 18 of the State List, which is land. In J&K, the Assembly can do so.


Anti-Corruption Bureau


Control of the ACB, which has the power to register FIRs on corruption cases and make arrests, was a contentious issue between Delhi’s AAP government and the Centre. In February this year, a two-judge Supreme Court Bench held that the ACB will be under control of the L-G and the Delhi government has no police powers.



For the proposed UT of Jammu & Kashmir, the Bill is very clear. Section 53(2)(iii) states that the Lieutenant Governor shall, in the exercise of his functions, act in his discretion, in matters related to “All India Services and Anti-Corruption Bureau”. Therefore, all appointments and other administrative matters related to the ACB will be directly under the Lieutenant-Governor.




In Delhi, another bone of contention has been services. A Bench of Justices A K Sikri and Ashok Bhushan differed on the issue of transfer of officers posted in Delhi, and referred the matter to a three-judge Bench.


For J&K, Part XIII and Section 88(4) of the Bill make it clear that the Lieutenant-Governor will have discretionary powers relating to composition, strength and allocation of officers of the Indian Administrative Service, Indian Police Service and Indian Forest Service



















Section 92 deals with provisions relating to “other services”. It states: “Every person who, immediately before the appointed day, is holding or discharging the duties of any post or office in connection with the affairs of the existing State of Jammu and Kashmir in any area which on that day falls within one of the successor Union Territory, shall continue to hold the same post or office in that successor Union Territory, and shall be deemed, on and from that day, to have been duly appointed to the post or office by the Government of, or other appropriate authority in, that successor Union Territory.” It adds: “Provided that nothing in this section shall be deemed to prevent a competent authority, on and from the appointed day, from passing in relation to such person any order affecting the continuance in such post or office.”


The “competent authority” mentioned, therefore, can alter the posting of an officer currently employed with the Jammu & Kashmir government. However, as in Delhi, it is unclear whether the transfer of officers will be under the exclusive domain of the Lieutenant-Governor.


Other matters



Section 55 of the J&K Bill states that the Lieutenant-Governor shall make rules on the advice of the Council of Ministers for the allocation of business to the ministers, for the more convenient transaction of business with the ministers including the procedure to be adopted in case of a difference of opinion between the Lieutenant Governor and the Council of Ministers or a minister. The same rule applies to NCT of Delhi.


Section 36(3) states that if a Bill which, if enacted and brought into operation, would involve “expenditure from the Consolidated Fund of Union Territory”, it shall not be passed by the Legislative Assembly of the Union Territory “unless the Lieutenant Governor has recommended to the Assembly, the consideration of the Bill”. The same rule applies to NCT of Delhi.






1/4 of world’s population faces huge water stress, bulk in India #GS3 #Environment






























One-quarter of the world’s population faces “extremely high” levels of baseline water stress, which means that irrigated agriculture, industries, and municipalities withdraw more than 80% of their available supply on average every year, new data from the World Resources Institute (WRI) show.


India is 13th among these 17 countries. India has more than three times the population of the other 16 extremely highly stressed countries combined, the WRI noted. This implies that more than three-quarters of these populations facing extremely high water stress live in India.



India’s water challenges extend beyond Chennai, which was recently reported to have “run out of water”. The WRI noted that last year, NITI Aayog declared that the country is “suffering from the worst water crisis in its history, and millions of lives and livelihoods are under threat”.


In addition to rivers, lakes and streams, India’s groundwater resources are severely overdrawn, largely to provide water for irrigation. Groundwater tables in some northern aquifers declined at a rate of more than 8 cm per year between 1990 and 2014.


The WRI took note of steps India has taken to mitigate water stress, including setting up the Jal Shakti Ministry. Other solutions India could pursue, the WRI suggested, include more efficient irrigation; conserving and restoring lakes, floodplains, and groundwater recharge areas; and collecting and storing rainwater.


