8 August Current Affairs – Daily News

8 August Current Affairs – Daily News

CIVIL SNIPPETS

 

Pakistan expels India’s envoy, to suspend bilateral trade #GS2 #IR

 

Pakistan expelled Indian High Commissioner Ajay Bisaria, minutes after it decided to downgrade diplomatic ties with India over what it called New Delhi’s “unilateral and illegal” move to revoke the special status of Jammu and Kashmir.

 

This announcement came after Pakistan Prime Minister Imran Khan chaired a meeting of the National Security Committee (NSC), attended by top civil and military leadership. This meeting also decided to suspend bilateral trade and review the “bilateral arrangements”.

 

Our ambassadors will no longer be in New Delhi and their counterparts here will also be sent back. The NSC also decided to take up the issue with the UN Security Council. Imran Khan had warned of a possible war with India after it bifurcated J&K into two Union Territories.

 

India had emphasised that the Kashmir issue was an internal matter and it would not entertain any external intervention. “India does not comment on the internal affairs of other countries and similarly expects other countries to do likewise.

 

The trade suspension is expected to hurt Pakistan more than India, even though India exports goods worth $2 billion (2018-19) and imports goods valued at $500 million from Pakistan.

 

India is less dependent on Pakistan… India’s goods exports to Pakistan have limited profile as Pakistan has not given MFN (Most Favoured Nation) status to India and such goods have a ready market in South Asia and the Middle East.

 

Following the Pulwama terror attack, India had withdrawn the MFN status to Pakistan. Delhi also increased import duties on all items from Pakistan by 200 per cent in February.

 

The Pakistan NSC also decided that the country’s Independence Day on August 14 will be observed in solidarity with Kashmiris and their “just struggle for their right of self-determination’’. August 15, India’s Independence Day, will be observed as a Black Day.

 

Reacting to the development, the US said there is an “urgent need” for dialogue among all actors to reduce tensions and to avoid a potential military escalation in South Asia. It also refuted media reports that India consulted or informed the US about its J&K decision.

 

 

 

 

 

RBI takes offbeat tack to help reverse growth slowdown #GS3 #Economy

 

The Reserve Bank of India on Wednesday opted to break with convention by reducing the key policy rate, the repo rate, by 35 basis points (bps) to 5.4% as it focused monetary policy measures on helping

 

 

revive demand to tackle a deepening economic slowdown. While central banks typically cut or raise interest rates in increments of a quarter percentage point or multiples.

 

The extent of cut was determined by the situation, he said. This is the first time the RBI has moved rates by a figure that is not a multiple of 25 bps. A percentage point comprises 100 bps.

 

Given the evolving economic situation, the assessment of MPC, based on demand conditions etc., 25 bps cut was inadequate, while a 50 bps rate cut was excessive, especially after taking into account the actions already undertaken.

 

While all six members of the monetary policy committee (MPC) voted to cut rates, two members backed a 25 bps cut. With the GDP growth forecast for the year pared to 6.9%, the policy stance was kept accommodative.

 

RBI revised the growth forecast to 6.9% for FY20, from 7% predicted during the June policy while the first quarter of 2020-21, growth rate is expected to be 7.4%. Consumer price index based inflation is projected slightly higher at 3.5-3.7% for the second half of the current financial year and 3.6% for the first quarter of next fiscal. With this rate cut, RBI has now reduced the repo rate by 110 bps in 2019.

 

RBI has painted a reasonably gloomy picture for the economy and the 35 bps cut seems to suggest that it concedes the fact that the extent of the slowdown is sharper than it had projected earlier although it does not see the need to push the panic button (that a 50 bps might have been interpreted as.

 

Though banks have been reluctant to to cut rates in response to the previous 75 bps repo rate cut, as their benchmark lending rate only declines by 29 bps, but after Wednesday’s rate cut, SBI was quick to response with a 15 bps cut in marginal cost of fund based lending rate. Other banks are expected to follow suit.

 

 

Apart from rate cut, RBI has reduced the risk weight for consumer loans, except credit cards, from 125% to 100% – a step to address falling consumer demand in segments such as individual vehicle loans and personal loans. The NBFC sector which is facing cash crunch also saw measures which will increase banks’ headroom to lend to these lenders.

 

Commenting RBI steps as bazooka measures, SBI chairman Rajnish Kumar said, “The RBI has unveiled a host of bazooka measures to arrest the recent growth pangs even as it has marginally lowered its growth forecast for FY20.”

 

HSBC India Chief Economist Pranjul Bhandari who thinks growth for FY 20 will be much lower at 6.4%, said they expect two more rate of 25 bps over the fourth quarter of current fiscal and first quarter of the next fiscal.

