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Insights Daily Current Events, 02 March 2016

Insights Daily Current Events, 02 March 2016

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 Paper 3 Topic: infrastructure.

Our aim is to electrify every home

Union Power Minister Piyush Goyal recently said that “the NDA government’s aim is to electrify every Indian house under the Deen Dayal Upadhyaya Rural Electrification Scheme by 2018.”

About Deen Dayal Upadhyaya Rural Electrification Scheme:

The scheme, also known as Deen Dayal Upadhyaya Gram Jyoti Yojana, was launched by the Power Ministry after subsuming the previous Rajiv Gandhi Gramin Vidhyutikaran Yojana (RGGVJ) as it rural electrification component.

Aim of the Scheme:

It aims to augment power supply to rural areas and strengthen sub transmission and distribution lines.

Major components of the scheme:

  1. To separate agricultural and non agricultural feeders.
  2. To strengthen and augment sub transmission and distribution infrastructure in rural areas, including metering of distribution transformers/feeders/consumers.

Benefits:

  • It would increase the number of hours of power supply in rural areas.
  • Reduction in peak load.
  • Improvement in billed energy based on metered consumption.
  • Providing access to electricity to rural households.

Budget:

The scheme has an outlay of 76000 crore, of which centre has committed to provide a grant of Rs. 63000 crore.

Sources: the hindu.


 

Paper 3 Topic: e-technology in the aid of farmers.

e-market platform

Union Finance Minister Arun Jaitley, in his budget, announced that a Unified Agricultural Marketing e-platform will be dedicated to the nation shortly.

  • Analysts, welcoming this announcement, have said that such an e-market platform would remove inter-state barriers in moving farm produce and could be a game changer.

What’s required for such a platform?

  1. An amendment of APMC act.
  2. Physical logistical support for farmers to transport their produce.

An amendment to APMC act empowers state governments to notify commodities and designate markets and market areas where the regulated wholesale trade takes place. SO far, 12 states have amended this act.

Benefits associated:

  • This would benefit farmers and consumers alike by ensuring fair prices.
  • This would also open up the agri marketing sector to foreign capital for marketing food products produced and manufactured in India, and would also create vast employment opportunities.

Sources: the hindu.


 

Paper 3 Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

RBI unlocks Rs.40,000 crore additional capital for banks

The Reserve Bank of India (RBI) has revised norms on capital recognition, making available an additional Rs.40,000 crore to Indian banks.

  • However, it has kept other rates unchanged. This is the second time in a row that interest rates have been left unchanged amid demands for moderation to spur growth.
  • The repo rate, at which the Reserve Bank of India lends to banks, has been retained at 8%, while the statutory liquidity ratio (SLR) for banks has been cut by 0.5% to 22.5% with effect from June 14.
  • The cash reserve ratio for banks has been kept unchanged at 4%.

Significance of this move:

  • The move comes at a time when public sector banks are facing pressure on their profitability due to a sharp rise in non-performing assets, which is eroding their capital base.
  • The announcement is a big relief for, mainly, public sector banks. Finance minister Arun Jaitley also announced in his budget speech a capital infusion of Rs. 25,000 crore for the fiscal year starting in April.
  • However, the minister did not make any increases to the capital infusion amount that was decided in August 2015.
  • Many public sector banks reported huge losses for the quarter ended December 2015 after the RBI asked lenders to identify several accounts as non-performing. Banks are expected to post weak earnings in the current quarter too.

Other details:

  • The revised norms will give PSBs access to additional capital of 35,000 crore, while it could be about 5,000 crore for private sector banks.
  • The unlocking of capital follows a review carried by the RBI with the aim of further aligning the definition of regulatory capital with the globally adopted Basel III norms.
  • These standards aim to improve the banking sector’s ability to absorb shocks arising from financial stress and improve risk management and governance.
  • Banks have now been allowed to include some items, such as property value and foreign exchange, for calculation of Tier 1 capital (CET1), instead of Tier 2 capital.
  • As per RBI norms, CET1 capital, comprising paid-up equity capital, statutory reserves, capital reserves, other disclosed free reserves (if any), and balance in P&L Account at the end of the previous fiscal year, must be at least 5.5% of risk-weighted assets.

Sources: the hindu.


 

Paper 2 Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

India kicks off Raisina Dialogue

India is hosting a first of its kind conference on Geo politics in the capital, called the Raisina Dialogue which will have invitees from various other countries also.

  • This international conclave on geopolitics and geo-economics will be hosted in Delhi.

About the Conference:

Envisioned as India’s flagship conference of geopolitics and geoeconomics, the Raisina Dialogue 2016 is designed to explore prospects and opportunities for Asian integration as well as Asia’s integration with the larger world.

  • It is predicated on India’s vital role in the Indian Ocean Region and how India along with its partners can build a stable regional and world order.
  • The 2016 conclave will focus on Asia’s physical, economic, digital connectivity and fostering common global spaces with an emphasis on Asia.
  • The two-day annual conference is a multistakeholder, cross-sectoral meeting involving policy and decision-makers, including but not limited to Foreign, Defence and Finance Ministers of different countries, high-level government officials and policy practitioners, leading personalities from business and industry, and members of the strategic community, media and academia.

Sources: the hindu.


 

Paper 3 Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

IFC launches masala bonds to mobilise Rs 30 crore

International Finance Corporation (IFC) — a member of the World Bank group—has launched its first Uridashi Masala bonds, mobilising R30 crore directly from Japanese household investors to promote private sector development in India.

  • The three-year bond builds on IFC’s Masala bond programme, which has raised the equivalent of $1.7 billion from international investors for investment in India.
  • Proceeds from IFC’s Uridashi Masala bonds will be used to support private sector investment in India.

Uridashi bonds are sold to Japanese household investors.

What are Masala Bonds?

The term is used to refer to rupee-denominated borrowings by Indian entities in overseas markets. The International Finance Corporation (IFC), the investment arm of the World Bank, last November, issued a Rs. 1,000 crore bond to fund infrastructure projects in India. These bonds were listed on the London Stock Exchange (LSE). IFC then named them Masala bonds to give a local flavour by calling to mind Indian culture and cuisine.

  • While it may seem odd to name a staid debt instrument after food stuffs, it has been done in the past. Chinese bonds, named Dim-sum bonds after a popular dish in Hong Kong, have been around for while. So have Japanese bonds named Samurai after the country’s warrior class.

Why is it important?

Masala bonds, if they take off, can be quite a significant plus for the Indian economy. They are issued to foreign investors and settled in US dollars. Hence the currency risk lies with the investor and not the issuer, unlike external commercial borrowings (ECBs), where Indian companies raise money in foreign currency loans.

  • While ECBs help companies take advantage of the lower interest rates in international markets, the cost of hedging the currency risk can be significant. If unhedged, adverse exchange rate movements can come back to bite the borrower. But in the case of Masala bonds, the cost of borrowing can work out much lower.

About the International Finance Corporation (IFC):

The International Finance Corporation (IFC) is an international financial institution that offers investment, advisory, and asset management services to encourage private sector development in developing countries.

  • It is a member of the World Bank Group and is headquartered in Washington, D.C., United States.
  • It was established in 1956 as the private sector arm of the World Bank Group to advance economic development by investing in strictly for-profit and commercial projects that purport to reduce poverty and promote development.
  • The IFC is owned and governed by its member countries, but has its own executive leadership and staff that conduct its normal business operations.
  • It is a corporation whose shareholders are member governments that provide paid-in capital and which have the right to vote on its matters.

Functions:

  • It offers an array of debt and equity financing services and helps companies face their risk exposures, while refraining from participating in a management capacity.
  • The corporation also offers advice to companies on making decisions, evaluating their impact on the environment and society, and being responsible.
  • It advises governments on building infrastructure and partnerships to further support private sector development.

Sources: the hindu.


 

Facts for Prelims:

 

New Delhi’s Indira Gandhi International Airport (IGI) has retained its number one position in the world for the second consecutive year in 25-40 Million Passengers Per Annum (MPPA) categories. Airports Council International (ACI) on Monday released new rankings for 2015 Airport Service Quality (ASQ) Awards.

The parameters based on which the IGI Airport bagged the award include improved on-time performance of airlines impacting passenger experience positively, launch of interactive and user-friendly mobile app – flyDEL, improvement of ambiance and signages, strong bonding with stakeholders among others. It was also appreciated for upgradation of shopping and eating facilities at the airport. Emphasis was also laid on sanitation.

Operated by the Delhi International Airport Limited (DIAL), the IGI Airport also stands ahead of all other Indian airports by winning maximum number of awards in 2015.