Globally, water withdrawals have more than doubled since the 1960s due to growing demand. Apart from the 17 countries facing withdrawals of 80% or more from available supply, 44 countries (home to one-third of the world) face “high” levels of stress, where on average more than 40% of available supply is withdrawn every year.


Twelve out of the 17 most water-stressed countries are in the Middle East and North Africa. The region is hot and dry, so water supply is low to begin with, but growing demands have pushed countries further into extreme stress.


The WRI said climate change is set to complicate matters further: The World Bank found that this region has the greatest expected economic losses from climate-related water scarcity, estimated at 6%-14% of GDP by 2050.


Even in countries with low overall water stress, communities may still be experiencing extremely stressed conditions. The WRI cited the examples of South Africa and the United States, which rank 48 and 71 on the list, respectively, yet the Western Cape (SA) and New Mexico (US) experience extremely high stress levels.






US says China manipulates yuan. What does that mean, how is it done? #GS3 #Economy


US Treasury Department declared that China is a currency manipulator. The move came after the People’s Bank of China (PBOC), the central bank of China, allowed the yuan to suddenly depreciate (or lose value) relative to the dollar by 1.9 per cent — one of the biggest single-day falls. As a result, the yuan breached the 7-to-a-dollar-mark for the first time since 2008.



In retaliation, the US announced that it would approach the International Monetary Fund “to eliminate the unfair competitive advantage created by China’s latest actions”. It signalled that the ongoing trade war between the world’s two biggest economies was now turning into a currency war as well.


What is a currency’s exchange rate?


In many ways, the exchange rate of your currency is the fundamental price in the economy. If an Indian car is worth Rs 10 lakh, then that is all the information we need to conduct that transaction; we do not have to wonder “what is the price of a rupee?”.


However, if we’re trying to buy a car that was produced in, say the US, we would need more information than just its price (say, $15,000 in the US). This is because buying the imported car involves two transactions: one, using your rupees to buy 15,000 dollars; two, using these dollars to buy the car.


In the globalised world economy, where different parts of each good (and service) are produced in different countries, exchange rates become all important. It often determines the affordability of buying or selling internationally. So, if the rupee is at 70 to a dollar, the car may be affordable, but not so at 100 to a dollar.


There is a flip side to this picture. While a stronger rupee (that is 70/$, instead of 100/$) is better for you as a consumer, it is worse for you if you were an Indian car manufacturer hoping to sell your car in the US. That’s because the rupee’s strength makes your car that much less affordable to US consumers.


How are exchange rates determined?


In an ideal world, the exchange rate for any currency would be determined by the interplay of its demand and supply. If more Indians want to buy US goods, there would be a higher demand for the dollar relative to the rupee.


This, in turn, would mean the dollar would be “stronger” than the rupee — and gain in strength as the demand increases. If demand falls, the dollar would depreciate relative to the rupee (or the rupee would appreciate relative to the dollar).


So, what is currency manipulation?


The real world is far from ideal. Most governments and central banks are bothered about generating more growth and employment at home. A weaker domestic currency comes in very handy when governments are trying to attract foreign demand and boost exports. China’s economic growth has been essentially fuelled by exporting to the world.


Currency manipulation happens when governments try to artificially tweak the exchange rate to gain an “unfair” advantage in trade. In other words, if China’s central bank buys dollars in the forex market, it can artificially weaken the yuan — and Chinese goods will then become more affordable (and competitive) in the international market.



Some amount of such “intervention” by central banks is allowed to reduce wild fluctuations in the exchange rate. But excessive and undisclosed interventions are not considered fair.


Consider: An American-made mobile phone could be in demand in India because it is a genuinely good phone. However, if a Chinese company can export a phone that is not only a close approximation of the American phone but also considerably “cheaper”, it is quite likely that the more price-sensitive Indian consumer will prefer the Chinese phone. Forget the Indians, if the Chinese phone is cheap enough, it might lure US consumers as well.