 

The RBI’s explicit emphasis on prioritizing a growth recovery and expectations of one-year ahead inflation remaining well below 4%, gives us further confidence in our call. Stock markets were disappointed as they expecting a 50 bps rate cut.

 

Equities lost ground with the benchmark Sensex shedding 286.35 points or 0.77% to close at 36,690.50.

 

Earlier in the day, it touched a high of 37,104.79 but could not sustain the level amidst selling pressure.

 

Nearly 1,400 stocks lost ground, as against 1,114 gainers on BSE. The Sensex pack saw 22 stocks end in the red with heavyweights like State Bank of India, Tata Motors, Vedanta, Tata Steel and M&M all losing over 3% each. The broader Nifty closed at 10,855.50, down 92.75 points or 0.85%.

 

“While we were hoping 50 bps rate cut, the RBI has chosen unconventional cut of 35bps which is mildly positive for the market. However, RBI cutting its estimation of GDP growth rate below 7%, while widely expected, may not go down well with the market in short term.

 

 

 

 

 

Why use Urdu, Persian terms in FIR, asks HC #GS2 #Governance

 

The Delhi High Court on Wednesday directed the Delhi Police Commissioner to explain why Urdu or Persian terms are used in a FIR when the same are not used by the complainant.

 

A Bench of Chief Justice D.N. Patel and Justice C. Hari Shankar said: “Too much flowery language, the meaning of which is to be found out by a dictionary, should not be used. An FIR should be in the words of the complainant.

 

The police is there for public at large and not just for persons with doctorate degree in Urdu or Persian. Simple language should be used, instead of high-sounding words. People have to know what is written. It is applicable to use of English also. Do not use bombastic language.”

 

 

The High Court directed the Police Commissioner to file an affidavit explaining whether the Urdu or Persian words are used by the agency or the complainant. It listed the case for further hearing on November 25.

 

The High Court was hearing a petition filed by advocate Vishalakshi Goel seeking directions to the Delhi Police not to use Urdu and Persian words in FIRs. Delhi government additional standing counsel Naushad Ahmed Khan, appearing for the police, said the Urdu and Persian words used in FIRs can be understood by “making a little effort”. He added that the words are used when transferring the FIR to the higher authorities.

 

Online content can’t be regulated under Cinematograph Act: HC #GS2 #Governance

 

The Karnataka High Court on Wednesday held that the films, serials and other multimedia contents transmitted, broadcast or exhibited through internet platforms, like YouTube, Google India, online streaming platforms like Hotstar, Amazon Prime, Netflix and Alt Digital, cannot be regulated under the Cinematograph Act, 1952.

 

A division bench comprising Chief Justice Abhay Shreeniwas Oka and Justice Mohammad Nawaz passed the order while rejecting a plea made in a PIL petition filed Padmanabh Shankar, a resident of Bengaluru.

 

While pointing out that children were being affected due to unregulated content transmitted through online platforms, the petitioner had sought a declaration from the court that films, serials, and other multimedia content transmitted through online platforms require certification under the Cinematograph Act till a suitable legislation is made to regulate them.

 

It was also contended in the petition that the Cinematographic Act, 1952 and the Cable Television Network Regulation Ac, 1995 are silent with regard to broadcast or transmission of films, cinema, serials and other multimedia contents through the internet.

 

The bench said that going by the concept of internet and its operation, the act of exhibition of films, serials and other content perhaps amounts to transfer of files based on requests by users, and hence it is not possible to accept that transfer of files or films, serials through the internet comes under the purview of Cinematograph Act.

 

However, the bench observed that the anxiety of the petitioner, who is a senior citizen, that films, serials and other multimedia content transmitted through internet platforms will have an adverse impact on children can be well understood.

 

While observing that the concern expressed by the petitioner merits consideration by the Union government, the bench said that it hopes that the Union government, considering a larger public interest, will find a solution within the four corners of the law if the petitioner submits a representation seeking regulation of content of online streaming platforms.

 

 

 

 

Centre unveils plan for coastal zone management -Jacob Kosh #GS3 #Environment

 

The Environment Ministry has unveiled a draft plan that will dictate how prospective infrastructure projects situated along the coast ought to be assessed before they can apply for clearance. The draft

 

Environmental and Social Management Framework (ESMF) is part of a World Bank-funded project.

 

The document lays out guidelines out for coastal States to adopt when they approve and regulate projects in coastal zones.

 

The project seeks to assist the Government of India in enhancing coastal resource efficiency and resilience, by building collective capacity (including communities and decentralised governance) for adopting and implementing integrated coastal management approaches,” the introduction to the report notes. The document was prepared by the Society for Integrated Coastal Management, a Ministry-affiliated body.

 

Integrated coastal zone management (ICZM) has to be a continuous process rather than a “one-off” investment action. So far three coastal States, namely Gujarat, Odisha and West Bengal, have prepared Integrated Coastal Zone Management Plans with support from the World Bank. Such plans would be prepared for the selected coastal stretches in other States/UT, the project notes.

 

The key activities proposed for coastal zone development that consist of investments by States include: mangrove afforestation/shelter beds, habitat conservation activities such as restoration of sea-grass meadows, eco-restoration of sacred groves, development of hatcheries, rearing/rescue centres for turtles and other marine animals, creation of infrastructure for tourism, restoration and recharge of water bodies, beach cleaning and development, and other small infrastructure facilities.

 

Livelihood improvement projects include demonstration of climate resilient or salinity resistant agriculture, water harvesting and recharge/storage, creation of infrastructure and facilities to support eco-tourism, community-based small-scale mariculture, seaweed cultivation, aquaponics, and value addition to other livelihood activities.

 

The plan describes how “environmental and social aspects” ought to be integrated into the planning, design, implementation of projects.

 

Projects should strive to avoid or minimise impacts on cultural properties and natural habitats, compensate any loss of livelihood or assets, adopt higher work safety standards, occupational and community health and safety.

 

Inadequate planning has often obstructed coastal zone development projects. On June 16 the Bombay high court struck down the Coastal Regulation Zone (CRZ) clearance for its ₹14,000-crore Coastal Road,

 

 

which is part of the Eastern Freeway to be constructed to provide an alternate speedy connect between South Mumbai and Western suburbs. This was on the grounds of an inadequate scientific study by the Maharashtra Coastal Zone Management and lapses by the Union environment ministry which had overlooked these lacunae.

 

 

 

 

 

Home Ministry pulls out original instrument of accession to support Article 370 move- Vijaita Singh #GS2 #Governance

 

Officials in the Home Ministry fished out original copies of the “Instrument of the Accession” signed with 562 princely states during the time of Independence to make a legal basis for the amendment to Article 370 taking away the special status of Jammu & Kashmir.

 

The copies pulled out from the archival records were matched with the Instrument of Accession signed by Maharaja Hari Singh, the ruler of J&K, with India on October 26, 1947. “We matched the accession document of J&K with that signed with the other princely States, each and every word was the same. According to him, though the legal document was the same, Article 370 was only applied in J&K.

 

The accession agreement was never an impediment for the merger of other States with India. This is what made it clear that Article 370 could be removed as it was not part of the original agreement.

 

The document was to accede in respect of only the following subjects — Defence, Foreign Affairs, Communications and ancillary that included matters related to courts and electtion.

 

On April 20, 1951, the Maharaja issued a Proclamation constituting a 75-member Constituent Assembly (CA) for the purposes of framing a Constitution for the State. Home Minister Amit Shah has said in both the Houses of Parliament that Article 370 was “originally a temporary provision.”

 

We have been doing the groundwork for the past two weeks. The move was taken after sound legal scrutiny. On Tuesday night, the President of India declaration that “all clauses of Article 370 shall cease to be operative in the State of Jammu and Kashmir” was notified in the gazette of India.

 

Congress leader Manish Tewari said in the Lok Sabha on Tuesday that after J&K was attacked by the Pakistanis in 1947, Hari Singh sought India’s help.

 

“After J&K was attacked, Hari Singh decided that his future was in a secular India. He signed the Instrument of Accession, some promises were made…Article 370 and a separate constitution were part of it.”

 

Mr. Shah told the Lok Sabha on Tuesday that Article 370(3) provided the President the powers to amend or repeal the Article by issuing a notification, based on a recommendation of the Constituent Assembly of J&K and since it doesn’t exist any more, it would be read as the Legislative Assembly.

 

 

He added that since the Legislative Assembly of J&K was dissolved last year, its powers vested in both the Houses of Parliament.

 

 

 

 

 

Banks get more headroom for lending to NBFCs #GS3 #Economy

 

The on-going liquidity crunch faced by non-banking finance companies (NBFCs) has made the Reserve Bank of India (RBI) to take further measures to increase credit flow to the sector. The central bank has decided to increase the cap on a bank’s exposure to a single NBFC to 20% of its tier-I capital from 15% now.

 

Further, RBI has decided to give ‘priority sector’ tag for banks lending to NBFCs, for on-lending to farm, small and medium enterprises and housing sector.

 

Banks have been allowed to lend to the NBFCs for on-lending to the agriculture sector up to ₹10 lakh, up to ₹20 lakh to micro and small enterprises, and for housing, up to ₹20 lakh per borrower. These will be classified as priority sector lending.

 

This will improve the available sources of funding, especially for new-age mid and small-sized NBFCs, at a relatively lower cost, while improving banks’ ability to meet their priority sector lending targets.

 

“Permitting banks to on-lend through NBFCs for priority sector lending would make this transmission faster and more efficient,” Umesh Revankar, MD and CEO, Shriram Transport Finance Ltd., said.

 

RBI Governor Shaktikanta Das also batted for mutual fund and insurance companies, who are creditors of stressed NBFCs, to be part of the resolution process, and said inter-regulatory discussions were going on in this regard.

 

“It is necessary to look at the whole liability of the entity comprehensively. So, we have had inter-regulator meetings, and IRDAI has taken a decision to enable the insurance companies to be a part of the inter-creditor agreement. Our discussions with other regulators are going on,” Mr. Das said.

 

In the resolution process of mortgage lender Dewan Housing Finance Corporation Ltd. (DHFL), where insurance and mutual funds have sizeable exposure, banks want other creditors to be a part of the resolution process.

 

Mutual funds are awaiting approval from the markets regulator for becoming a part of the bank-led resolution plan.

 

In a bid to encourage banks to extend loans to retail consumers segments such as individual vehicle loans and personal loans, amid a sharp slowdown in demand, the central bank has decided to lower the risk weight for consumer loans, excluding credit cards.

 

 

The risk weight, which was 125% as prescribed in 2004, will now become 100%. As a result, banks will need to set aside lower capital for these loans.

 

Ratings agency ICRA said with personal loans of ₹6 lakh crore outstanding as on June 2019, a 25-percentage point reduction in risk weight may also reduce the capital requirements of banks by ₹12,500 crore and add 14 bps to their capital ratios.

 

 

 

 

 

Lower rates will spur credit flow and revive growth: Shaktikanta Das #GS3 #Economy

 

Why a 35 bps rate cut?

 

According to the assessment of the MPC (monetary policy committee), based on demand conditions etc, a 25 basis-point [rate] cut was inadequate, while a 50 basis-point cut was excessive. That is why we took a balanced call.

 

What are the underlying issues, according to the RBI, that are hurting growth?

 

There is a demand and investment slowdown; both put together having a dampening effect on growth. We have reduced the growth projection to 6.9% with risks slightly to the downside. Our understanding is that, at this point, it is perhaps a cyclical slowdown, not really a deep structural slowdown.

 

Nonetheless, we have to recognise that there is room for structural reforms which needs to be undertaken.

 

You have said a 50 bps rate cut is excessive. What is the real rate you are working with?

 

This is not the time to look at real interest rate. Currently, our focus is to fill up the output gap, that is the determining factor for the MPC’s decision. And also, there is also a gap in inflation.

 

What is the RBI’s view on dollar bonds?

 

We have conveyed our views internally to the government. [The] Government is consulting the Reserve Bank on this issue. For the moment, I would leave it at that.

 

Where do you see the recovery in growth coming from?

 

Our expectation is — and I am saying this after our interaction with the government — the government will take necessary, further measures as may be required to deal with various issues. With the RBI cutting interest rates, the credit flow will revive. Therefore, growth numbers will pick up.

 

What steps will the Reserve Bank take to ensure faster transmission of monetary policy rates?

 

 

The system is flush — if I can use the word — with liquidity. So, therefore, the rate cuts done by the RBI and the liquidity which we have injected, both have started the cycle of rate cuts so far as new loans from banks are concerned.

 

We have a sense that there will be improvement.

 

The RBI is monitoring it regularly. And in future, whatever steps are required for faster transmission of rates, the Reserve Bank of India will not hesitate to take those steps.

 

Despite interest rate cuts, there has been a demand slump. What stopped you from a 50 bps rate cut?

 

In policy making there is something called ‘you take a call.’ When you take a call, there is something more than mere numbers, which is beyond what is there just in the data. So, the MPC, in its considered opinion, took the view that it will be 35 bps rate cut.

 

What is so sacred about multiples of 25 bps? It has just been adopted and has become a convention. So, therefore, when you do something out of convention, too much should not be read into it. So, it is a judgement call that the MPC has taken.

 

The rupee is under pressure. Will it impact RBI’s effort to push if it depreciates further?

 

On the rupee, it won’t be appropriate for me to give some kind of forward guidance. I will just repeat the stated policy of the RBI that it is the RBI’s responsibility to manage volatility of the rupee.

 

While projecting CPI inflation, what is the rupee assumption?

 

MD Patra (Executive Director): We take the prevailing exchange rate, average of the relevant period.

 

Is a CRR (cash reserve ratio) cut on the table? How long do you see the rate easing cycle continuing?

 

At the moment, there is no proposal for a cut in the cash reserve ratio. As far as future rates are concerned, you have to wait for the incoming data and [watch] how the macroeconomic situation evolves.

 

 

 

 

 

Mexico’s cactus offers alternative to plastics #GS3 #Environment

 

Mexico’s prickly pear cactus, which is emblazoned on the country’s flag, could soon play a new and innovative role in the production of biodegradable plastics. A packaging material that is made from the plant has been developed by a Mexican researcher and is offering a promising solution to one of the world’s biggest pollution conundrums.

 

That substance is then mixed with non-toxic additives and stretched to produce sheets that are coloured with pigments and folded to form different types of packaging.

 

 

Ms. Pascoe is still conducting tests, but hopes to patent her product later this year and look for partners in early 2020, with an eye towards large scale production. The cacti Ms. Pascoe uses for her experiments come from San Esteban, a small town on the outskirts of Guadalajara, where they grow by the hundreds.

 

San Esteban is located in Jalisco state where, starting next year, single-use non-recyclable plastic bags, straws and other disposable items will be banned. Pascoe says her new material would be no more than a “drop in the ocean” in the battle to preserve the environment.

 

Given the rampant production of industrial plastics and the time it takes to make her material, there would need to be “other recycling strategies” to make any concrete difference, she said.

 

In March, UN member states committed to “significantly reduce” single-use plastics over the next decade, although green groups warned that goal fell short of tackling the Earth’s pollution crisis.

 

 

 

 

 

Even in cities, natural signs can warn of flood #GS3 #Environment

 

Indigenous knowledge about how to spot flood risks ahead of time could save lives in cities, as climate change and population growth put millions of people at risk of increasingly unpredictable weather patterns.

 

Understanding changes in natural indicators – such as plants, birds and temperatures – could be used to alert urban residents to extreme weather where forecasts are seen as unreliable. There are

 

knowledge transfers that can be made between rural and peri-urban spaces that could save lives and livelihoods around the world.

 

The study interviewed 1,050 people in 21 rural and urban communities in Ghana, including the capital city Accra and the main city of Tamale in its Northern Region. Researchers documented natural indicators used by indigenous communities to predict floods, droughts and temperature changes.

 

Those include links between rainfall patterns and ant behavior, appearances by certain birds, flowering of baobab trees and observations of heat intensity, passed down between generations.

 

Knowles said not all rural indicators could be transferred to urban spaces, but some are relevant for both environments, such as clouds, heat, insects and trees.

 

Promoting tree-planting in urban areas could offer further opportunities to apply indigenous knowledge on flora in cities. Over 3 million urban dwellers could be at risk of flooding from extreme rainfall by 2050 as climate change brings more unpredictable weather hazards, the study said.

 

Extreme heat and power blackouts, alongside food and water shortages, are other threats if climate-changing emissions are not curbed, a 2018 report for the C-40 cities network found.

 

 

As floods become more sudden and hard to predict, the inclusion of indigenous knowledge in science-based warning systems should be prioritized, researchers said this week.

 

We have seen the use of indigenous knowledge for climate adaptation all over the world. Indigenous people in Tanzania, Zimbabwe, Myanmar and Ethiopia, for example, use their knowledge to observe and mitigate impacts of extreme climate events such as flooding and droughts.

 

Dialogue is needed between indigenous groups and climate researchers as “both can learn from one another. Indigenous knowledge can be used as an “added layer” to scientific research in designing early warning systems for floods, Kasei said.

 

More work is needed to document traditional knowledge at risk of being lost as the natural environments in which indigenous peoples live become more threatened by climate-related disasters, the study noted.

 

 

 

 

 

Why RBI’s monetary policy matters #GS3 #Economy

 

In its monetary policy review Wednesday, the Monetary Policy Committee of the RBI decided to cut the repo rate by 35 basis points (bps). Repo rate is the rate at which the RBI lends money to commercial banks. 100 bps make a full percentage point. The RBI’s repo rate has now fallen 110 basis points since February. The RBI also announced some measures to boost economic activity.

 

Why does monetary policy matter?

 

In any economy, economic activity, which is measured by gross domestic product or GDP, happens by one of four ways. One, private individuals and households spend money on consumption. Two, the government spends on its agenda. Three, private sector businesses “invest” in their productive capacity. And four, the net exports — which is the difference between what all of them spend on imports as against what they earn from exports. At the heart of any spending decision taken by any of these entities lies the question: What is the cost of money?

