23 May, 2020 54 Min Read
|GS-I||Pili Yesa||Art and Culture|
|GS-II||US pull out of Open Skies treaty||International Relations|
|GS-III||“Sweet Revolution” as a part of Atmanirbhar Bharat Abhiyan||Economy|
|RBI slashes the lending rates||Economy|
|NTPC in pact with ONGC to set up Joint Venture Company for Renewable Energy Business||Energy|
|RBI announces 9 measures for strengthening the Economy||Economy|
|PT Pickups||The IMD via UMANG App||Good Governance|
|‘ReSTART’ policy||Good Governance|
|Wadi Rum Desert||Geography|
GS-I : Art and Culture
GS-II : International Relations
US pull out of Open Skies treaty
Part of: GS-II- International Treaties and Convections (PT-MAINS-PERSONALITY TEST)
The United States announced its intention to withdraw from the 35-nation Open Skies treaty allowing unarmed surveillance flights over member countries, the Trump administration's latest move to pull the country out of a major global treaty.
The Open Skies treaty, proposed by U.S. President Dwight Eisenhower in 1955, was signed in 1992 and took effect in 2002. The idea is to let member nations make surveillance flights over each other's countries to build trust. It allows each state-party to carry out short-notice, unarmed, reconnaissance flights over the others' territories to collect data on military forces and activities.
The Open Skies Treaty is part of a broad web of arms control agreements meant to ensure stability and predictability on the European continent and reduce the risk of misunderstandings that could spiral into conflict by ensuring transparency.
Note: India is not a member of this treaty.
Reason of withdrawal
Some experts worry that a U.S. exit from the treaty, which will halt Russian overflights of the United States, could prompt Moscow's withdrawal, which would end overflights of Russia by the remaining members, weakening European security at a time that Russian-backed separatists are holding parts of Ukraine and Georgia.
Mr Trump’s decision deepens doubts about whether Washington will seek to extend the 2010 New START accord, which imposes the last remaining limits on U.S. and Russian deployments of strategic nuclear arms to no more than 1,550 each. It expires in February.
Mr. Trump has repeatedly called for China to join the United States and Russia in talks on an arms control accord to replace New START. China, estimated to have about 300 nuclear weapons, has repeatedly rejected Mr. Trump's proposal.
The 35 state parties to the Open Skies treaty are: Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, Croatia, the Czech Republic, Denmark (including Greenland), Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Italy, Kazakhstan, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland, Portugal, Romania, the Russian Federation, Slovakia, Slovenia, Spain, Sweden, Turkey, Ukraine, the United Kingdom, and the United States.
The Hindu analysis: USA withdraw from essential treaties
On August 2 2019, the US formally quits the US-Russia Intermediate-Range Nuclear Forces (INF) Treaty. Concluded in 1987, it had obliged the two countries to eliminate all ground-based missiles of ranges between 500 and 5,500 km, an objective achieved by 1991.
What is about to change?
What happened in the 1980s?
What are the Cold War talks about?
What was the effect of INF Treaty?
What happened when US withdrew from ABM?
Is there any future for New START?
Why is the testing of low-yield weapon done?
Source: Arms control
GS-III : Economy
“Sweet Revolution” as a part of Atmanirbhar Bharat Abhiyan
Government is promoting Beekeeping as part of its aim to double farmers’ income.
The Government has allocated Rs.500 crore towards Beekeeping under the Atma Nirbhar Abhiyan.
India is among the world’s top five honey producers. Compared to 2005-06 honey production has risen by 242% and exports shot by 265%.
Beekeeping will be an important factor in achieving the goal of doubling farmers’ income by 2024.
National Bee Board has created four modules to impart training as part of the National Beekeeping and Honey Mission (NBHM) and 30 lakh farmers have been trained in beekeeping. They are also being financially supported by the Government.
The Minister said the Government is implementing the recommendations of the Committee (Bibek Debroy) to promote beekeeping.
Government has launched ‘Honey Mission’ as part of ‘Sweet Revolution’ which has four components. Even small and marginal farmers can adopt beekeeping since investment is low and returns high.
Issues before beekeepers
Successful beekeepers and entrepreneurs from Kashmir, West Bengal, Uttarakhand, Bihar, Kerala, Tamil Nadu, Karnataka, Uttar Pradesh, Jharkhand and Madhya Pradesh shared their experiences and suggested ways forward to bring about the Sweet Revolution.
Beekeeping Development Committee
Bibek Debroy led beekeeping development committee under the Economic Advisory Council to the Prime Minister has made recommendations to enhance the contribution of the beekeeping sector for achieving the target of doubling of farmer incomes by 2022.
The committee was set up to identify ways of advancing beekeeping in India that can help in improving:
Honey Bee Industry in India
National Bee Board (NBB)
RBI slashes the lending rates
Part of: GS-III- RBI-INFLATION (PT-MAINS-PERSONALITY TEST)
The RBI Governor Shaktikanta Das said that the six-member Monetary Policy Committee voted 5:1 in favour of 40 bps cut in interest rate. The RBI Governor said, measures announced can be divided into four categories-to improve functioning of markets, to support exports and imports, to ease financial stress by giving relief on debt servicing and better access to working capital and to ease financial constraints faced by State Governments.
The RBI Governor said private consumption has seen biggest blow due to COVID-19 outbreak, following investment demand has halted big time impacting the government revenues severely due to slowdown in economic activity. The inflation outlook is highly uncertain with elevated level of inflation in pulses being worrisome and therefore requires review of import duties. The Group Exposure Limit of banks is being increased from 25 to 30 per cent of eligible capital base for enabling the corporates to meet their funding requirements from banks. The increased limit will be applicable up to 30th June, 2021.
Monetary Policy Committee
Usually, the MPC meets six times a year. But, in FY20, it had an extra meeting in view of the pandemic and the urgent need to assess the current and evolving macroeconomic situation.
The RBI has a government-constituted Monetary Policy Committee (MPC) which is tasked with framing monetary policy using tools like the repo rate, reverse repo rate, bank rate, cash reserve ratio (CRR).
It has been instituted by the Central Government of India under Section 45ZB of the RBI Act that was amended in 1934.
The MPC is entrusted with the responsibility of deciding the different policy rates including MSF, Repo Rate, Reverse Repo Rate, and Liquidity Adjustment Facility.
Composition of MPC:
Selection and term of members:
Selection: The government nominees to the MPC will be selected by a Search-cum-Selection Committee under Cabinet Secretary with RBI Governor and Economic Affairs Secretary and three experts in the field of economics or banking or finance or monetary policy as its members.
Term: Members of the MPC will be appointed for a period of four years and shall not be eligible for reappointment.
How decisions are made?
Decisions will be taken by majority vote with each member having a vote.
RBI governor’s role: The RBI Governor will chair the committee. The governor, however, will not enjoy a veto power to overrule the other panel members, but will have a casting vote in case of a tie.
What is RBI Monetary Policy?
The term ‘Monetary Policy’ is the Reserve Bank of India’s policy pertaining to the deployment of monetary resources under its control for the purpose of achieving GDP growth and lowering the inflation rate.
The Reserve Bank of India Act 1934 empowers the RBI to make the monetary policy.
What the Monetary Policy intends to achieve?
As per the suggestions made by Chakravarty Committee, aspects such as price stability, economic growth, equity, social justice, and encouraging the growth of new financial enterprises are some crucial roles connected to the monetary policy of India.
Monetary Policy Instruments and how they are managed?
Monetary policy instruments are of two types namely qualitative instruments and quantitative instruments.
The list of quantitative instruments includes Open Market Operations, Bank Rate, Repo Rate, Reverse Repo Rate, Cash Reserve Ratio, Statutory Liquidity Ratio, Marginal standing facility and Liquidity Adjustment Facility (LAF).
Qualitative Instruments refer to direct action, change in the margin money and moral suasion.
Consolidated Sinking Fund and Guarantee Redemption Fund of State Governments
State Governments are maintaining the Consolidated Sinking Fund (CSF) and the Guarantee Redemption Funds (GRF) with the Reserve Bank as buffers for repayment of their liabilities. Currently, State Governments can avail of Special Drawing Facility (SDF) from the Reserve Bank against the collateral of the funds in CSF and GRF. The rate of interest charged is 100 bps below the Repo Rate at which Ways and Means Advances are extended to the State Governments. In order to further incentivise adequate maintenance of these funds by the State Governments and to encourage them to increase the corpus of these funds, it has been decided to lower the rate of interest on SDF from 100 bps below the Repo Rate to 200 bps below the Repo Rate.
What Is a Sinking Fund?
A sinking fund is a fund containing money set aside or saved to pay off a debt or bond. A company that issues debt will need to pay that debt off in the future, and the sinking fund helps to soften the hardship of a large outlay of revenue. A sinking fund is established so the company can contribute to the fund in the years leading up to the bond's maturity.