The key question is: what makes the Chinese phone cheaper? If it is the case that China is more efficient at making the phone, then nobody can complain. But if China is artificially reducing the “price” of its currency — by devaluing the yuan relative to the dollar or the rupee — it will be accused of manipulating its currency.






























How did the US conclude that China was manipulating the yuan?


In the so-called “FX report” released by the US Treasury Department in May, it found that the yuan’s depreciation against the dollar was far more than its depreciation against a trade-weighted basket of 24 currencies (see chart left). It also found that the yuan depreciated more than what it should have, if the fall were due only to the known interventions by the Chinese central bank.


The US accused the People’s Bank of China of using China’s state-owned enterprises to do its dirty work. The US has also found that Chinese authorities intervene more assiduously when the yuan starts appreciating against the dollar, but look the other way when the yuan starts weakening.





What is Article 371? #GS2 #Governance



Home Minister Amit Shah told Lok Sabha Tuesday that the government had no intention of removing Article 371 of the Constitution, which includes “special provisions” for 11 states, including six states of the Northeast. His assurance came after Congress leaders expressed apprehension that having rendered Article 370 irrelevant, the government might unilaterally move to abrogate or modify Article 371.


Articles 369 through 392 (including some that have been removed) appear in Part XXI of the Constitution, titled ‘Temporary, Transitional and Special Provisions’. Article 370 deals with ‘Temporary Provisions with respect to the State of Jammu and Kashmir’; Articles 371, 371A, 371B, 371C, 371D, 371E, 371F, 371G, 371H, and 371J define special provisions with regard to another state (or states).


Article 371I deals with Goa, but it does not include any provision that can be deemed ‘special’.




Articles 370 and 371 were part of the Constitution at the time of its commencement on January 26, 1950; Articles 371A through 371J were incorporated subsequently.




Article 371, Maharashtra and Gujarat: Governor has “special responsibility” to establish “separate development boards” for “Vidarbha, Marathwada, and the rest of Maharashtra”, and Saurashtra and Kutch in Gujarat; ensure “equitable allocation of funds for developmental expenditure over the said areas”, and “equitable arrangement providing adequate facilities for technical education and vocational training, and adequate opportunities for employment” under the state government.


Article 371A (13th Amendment Act, 1962), Nagaland: This provision was inserted after a 16-point agreement between the Centre and the Naga People’s Convention in 1960, which led to the creation of Nagaland in 1963. Parliament cannot legislate in matters of Naga religion or social practices, Naga customary law and procedure, administration of civil and criminal justice involving decisions according to Naga customary law, and ownership and transfer of land without concurrence of the state Assembly.


Article 371B (22nd Amendment Act, 1969), Assam: The President may provide for the constitution and functions of a committee of the Assembly consisting of members elected from the state’s tribal areas.


Article 371C (27th Amendment Act, 1971), Manipur: The President may provide for the constitution of a committee of elected members from the Hill areas in the Assembly, and entrust “special responsibility” to the Governor to ensure its proper functioning.


Article 371D (32nd Amendment Act, 1973; substituted by The Andhra Pradesh Reorganisation Act, 2014), Andhra Pradesh and Telangana: President must ensure “equitable opportunities and facilities” in



“public employment and education to people from different parts of the state”. He may require the state government to organise “any class or classes of posts in a civil service of, or any class or classes of civil posts under, the State into different local cadres for different parts of the State”. He has similar powers vis-à-vis admissions in educational institutions.


Article 371E: Allows for the establishment of a university in Andhra Pradesh by a law of Parliament. But this is not a “special provision” in the sense of the others in this part.


Article 371F (36th Amendment Act, 1975), Sikkim: The members of the Legislative Assembly of Sikkim shall elect the representative of Sikkim in the House of the People. To protect the rights and interests of various sections of the population of Sikkim, Parliament may provide for the number of seats in the Assembly, which may be filled only by candidates from those sections.


