Insights Daily Current Affairs, 18 August 2018
Topic: Indian culture will cover the salient aspects of Art Forms, Literature and Architecture from ancient to modern times.
11th World Hindi Conference
What to study?
For Prelims and Mains: Key facts on World Hindi Conference and its significance.
Context: 11th World Hindi Conference is being held at Mauritius.
Theme: “Vaishvik Hindi Aur Bharatiy Sanskriti“.
About the conference:
The event, held once in three years, is dedicated to Hindi language. It sees participation from Hindi scholars, writers and laureates from different parts of the world who contribute to the language.
Key facts for Prelims:
- The decision to organize the 11th edition of the Conference in Mauritius was taken at the 10th World Hindi Conference held in Bhopal, India in September 2015.
- The first World Hindi Conference was held in 1975 in Nagpur, India. Since then, ten such Conferences have been held in different parts of the world.
- The MEA has also set up the World Hindi Secretariat in Mauritius. The main objective of the WHS is to promote Hindi as an international language and further its cause for recognition at the United Nations as an Official Language.
Sources: the hindu.
Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Prompt Corrective Action (PCA) framework
What to study?
- For Prelims: Features of PCA.
- For Mains: Significance and the need for PCA framework, the NPA menace.
Context: PSU banks are expected to come out of the Prompt Corrective Action (PCA) framework by the end of this year. Currently, 11 out of a total of 21 state-owned banks are under the RBI’s Prompt Corrective Action (PCA) framework.
Various measures taken by the government including implementation of Insolvency and Bankruptcy Code (IBC) has yielded good results in terms of reining bad loans and increasing recovery.
What is PCA?
PCA norms allow the regulator to place certain restrictions such as halting branch expansion and stopping dividend payment. It can even cap a bank’s lending limit to one entity or sector. Other corrective action that can be imposed on banks include special audit, restructuring operations and activation of recovery plan. Banks’ promoters can be asked to bring in new management, too. The RBI can also supersede the bank’s board, under PCA.
When is PCA invoked?
The PCA is invoked when certain risk thresholds are breached. There are three risk thresholds which are based on certain levels of asset quality, profitability, capital and the like. The third such threshold, which is maximum tolerance limit, sets net NPA at over 12% and negative return on assets for four consecutive years.
What are the types of sanctions?
There are two type of restrictions, mandatory and discretionary. Restrictions on dividend, branch expansion, directors compensation, are mandatory while discretionary restrictions could include curbs on lending and deposit. In the cases of two banks where PCA was invoked after the revised guidelines were issued — IDBI Bank and UCO Bank — only mandatory restrictions were imposed. Both the banks breached risk threshold 2.
What will a bank do if PCA is triggered?
Banks are not allowed to re new or access costly deposits or take steps to increase their fee-based income. Banks will also have to launch a special drive to reduce the stock of NPAs and contain generation of fresh NPAs. They will also not be allowed to enter into new lines of business. RBI will also impose restrictions on the bank on borrowings from interbank market.
Sources: the hindu.
Topic: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.
Caspian Sea Agreement
What to study?
- For Prelims: All about Caspian sea.
- For Mains: Significance of the latest agreement.
Context: Leaders from Russia, Azerbaijan, Iran, Kazakhstan and Turkmenistan have finally signed a legal convention on ways to manage Caspian sea and its surrounding areas.
Significance of Caspian Sea:
The Caspian Sea is a geopolitically strategic body of water, both in terms of its location and its resources. Situated in a transcontinental zone between Europe and Asia, it has historically been a key trade and transit corridor between eastern and western powers.
The Caspian Sea became even more important in the modern era after the discovery of significant energy resources, including over 50 billion barrels of oil and 9 trillion cubic meters of natural gas in proven or probable reserves.
What’s the issue?
The countries surrounding the Caspian Sea make use of its strategic qualities. Russia and Iran are among the world’s largest energy producers and exporters, while Kazakhstan, Turkmenistan and Azerbaijan produce significant amounts as well. However, since the 1991 collapse of the Soviet Union established Azerbaijan, Kazakhstan and Turkmenistan as independent states and competitors in the region, ongoing disputes about how to draw boundaries in the Caspian have limited all the surrounding countries’ ability to exploit its resources.