NTPC in pact with ONGC to set up Joint Venture Company for Renewable Energy Business
NTPC achievements in generation of Renewable Energy
ONGC achievements in generation of Renewable Energy
RBI announces nine additional measures for strengthening the Economy
Essay lines :"It is when the horizon is the darkest and human reason is beaten down to the ground that faith shines brightest and comes to our rescue."
RBI Governor Shaktikanta Das drew hope and inspiration from the 1929 statement of the Father of the Nation, as he announced yet another set of nine measures to smoothen the flow of finance and preserve financial stability in the turbulent and uncertain times ushered in by the COVID-19 pandemic
The RBI Governor stated that we must have faith in India’s resilience and capacity to overcome all odds.
Repo rate reduced by 40 basis points
Shri Das also announced a set of regulatory and developmental measures which he said complement the reduction in the policy rate and also strengthen each other.
Goals of the measures being announced are:
Measures to Improve the Functioning of Markets
Voluntary Retention Route
The VRR is an investment window provided by RBI to Foreign Portfolio Investors, which provides easier rules in return for a commitment to make higher investments.
The rules stipulate that at least 75% of the allotted investment limit be invested within three months; considering the difficulties being faced by investors and their custodians, the time limit has now been revised to six months.
Measures to Support Exports and Imports
The maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks to exporters has been increased from the existing one year to 15 months, for disbursements made up to July 31, 2020.
The Governor has announced a line of credit of ?15,000 crore to the EXIM Bank, for financing, facilitating and promoting India’s foreign trade.
The loan facility has been given for a period of 90 days, with a provision to extend it by one year. The loan is being given in order to enable the bank to meet its foreign currency resource requirements, especially in availing a US dollar swap facility.
The time period for import payments against normal imports (i.e. excluding import of gold/diamonds and precious stones/jewellery) into India has been extended from six months to twelve months from the date of shipment. This will be applicable for imports made on or before July 31, 2020.
Measures to Ease Financial Stress
These measures will now be applicable for a total period of six months (i.e. from March 1, 2020 to August 31, 2020). The aforesaid regulatory measures are: (a) 3-month moratorium on term loan instalments; (b) 3-month deferment of interest on working capital facilities; (c) easing of working capital financing requirements by reducing margins or reassessment of working capital cycle; (d) exemption from being classified as ‘defaulter’ in supervisory reporting and reporting to credit information companies; (e) extension of resolution timelines for stressed assets; and (f) asset classification standstill by excluding the moratorium period of 3 months, etc. by lending institutions.
Lending institutions have been allowed to convert the accumulated interest on working capital facilities over the total deferment period of 6 months (i.e. March 1, 2020 up to August 31, 2020) into a funded interest term loan, to be fully repaid during the course of the current financial year, ending March 31, 2021.
The maximum credit which banks can extend to a particular corporate group has been increased from 25% to 30% of the bank’s eligible capital base.
The increased limit will be applicable up to June 30, 2021.
Measures to ease financial constraints faced by State Governments
Consolidated Sinking Fund
The Consolidated Sinking Fund is being maintained by state governments as a buffer for repayment of their liabilities.
Assessment of Economy
PT Pickups : Good Governance
The IMD via UMANG App
IMD via UMANG App
To further enhance the initiatives of Digital India Programme, MeitY has brought the India Meteorological Department (IMD) services on the “UMANG App”.
The following 7 services hosted on http://mausam.imd.gov.in web site of IMD have been on-boarded on UMANG Mobile application:
1. Current Weather -Current temperature, humidity, wind speed, direction for 150 cities updated 8 times a day. Information on sunrise/ sunset and moonrise/ moonset is also given.
2. Nowcast- Three hourly warnings of localized weather phenomena and their intensity issued for about 800 stations, and districts of India by State Meteorological Centers of IMD. In case of severe weather, its impact also is included in the warning.
3. City Forecast – Past 24 hours and 7 day forecast of weather conditions around 450 cities in India are given.
4. Rainfall Information- All India district Rainfall information daily, weekly, monthly and cumulative series are available.
5. Tourism Forecast- Past 24 hours and 7 day forecast of weather conditions of around 100 Tourist cities in India are provided.
6. Warnings- The alert issued to warn citizens of approaching dangerous weather. It is colour coded in Red, Orange and Yellow are the alert levels with Red as the most severe category. Issued twice a day for all districts for the coming five days.
7. Cyclone- Cyclone warnings and alerts provides the track of cyclonic storms along with likely time and point of crossing of coast. Impact based warnings, area/district wise, are issued so that appropriate preparation including evacuation of vulnerable areas can be done.