Article 371G (53rd Amendment Act, 1986), Mizoram: Parliament cannot make laws on “religious or social practices of the Mizos, Mizo customary law and procedure, administration of civil and criminal justice involving decisions according to Mizo customary law, ownership and transfer of land… unless the Assembly… so decides”.


Article 371H (55th Amendment Act, 1986), Arunachal Pradesh: The Governor has a special responsibility with regard to law and order, and “he shall, after consulting the Council of Ministers, exercise his individual judgment as to the action to be taken”.


Article 371J (98th Amendment Act, 2012), Karnataka: There is a provision for a separate development board for the Hyderabad-Karnataka region. There shall be “equitable allocation of funds for developmental expenditure over the said region”, and “equitable opportunities and facilities” for people of this region in government jobs and education. A proportion of seats in educational institutions and state government jobs in Hyderabad-Karnataka can be reserved for individuals from that region.






NIIF gets $2-billion boost from Canadian, Australian funds #GS3 #Economy


The National Investment and Infrastructure Fund (NIIF) on Tuesday said Australia’s largest superannuation fund AustralianSuper and Canada’s Ontario Teachers’ Pension Plan have each signed agreements to invest up to $1 billion with the NIIF Master Fund.


The agreements include commitments of $250 million each in the Master Fund and co-investment rights of up to $750 million each in future opportunities alongside the Fund, NIIF said in a statement.


“This marks the third close of the NIIF Master Fund. AustralianSuper and Ontario Teachers’ will now join the Government of India (GOI), Abu Dhabi Investment Authority (ADIA), Temasek, HDFC Group, ICICI Bank, Kotak Mahindra Life Insurance and Axis Bank as investors in the Fund,” it said.



The NIIF invests in equity capital in the country’s core infrastructure sectors with a focus on transportation, energy and urban infrastructure.


AustralianSuper and Ontario Teachers’ will also become shareholders in National Investment and Infrastructure Fund Ltd, NIIF’s investment management company. Domestic investors HDFC Life and Kotak Mahindra Life Insurance have further committed Rs 60 crore in the third round.


“With this, NIIF Master Fund becomes the largest infrastructure fund in India with assets under management of over $1.8 billion and a co-investment pool of $2.5 billion, which will enable the Fund to invest at the scale required for the large infrastructure requirements in India,” it said. The Master Fund has a tenure of 15 years and is denominated in the Indian rupees to provide long term funding in the infrastructure sector.


NIIF was set up in December 2015 to catalyse funding into the country’s core sector. It has a targeted corpus of Rs 40,000 crore to be raised over the years — 49 per cent of which will be funded by the government at any given point of time.


The remaining 51 per cent of the corpus is to be raised from domestic and global investors, including international pension funds, sovereign wealth funds, multilateral/bilateral investors.


NIIF Managing director and chief executive officer Sujoy Bose said, “AustralianSuper and Ontario Teachers’ are among the most respected infrastructure investors in the world and bring considerable global perspective and value to NIIF.


Their significant investments demonstrate the international interest in Indian infrastructure and reconfirms the many strengths of NIIF, which positions it as one of the primary Indian pooling vehicles for global capital.”


Dale Burgess, senior managing director (infrastructure and natural resources) of Ontario Teachers’, said, “NIIF’s investment strategy aligns with the long-term and partner-oriented investing approach, we have successfully used in other regions.”


Mark Delaney, chief investment officer with AustralianSuper, said India’s burgeoning infrastructure market is among the largest in Asia, which presents many opportunities for investment and a strong pipeline of investible projects.


NIIF was registered with the Securities and Exchange Board of India as a Category II Alternate Investment Fund on December 28, 2015. The fund has been set up as a fund of funds structure with an aim to generate risk-adjusted returns for its investors alongside promoting infrastructure development.