The primary issue has been whether to legally classify the Caspian as a sea or a lake. The former would require the division of the Caspian to extend from the shoreline of each littoral state to the body of water’s midway point, while the latter would divide the Caspian equally. Until now, the dispute has not stopped the Caspian states from accessing energy resources close to their shorelines, but it has prevented energy exploitation from taking place deeper offshore. Moreover, it has stalled the progress of any pipeline projects that would go across the seabed itself.
Outcomes of the latest summit:
The convention signed at the recent summit has confirmed that the surface of the Caspian Sea would be legally classified as a sea, meaning each country would control 15 nautical miles of water from its shoreline for mineral exploration and 25 natural miles of shoreline for fishing.
All other parts of the Caspian Sea would be considered neutral waters for common use. The summit also produced important security decisions, including an agreement that military vessels from non-Caspian states would be prohibited from entering the sea.
This is a boon for both Russia and Iran, who have long had concerns about a U.S. or NATO military presence increasing Western influence, particularly over Azerbaijan. The agreement does not prevent the shipment of military cargo through the Caspian, though, since both Azerbaijan and Kazakhstan have played logistical supply roles for U.S. and NATO forces in Afghanistan.
The legal convention signed at the Caspian Sea summit in Aktau is far from the final word on the division of the strategic sea and its abundant energy resources. It does indicate progress in certain areas such as security, but Russia and Iran will likely try to delay any finalized protocol for managing the body of water in order to protect their strategic energy interests.
However, many issues remain unsettled. For example, the delimitation of the seabed itself, where most energy resources are located, was left pending, meaning the Caspian countries will need to negotiate bilateral agreements.
Sources: the hindu.
Topic: Food processing and related industries in India- scope and significance, location, upstream and downstream requirements, supply chain management.
International Conference on Recent Advances in Food Processing Technology (iCRAFPT)
What to study?
- For Prelims: Meaning of food processing, IIFT.
- For Mains: Significance and the need for food processing.
Context: International Conference on Recent Advances in Food Processing Technology (iCRAFPT) 2018 is being held at Indian Institute of Food Processing Technology, Thanjavur in Tamilnadu.
Theme: Doubling farmers’ income through food processing.
Significance of the conference:
This conference will be a valuable and important platform for inspiring international and interdisciplinary exchange at the forefront of food research. Over the course of three days, internationally renowned speakers will share their research experiences in the areas of advances in food engineering and its industrial applications, food product development, food biotechnology, nano foods.
Significance and the need for strengthening of food processing sector:
Most of the agricultural products are not consumable in their original form, for which they are processed. Wheat is converted into flour, Paddy into rice, sugarcane into jagery, Sugar, ethanol, alcohol etc. These products can be further processed such as flour into bread. Apart from this, left over part of crop such as risk husk can also be processed to get some useful product for e.g. Rice Bran oil, cattle feed, Sugarcane bagasse can be used for power cogeneration.
Hence, food processing not merely adds value to the agro products, but also increases their utility. We know that activities in an economy are broadly divided into Agriculture, industry and Services. Food processing Industry is the product of agriculture and Industry.
Food processing industry in India:
India Food Processing Industry is estimated at $135 billion industry which is growing at about 8% annually. This growth rate is significantly more than agricultural growth rate which remains around 4%. These signals indicate toward phenomenal shift toward food processing from traditional ways.
Food processing industry and employment growth:
FPI is employment intensive industry; it can be an answer to jobless growth of past decade. Currently, only 3 % of employment is in FPI, while in developed countries it handles 14% population. Again, much of the employment will be created into rural India. This can remedy problem of distress migration. Growth in direct employment in the organized food processing sector stands at 6 % between 2011-12.
The key challenges identified overall for the food processing sector in India are as follows:
Poor supply chain linkages: India’s agriculture market has a long and fragmented supply chain that results in high wastage and high costs, especially due to seasonality, perishability, and variability of produce.
Infrastructure bottlenecks: The export related infrastructure for agri-produce is grossly inadequate, especially at sea ports and airports. More than 30 percent of the produce from the fields gets spoilt due to poor post-harvesting facilities and lack of adequate storage infrastructure.
Lack of skilled manpower: The agricultural workforce is inadequately skilled across different levels of food processing.
Low adherence to quality standards: India lacks basic standardization and certification infrastructure. Given the size of the food processing industry, there is a huge gap in the availability of laboratories, trained manpower, and certification agencies.
Topic: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.
What to study?
- For Prelims: Meaning and features of P- notes.
- For Mains: Significance, concerns associated and recent measures taken.
Context: Investments through participatory notes into Indian capital markets have plunged to over nine-year low of Rs 80,341 crore till July-end amid stringent norms put in place by the watchdog Sebi to check misuse of these instruments.
The decline could be attributed to several measures taken by the market watchdog to stop the misuse of the controversy-ridden participatory notes.
- In July 2017, Sebi had notified stricter norms stipulating a fee of USD 1,000 on each instrument to check any misuse for channelising black money. It had also prohibited FPIs from issuing such notes where the underlying asset is a derivative, except those which are used for hedging purposes.
- These measures were an outcome of a slew of other steps taken by the regulator in the recent past. In April last year, the Securities and Exchange Board of India (Sebi) had barred resident Indians, NRIs and entities owned by them from making investment through P-notes.
WHAT ARE P-NOTES?
These are used by overseas market participants that don’t want to get registered as FIIs. P-notes are not issued in India, rather these are issued by an India registered FII to other overseas investors. The FII will be the entity to initiate a transaction in our stock markets, which could be on behalf of foreign clients. P-notes are then issued by the FII to the client, underlining that the securities are held on behalf of the client albeit in the name of the FII. The P-note holder is entitled to all the dividends, capital gains and other payouts on the underlying securities. FIIs have to periodically report to Sebi on P-note issuance without the need to name the final beneficiary.
What are govt & regulator’s concerns?
The primary reason why P-Notes are worrying is because of the anonymous nature of the instrument as these investors could be beyond the reach of Indian regulators. Further, there is a view that it is being used in money laundering with wealthy Indians, like the promoters of companies, using it to bring back unaccounted funds and to manipulate their stock prices.
WHY ARE THEY POPULAR?
- These are a popular way to invest in Indian markets as not only do these save the investor from regulatory hassles of registration, but also allow the final beneficiary to remain anonymous.
- Large hedge funds and high net worth individuals find this a hassle-free and simple way to get exposure to Indian markets.
- Reports also suggest that P-notes may aid in movement of black money or unaccounted funds. Such funds leave the country through various routes and can easily re-enter via investments aided by P-notes, which won’t reveal the identity of the beneficiary. Given that P-notes are issued outside India to overseas investors, they are not regulated and are open to misuse.
Sources: the hindu.
Facts for Prelims:
The 18th edition of Asian Games is being held in Jakarta, Indonesia.
- For the first time, eSports, a form of competition using video games, and canoe polo will be contested as demonstration sports.
- This will be the second time that Indonesia hosts the Asian Games.
- This will be the first time that the Asian Games will be held in two cities – Jakarta and Palembang.
About Asian Games:
- The Asian Games, also known as Asiad, is a continental multi-sport event held every four years between athletes from all over Asia.
- Since 1982, the Games have been organised by the Olympic Council of Asia (OCA). Prior to that, the Games were regulated by the Asian Games Federation (AGF).
- The Games are the second largest multi-sport event after the Olympic Games.
- The last edition of the Games was hosted by Incheon, South Korea in October 2014.
Coloured stickers to indicate nature of fuel:
The Supreme Court has accepted the Centre’s proposal to use hologram-based coloured stickers on vehicles, plying in the Delhi-National Capital Region (NCR), to indicate the nature of the fuel used.
- The Hologram-based sticker of light-blue colour will be used for petrol and CNG-run vehicles.
- Sticker of orange colour will be used for diesel-driven vehicles.