 

Monetary policy essentially answers that question. In every country, the central bank is mandated to decide the cost of money, which is more commonly known as the “interest rate” in the economy. While various factors make it difficult for a central bank to exactly dictate interest rates, as a thumb rule, RBI’s decision on the repo rate sets the markers for the rest of the economy. In other words, the EMI for your car or home is determined by what the RBI decides.

 

What is the repo rate?

 

Repo and Reverse repo are short for repurchase agreements between the RBI and the commercial banks in the economy. In essence, the repo rate is the interest rate that the RBI charges a commercial bank

 

 

when it borrows money from the RBI. As such, if the repo falls, all interest rates in the economy should fall. And that is why common people should be interested in the RBI’s monetary policy.

 

But the interest rate for consumer loans has not reduced by 110 bps since February. Why?

 

In the real world, the “transmission” of an interest rate cut (or increase) is not a hundred per cent. And that is why, even though when the RBI cut by 35 bps on Wednesday, lay consumers may only receive a much lower reduction in the interest rate on their borrowings. This is due to a lot of factors — but primarily, it has to do with the health of the concerned commercial bank.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over the past few years, almost all banks, especially the ones in the public sector, have seen their profits plummet because many of their past loans have turned out to be non-performing assets (in other words, they are not getting repaid). To cover for these losses, the banks have to use their existing funds, which would have otherwise gone to common consumers for fresh loans.

 

There is another key element that affects the banks’ decision. The reduced repo rate applies only to new borrowings of banks. The banks’ cost of existing funds is higher. Of course, funding costs would eventually come down — but this process would take time. This “lag” in monetary policy is a key variable in determining the efficacy of any rate cut by the RBI. It could take anywhere between 9 and 18 months for the full effect of an RBI decision to reflect in interest rates across the economy.

 

So, how does RBI decide the interest rate?

 

Any central bank has a few main concerns.

 

The first is to ensure price stability in the economy. Think of how chaotic life would be if there was no predictability about the prices of everyday items. The interest rate anchors the prices in an economy. The RBI continuously maps prices, inflation (which is the rate of increase in prices), and expectations of inflation (of households) to decide if it should increase or decrease interest rates.

 

For instance, the RBI announced some years ago that it would like the inflation rate to be 4%. So, every time the retail inflation rate rises above the 4% mark, the RBI realises that there is too much cash chasing too few goods in the economy.

 

To set the matter right, it raises the cost of money — that is, the interest rate. When it does that, some people find it more advisable to put the cash out of the market and into banks. This way, inflation falls. The reverse process applies when the inflation is below the 4% mark.

 

The other related concern for a central bank is to take care of economic growth. For instance, economic growth is anaemic at present (see charts), and partly as a consequence, the inflation rate has been below 4% for several months now. The RBI is, therefore, cutting interest rates to incentivise people to consume more and businesses to invest more.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Will the rate cut bring investments?

 

Investments depend essentially on the “real” interest rate. The real interest rate is the difference between the repo rate and retail inflation. When making an investment decision, it is this interest rate that matters.

 

As a variable, it allows an investor to compare the attractiveness of different economies. As can be seen in the third chart, real interest rates in India have been rising, and that is one of the biggest reasons why investments are not happening. The RBI’s move on Wednesday would reduce the real interest rate and hopefully attract more investment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

How Rajasthan, Madhya Pradesh propose to check lynching #GS3 #Security

 

 

On Monday, the Rajasthan Assembly passed a new law against mob lynching. Another Congress government, in Madhya Pradesh, recently introduced a Bill that seeks to curb cow vigilantism. The State Law Commission in BJP-ruled Uttar Pradesh, meanwhile, has drafted the UP Combating of Mob Lynching Bill, 2019, and submitted it to Chief Minister Yogi Adityanath.

 

What is different?

 

While the Rajasthan law and the UP draft are new, the proposed law in MP is an amendment to the existing Madhya Pradesh Govansh Vadh Pratishedh Act, 2004, which is against cow slaughter. The amendments propose a jail term and a fine for those who attack, or damage property of, people

 

 

booked, or likely to be booked, for offences like slaughter of cow progeny, possession of beef or transporting cow progeny for slaughter.

 

These moves follow the Supreme Court’s directions to Parliament last year, in the wake of a series of lynching incidents, to come up with a special law. The Bench directed the Centre and states to carry out its directions within four weeks. The Centre informed Lok Sabha that it had created a Group of Ministers and a high-level committee to “deliberate” and “make recommendations” for a separate penal provision for mob violence.