Apart from the Master Fund, the Green Growth Equity Fund (GGEF) is the first investment of NIIF’s Fund of Funds. NIIF and the UK Government have committed GBP 120 million each into the Fund. NIIF also has investment in the ports, logistics and real estate sectors, among others. As per government estimates, India requires Rs 20 lakh crore worth of investments in the infrastructure sector each year.





China warns India of ‘reverse sanctions’ if Huawei is blocked #GS3 #Economy



China has told India not to block its Huawei Technologies from doing business in the country, warning there could be consequences for Indian firms operating in China.


India is due to hold trials for installing a next-generation 5G cellular network in the next few months, but has not yet taken a call on whether it would invite the Chinese telecoms equipment maker to take part.


Huawei, the world’s biggest maker of such gear, is at the centre of a geopolitical tug-of-war between China and the United States. US President Donald Trump’s administration put the company on a blacklist in May, citing national security concerns. It has asked its allies not to use Huawei equipment, which it says China could exploit for spying.


Two sources privy to internal discussions in New Delhi said India’s ambassador in Beijing, Vikram Misri, was called to the Chinese foreign ministry on July 10 to hear China’s concerns about the US campaign to keep Huawei out of 5G mobile infrastructure worldwide.


During the meeting, Chinese officials said there could be “reverse sanctions” on Indian firms engaged in business in China should India block Huawei because of pressure from Washington, one of the sources said, citing a readout of the ambassador’s meeting.


The Indian foreign ministry did not respond to a request for comment. China’s foreign ministry also did not respond to a Reuters request for comment on the matter.


Indian companies have a far smaller presence in China than other major economies. But firms including Infosys, TCS, Dr Reddy’s Laboratories Reliance Industries and Mahindra & Mahindra have a foothold there in manufacturing, healthcare, financial services and outsourcing.


A potential row over Huawei could revive tensions in the broader India and China relationship just as the two sides have been making high-level efforts to ensure their long standing territorial disputes do not escalate.


In October, Prime Minister Narendra Modi will host Chinese President Xi Jinping in the sacred Hindu city of Varanasi, his parliamentary constituency in northern India, where the two are expected to address trade issues including a $53 billion trade deficit in 2018/19 that India is concerned about.


The main right-wing group tied to Modi’s ruling alliance, which has a long-standing distrust of China and promotes self- reliance in the economy, has stepped up criticism of Huawei.


In a letter written to Modi last week, Ashwani Mahajan, the head of the economic wing of the Hindu nationalist Rashtriya Swayamsevak Sangh, said there were concerns about the operations of Huawei in India.



“We as a country are not yet sure of relying on Huawei. Globally, the Chinese companies, including Huawei, are facing allegations that they ‘underbid’ projects, and position themselves and their establishment back home to snoop and enable them to shut remotely, if required be,” he wrote.


Minister Prasad told parliament that six proposals have been received for 5G technology trials, including from Huawei. He did not name the others, but firms such as Sweden’s Ericsson Finland’s Nokia and South Korea’s Samsung Electronics are expected to participate.


A high-level group of officials, led by the Principal Scientific Advisor to the Indian government Dr. K Vijay Raghavan and including representatives from the departments of telecoms, information technology and the intelligence services, has been looking into whether to open the 5G trials to Huawei.


The committee has found no evidence to suggest Huawei has used “back-door” programmes or malware to collect data in its current operations in India, the first source and another official in the federal telecoms ministry said.


The interior ministry, which is responsible for the security of the infrastructure, had issued no directive to curtail Huawei’s entry. “We can’t simply reject them just because they are Chinese,” said the official.


One option that a tech expert at the government’s National Security Advisory Board (NSAB) has suggested is to ensure the hardware and software for the proposed fifth-generation network are not both sourced from Huawei.


The government should get wireless carriers who will be rolling out 5G services to use Indian-made software to drive equipment supplied by gearmakers such as Huawei, NSAB expert V.Kamakoti said in a recent internal presentation reviewed by Reuters.



Leave a Reply

%d bloggers like this: