9 PM Daily Brief – 8 June 2016

Brief of newspaper articles for the day bearing
relevance to Civil Services preparation

What is 9 PM brief?

• GS PAPER 1
  1. Feasting and fasting {Communism}
  2. Effort to make Sabarimala ‘global’ {Art and Culture}
  3. Ganesha idol set to return home {Art and Culture}
• GS PAPER 2
  1. India, U.S. to ratify Paris deal by 2017 {Foreign Policy}
  2. India to join missile treaty club {Foreign Policy}
• GS PAPER 3
  1. The way to financial inclusion {Economy}
  2. ‘India will protect its airlines’ {Economy}
  3. India to submit services trade plan to WTO {Economy}
  4. A cautionary note {Economy}

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GS PAPER 1

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[1] Feasting and fasting

Indian Express

China’s ideological warfare against China’s Muslim population:

• It banned public observance of Ramzan, keeping restaurants open.
• Muslims urging the fast upon others have been detained.
• It bans minors from getting religious instruction.
• Parents are encouraged to pledge their lads to atheism.

In contrast to China, Indian form of communism is practiced in entirely different way. Two homeground states of communist politics in India viz West Bengal and Kerala, have not only promoted religious activities such as Durga Puja but even used them as symbol of Indian communism.

Major reason for such a contrasting feature is the failure of industrialisation in these two states and problem of unemployment.

[2] Effort to make Sabarimala ‘global’

The Hindu

Context

Central govt has decided to develop Sabarimala into an international pilgrim destination

News

• A joint committee with representative of various ministries concerned will look into the details of how to do this.
• Since a part of Sabarimala (the sacred grove of Sabarimala) comes under the ambit of the buffer zone of Periyar Tiger Reserve, special care needs to be taken while making any developments.
• Centre will have to devise a way on how to take Sabarimala temple’s administrative body (Travancore Devaswom Board) along with it for smooth implementation of its plans.

Conclusion

Since Sabarimala is one of the largest pilgrimages in the world, the centre’s plan to make develop it as an international pilgrim destination is a welcome move.

However, it would require a lot of cooperation and understanding between the existing temple board as its role might change after becoming an international destination. Environmental concerns also need to be addressed sufficiently.

[3] Ganesha idol set to return home

The Hindu

Context

• India gets back the Ganesha ideal belonging to the Chola era along with 200 other stolen artefacts.
• These were returned to India by the US.

How India got its artefacts back?

• Apart from the efforts and cooperation between the Indian govt, US govt and police agencies, efforts of a voluntary group known as the Indian Pride Project (IPP) have resulted in getting back the stolen Indian artefacts.
• An IPP member Vijay Sundaresan matched the photos of the idol taken at Toledo Museum of Art, Ohio (USA) with those taken by the French institute at Puducherry and blogged about how it was the same idol.
• This was picked up by the media agencies in the US and the investigation started which lead to the questioning of art dealer Subhash Kapoor who is now undergoing various trials in cases of idol thefts.
• It was ascertained the Ganesha idol and other artefacts were stolen from India and traded abroad with fake invoices and bills. These were finally returned.

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GS PAPER 2

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[1] India, U.S. to ratify Paris deal by 2017

The Hindu

News

• Both, India and the U.S agreed to initiate domestic processes to ratify the Paris Agreement on climate change  and it is expected that both will complete the process within this year.

Procedure of ratification in both the countries

• In India, an International treaty is ratified by the decision of the Union Cabinet.
  In US,  an International treaty is ratified by the approval of both the Houses of Congress.

For comprehensive coverage of Paris deal, refer to Editorial Today #21 – Paris Climate Deal

[2] India to join missile treaty club

The Hindu

Context

India is all set to become a part of Missile Technology Control Regime (MTCR) as the countries belonging to MTCR have raised no objections for India’s membership.

The formalities

This no objection by the MTCR members has to be done formally where each of the 34 MTCR members have to send a diplomatic note which says that they agree to India’s membership.

Why it took time to get MTCR membership?

• In 2015, India’s membership efforts were opposed by Italy. This was because of the rift between India and Italy over the detention of Italian marines.
• But now India has agreed to send the Italian Marines back to Italy, hence, Italy has no problem with India becoming a member of MTCR.

What MTCR membership means for India?

India wants to join MTCR because of various reasons. The prominent ones being:

• MTCR membership would would improve India’s stature among world nations, especially because India is a non signatory of both NPT and CTBT that are necessary for membership
• India will get to play a role in decision making process of the global body; it would help India to address some of our concerns especially with Pakistan’s nuclear program and promote our interest.
• India will find it easier to access nuclear energy resources and high end technologies from world nations more easily.
• India can find a market for its own nuclear technology which is much cost effective and also sell Thorium which is abundant in India
• It will be a big step in opening doors for India’s entry into other nuclear regimes it is eyeing for (NSG, Australia Group and Wassenaar Group)

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GS PAPER 3

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[1] The way to financial inclusion

Livemint

Context

• Financial inclusion

One of the prime objective of Prime Minister’s Jan Dhan Yojana (PMJDY) is financial inclusion.

• 21 crore bank accounts have been opened, after PMJDY’s initiation.

How this 21 crore bank account number achieved?

1. There were political pressure on banks to achieve programme targets.
2. To avail of the insurance benefits.

Its Consequences:

• Duplicate accounts with zero balances.

There are more than one lakh business correspondents (BCs). Can BCs generate an increase in household savings?

Reasons behind unsuccessful financial inclusion in the past:

1. Geographic:  Poor live in areas where bank branches are not located.
2. Many of the poor are employed in daily wage they transact in small sums of money and at a higher frequency than salaried.

Now Technological improvements helps in universal coverage.

FIrst take a look at the origin of BC:

The financial inclusion drive that was initiated in 2009 with a Reserve Bank of India directive requiring lead banks to ensure coverage of all villages with a population of 2000 or more, either through a BC or a bank branch led to its widespread growth.

The policy was subsequently changed to require BCs to cover not just the initially assigned village, but all villages within a designated “sub-service area”, that generally corresponds to the gram panchayat (GP).

Following are the findings of the study of surveys of 2007 and 2013 about effects of BCs according to author:

1. Significant increase in savings of both landless as well as landowners
2. Women were the biggest beneficiaries after the tie up of MNREGA and financial inclusion drives
3. However the benefit to landholders were much more than to the landless and marginalized
4. Poor households usually pay their debts taken from informal channels so there savings is insignificant for such households
5. Borrowing taken by such households mainly owe to factors like health problems, purchase of agricultural products etc
6. Also the benefits of presence of BCs are more in villages with larger population to taht of villages with smaller populations

Who/What is Business correspondent?

• Business correspondents are bank representatives.
• They help villagers to open bank accounts.
• They help villagers in banking transactions. (deposit money, take money out of savings account, loans etc.)
• The Business Correspondent carries a mobile device.
• The villager gives his thumb impression or electronic signature, and get the money.
• Business Correspondents get commission from bank for every new account opened, every transaction made via them, every loan-application processed etc.

[2] ‘India will protect its airlines’

The Hindu

Issue

• Government is not in favour of ‘Open Sky Policy’ in civil aviation.

What is Open sky policy?

Open skies is an international policy concept that calls for the liberalization of the rules and regulations of the international aviation industry—especially commercial aviation—in order to create a free-market environment for the airline industry. Its primary objectives are:

• to liberalize the rules for international aviation markets and minimize government intervention as it applies to passenger, all-cargo, and combination air transportation as well as scheduled and charter services; and
• to adjust the regime under which military and other state-based flights may be permitted.

In the interest of domestic players

• The Government is not in favour of Open Sky Policy as it wants its domestic players to be secured.
• Currently, India has open sky agreements with US without restriction.
• And India has near open skies for the U.K. (restriction on flights to and from Mumbai and Delhi Airports).
  But it has put some restriction on other countries on either the number of seats or airports they can fly to.