 

Rajasthan Bill

 

The Rajasthan Protection from Lynching Bill, 2019 makes mob lynching a cognisable, non-bailable and non-compoundable offence punishable with life imprisonment and a fine up to Rs 5 lakh. It defines lynching as “any act or series of acts of violence or aiding, abetting or attempting an act of violence, whether spontaneous or planned, by a mob on the grounds of religion, race, caste, sex, place of birth, language, dietary practices, sexual orientation, political affiliation, ethnicity”.

 

Offences will be investigated by a police officer of the rank of inspector and above, and the DGP will appoint an officer of the rank of IG or above as State Coordinator. In cases of “hurt” and “grievous hurt”, the convict may get up to seven and 10 years in jail respectively; if it leads to death, the punishment is life imprisonment. The Bill also makes conspirators accountable.

 

Rajasthan had witnessed a number of lynchings in 2017, beginning with that of dairy farmer Pehlu Khan in April 2017.

 

Madhya Pradesh Bill

 

The Bill seeks to amend Sub-section (2) of Section 9 of the 2004 Act and propose a minimum jail term of six months that may be extended to one year. When the same offence is committed by members of illegal assembly (mob) the minimum term will increase to one year and the maximum to five years. The Bill proposes a lower term for those who abet and those who attempt to commit the crime. The punishment will double in case of those convicted for an offence they were previously convicted of.

 

The minimum fine is Rs 5,000 and the maximum Rs 50,000. The Bill seeks to insert Section 6D. While the rules are yet to be formed, these will specify who issues the transit permit of cow progeny, which will be pasted prominently on the vehicle. There is no provision in the 2004 legislation for issuing transit permit from other states.

 

What next in MP

 

Following the BJP’s demand, the Assembly Speaker has agreed to refer the Bill to a Select Committee. The BJP has opposed the Bill, accusing the Congress of appeasement politics. The BJP says provisions already exist in the IPC to punish such offences. “Instead of bringing a separate law against mob lynching as recommended by the Supreme Court, the government has brought a law to protect those who slaughter cows,’’ alleged former Home Minister Bhupendra Singh.

 

 

 

 

How forces are tackling Maoists in Chhattisgarh, what challenges remain #GS3 #Security

 

Seven Maoists were killed in an encounter with the Chhattisgarh Police on August 3 in the Bagnadi area of Rajnandgaon district bordering A week previously, on July 27, another seven had been killed in Machkot in Bastar.

 

With these operations, over the last week, 16 Maoists have been killed. While security forces have made continuous inroads, the Central Committee of the CPI (Maoist) has repeatedly admitted in various reports and meetings that their base area has shrunk, fresh recruitment almost dried up, and desertions increased.

 

Traditionally, the monsoon has been considered a lean period in the conflict. What explains the Chhattisgarh police’s recent successes?

 

Though anti-Maoist operations do get restricted by various seasonal factors, these continue to be launched if there is actionable intelligence of Maoist movement. Further, security forces have learnt to overcome many impediments.

 

Use of satellite technology helps in keeping track of jawans’ movement from any location, and the target can be identified with more clarity; staff trained in ‘battlefield nursing’ courses (conducted by the Army) can treat wounded jawans on the field itself; night helicopter landing facilities keep jawans motivated even at odd hours.

 

Therefore, irrespective of the monsoon in full swing at both Machkot and Sitagota-Sherpar jungles, the police with convincing intelligence were able to launch operational teams and emerge successful. In both instances, security forces were successful in recovering weapons and the bodies of the deceased Maoists without suffering a single casualty (except for injury to one jawan).

 

Of late, local police in the form of DRG (District Reserve Guard) have been more and more successful in countering Left Wing Extremism (LWE). What has made this possible?

 

Chhattisgarh’s state police, with the support of specialised training institutes (CTJW College, Kanker and four CIAT Schools) have built up capacity and raised specialised forces. The Centre, besides helping the state strengthen training capacity and capabilities, is also providing financial support to strengthen the specialised wings of STF (Special Task Force) and SIB (State Intelligence Bureau).

 

The two STF battalions are capable of countering Maoists’ ‘main force’ which chiefly consists of military Battalion No. 1 and is active in south Bastar. DRGs have been constituted in many districts consisting of local policemen of affected areas.

 

 

They not only have the best knowledge of the terrain but are also well-versed in the local dialect. Their natural instincts have been supplemented with professional ethos from the Counter-Insurgency and Jungle Warfare School of Vairengte, Mizoram. While both STF and DRG played a pivotal role in the Machkot encounter, DRG of Rajnandgaon with able leadership led the operation.

 

The August 3 encounter was in the proposed ‘MMC Zone’, which was described in a 25-page Maoist document and reported by The Indian Express in 2017. What is the nature of the threat, and how can it be combated?

 

The CPI(Maoist), following a decision taken in the 2014 Central Regional Bureau (CRB) meeting, is trying to develop the new MMC Zone. This is where Maharashtra, Madhya Pradesh and Chhattisgarh meet, broadly the districts of Gondia in Maharashtra, Balaghat in Madhya Pradesh, and parts of Rajnandgaon, Kabirdham, and Mungeli in Chhattisgarh.

 

Maoists intend to create an entity like the Dandakaranya (DK) Special Zonal Committee in Bastar. This area is predominately tribal, forested and hilly and suitable for guerrilla warfare. It is also contiguous to the North Gadchiroli Maoist Division of the DK. Except for a few, most of the cadres in the MMC Zone were transferred there from Bastar.

 

The state governments took proactive steps by deploying additional resources and are trying their best to check Maoists’ expansion. In Chhattisgarh, many new police stations and security camps have been established. The SP, Kabirdham, organised a number of awareness campaigns in remote areas which are most vulnerable to Maoist influence.

 

He made arrangements for villagers’ training and facilitated government employment for hundreds. The administration has taken steps to expedite developmental work. Madhya Pradesh and Maharashtra too have intensified anti-Maoist operations in these areas.

 

Though the Maoists are yet to find their roots here, the efforts need to be continued. The Darrekasa Area Committee of the Gadchiroli-Rajnandgaon-Balaghat (GRB) Division of MMC was almost wiped out on August 3.

 

What went wrong in the attack on C-60 commandos in an “open area” of Gadchiroli on May 2 this year?

 

In the guerrilla zone (in addition to hilly and forested terrain) open areas leave security forces vulnerable as most Maoists, being from DK, can easily conceal their identity and mingle with locals. In such areas, Maoists carefully survey the modus operandi of security forces and only then lay an ambush or attack.

 

What I could gather from the May 2 attack is that perhaps the road was not dominated by the police as per laid down standard operation procedures. In the wake of the preceding incident of Maoists setting on fire about three dozen vehicles engaged in road construction work, this ought to have been all the more important. Still, it will not be appropriate to label this incident as a failure of commandos, but it was a professional hazard security forces have to put up with.

 

 

Despite the last two successful encounters, don’t Maoists retain the ability to strike back soon after suffering a major setback — like the Maoist attack in Kurkheda of Maharashtra, after 50 Maoists had been killed in Gadchiroli in April 2018?

 

If we analyse the pattern, most such attacks have taken place during the ‘Tactical Counter Offensive Campaign’ (TCOC) period which generally extends from February-March to May-June each year. During this TCOC period, most of their field formations (political as well as military) join together to form area or division command (which are much bigger in size) and launch major attacks.

 

Thus, despite the fact that the overall strength of the CPI (Maoist) has thinned and the capacity of the security forces has improved, Maoists can still manage to strike security forces and cause casualties this way. The security forces therefore need to be extra vigilant during this TCOC period.

 

What is the best way to fight IEDs, like the one used in Kurkheda or the one that blew up an MPV in Sukma in March 2018?

 

One way to avoid destruction and casualties caused by IEDs is to ensure that these are successfully detected through visual surveillance or using technical gadgets and defused in time.

 

Second, a road opening party may dominate the surrounding area thoroughly enough to make certain that no suspicious elements are hiding around to trigger IEDs.

 

Third, law-enforcement agencies can crack down on miscreants who supply explosive substances to the Maoists.

 

Fourth, explosive substances and most importantly detonators can be made identifiable at the production stage using a unique number for identification. However, all these measures have their limitations. Also, the use of IEDs, being inhumane, must be condemned by all at appropriate international forums.

 

What is the way forward for security forces here on?

 

Though, Maoists have weakened in DK, Odisha State Committee and other zones, and their expansionist policy is under check, security forces cannot afford to ignore their protracted war strategy. The mobile war (capability to attack at will in base areas and escape unscathed) has to be reversed and the areas of security vacuum (where there is no presence of the security forces) plugged.

 

Better technologies, including Ground Penetration Radar, are required to detect and defuse IEDs.

 

Security forces also need to learn from previous tactical errors and adhere to time-proven SOPs.

 

The information network should improve with better road and telecom connectivity in far-flung areas. Surrender and rehabilitation policies must be implemented in letter and spirit. The administrative and political vacuum in remote areas must be filled.

 

‘The Forest Rights Act’ should be interpreted in favour of forest dwellers. The root cause of the problem that is exploited by the Maoists —socio-economic deficits — must be bridged. The human rights of the

 

 

local populace must be protected by the administration and security forces if the credibility of efforts so far is to be established.

PDF