[3] India to submit services trade plan to WTO

The Hindu

News

• After pitching for Trade Facilitation Agreement (TFA) in services, the Government is ready to submit a formal proposal before the World Trade Organisation (WTO) for the same.

Why India wants Trade Facilitation Agreement (TFA) in services?

• Service sector has huge potential and it contributes significantly to the country’s economy.
• It will pave the way for better negotiations on services at the bilateral and regional Free Trade Agreement negotiations.
• India wants that there should be some distinction between temporary movement of professionals and (permanent) migration.
• A global pact on services trade facilitation will also help in providing greater clarity in case of disputes arising out of visa-related restrictions.
• In that regard, India has laid that TFA in services will ease the flow of temporary movement of software, accounting, medical and consulting professionals as well as similar skilled workers.
• TFA in Services will also  ease the flow of global services trade.

Response from WTO

• WTO DG has welcomed this idea and it has asked for a formal proposal from India.

TFA in Goods

• The Trade Facilitation Agreement contains provisions for expediting the movement, release and clearance of goods, including goods in transit.
• It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues.
• It further contains provisions for technical assistance and capacity building in this area.
  India and several other countries have already ratified a ‘TFA in Goods’.
• The Trade Facilitation Agreement will enter into force once two-thirds of members have completed their domestic ratification process.

TFA in ‘Investment’

• Countries including China are pushing for a ‘TFA in Investment’ at the WTO level, but that proposal has not received much support.

[4] A cautionary note + Central bank holds repo rate, stays accommodative

The Hindu                                            The Hindu

Issue

• RBI Monetary Policy Review of June 2016.

Retaining the Accommodative Monetary policy

• Accommodative monetary policy means central bank chooses to expand the overall money supply to boost the economy when the growth is slowing.
• The objective of this kind of policy is to encourage more spending by making money less expensive to borrow by lowering the interest rate.
• But in reality, RBI has kept the key interest rates unchanged.
• Repo rate unchanged at 6.50 per cent, Reverse Repo at 6%, Cash reserve ratio or CRR unchanged at 4%.
• So, it should be understood that it has not actually adopted it this time as it has not lowered the key interest rates, rather it is continuing the accommodative stance it has adopted in the last review.

Why RBI has not lowered the interest rates?

• Domestically, April retail inflation is the main reason which prompted the RBI to keep the rates unchanged.
• Further,  implementation of 7th pay commission poses upside risk to inflation.
• Internationally, crude oil prices have strengthened which became the other reason behind this move.

Global challenges for India’s economic growth

• Global growth is uneven and struggling to gain traction
• World trade is struggling because of lack of demand
• U.S. is weighed down by contracting industrial activity and exports
• Deflationary pressures are building in Japan
• The slowdown in China shows no signs of reversing.

Regarding financial volatility

• If there is a Brexit (Exit of Britain from the European Union), then there might be some volatility in the financial markets.
• Further, foreign currency non-resident (bank) deposits(FCNR), are about to mature. And if they will be withdrawn, there could be outflows of  about $20 billion.
• The RBI has given assurance that it stands ready to mitigate any financial volatility resulting out of FCNR deposit maturities due later this year.
• But the RBI has however warned that the supply of dollars by the central bank should not be taken ‘for granted’.

Strengthening the Public Banks

• RBI said it is committed to provide liquidity to the banks.
• It has observed that the Centre could also aid credit flows through a timely infusion of capital into constrained public sector banks.
  

Silverlining

• We have seen an increase in cargo traffic in major ports which implies that there might be an increase in exports or imports or both.
• We have also seen an upturn in sales of commercial vehicles, cement output (increase in activity of building of road infrastructure) and steel consumption.
• It suggests that accommodative policies adopted by the RBI has provided a boost to private investment which has strengthened the economy to a limit but it is still worrisome.
• Further, expectations of an “above normal” monsoon might become the source of disinflationary pressure.