Weekly Current Affairs Prelims (28th October to 4th November, 2018)

agni 1

 

Weekly Current Affairs Prelims (28th October to 4th November, 2018)

 

Topic: Sixth tranche of electoral bonds sale to kick off from Nov 1

Topic in Syllabus: Indian Polity

 

electoral bond scheme

Why in news?

The sixth tranche of electoral bonds sale will take place from November 1-10, the finance ministry said on recently.

 

More about on news:

  • Electoral bonds are being pitched as an alternative to cash donations made to political parties as part of efforts to bring transparency in political funding.
  • “State Bank of India (SBI), in the sixth phase of sale, has been authorised to issue and encash electoral bonds through its 29 authorised branches with effect from November 1 to 10,” the ministry said in a statement.
  • The 29 specified SBI branches are in cities like New Delhi, Gandhinagar, Chandigarh, Bengaluru, Bhopal, Mumbai, Jaipur, Lucknow, Chennai, Kolkata and Guwahati.
  • The electoral bond sales comes at a time when assembly election process in five states including Rajathan and Madhya Pradesh has started.
  • The Model Code of Conduct is in force in these states.
  • The government notified the Electoral Bond Scheme in January this year.
  • The sale of first batch of electoral bonds took place from March 1-10, 2018.
  • The second phase was launched from April 2-10. The third phase took place during May 1-10, fourth tranche was launched from July 2-11 and fifth was between October 1 and October 10.

 

Electoral Bonds:

  • It may be noted that Electoral Bonds shall be valid for fifteen calendar days from the date of issue and no payment shall be made to any payee Political Party if the Electoral Bond is deposited after expiry of the validity period.
  • The Electoral Bond deposited by an eligible Political Party in its account shall be credited on the same day.
  • Electoral Bond is a financial instrument (similar to a promissory note) for making donations to political parties. These are issued by Scheduled Commercial banks upon authorization from the Central Government to intending donors, but only against cheque and digital payments (it cannot be purchased by paying cash).
  • These bonds shall be redeemable in the designated account of a registered political party within the prescribed time limit from issuance of bond.
  • Electoral bond was announced in the Union Budget 2017-18. Required amendments to the Reserve Bank of India Act, 1934 (Section 31(3)) and the Representation of People Act, 1951 were made through Section 133 to 136 of Finance Bill, 2017.
  • Electoral Bond is an effort made to cleanse the system of political funding in India. The scheme of electoral bonds addresses the concerns of donors to remain anonymous to the general public or to rival political parties.
  • From the bonds, no details of the donor nor of the intended political beneficiary can be made out. So electoral bond cannot be identified or associated with any particular buyer or political party.
  • State Bank of India (SBI) has been authorised to issue and encash Electoral Bonds initially at its 4 Authorised Branches. The first issue of the Scheme was opened in March 2018.
  • Accordingly, the first sale of Electoral Bonds commenced from 1 March 2018 for a period of 10 days i.e. up to 10 March 2018.

 

Sample Question:

Q) With respect to Electoral bonds scheme, consider the following statements

  1. It makes India first country in the world to have such unique bonds for electoral funding.
  2. These bonds are bearer instrument in nature of promissory note and interest-free banking instrument.
  3. It will carry name of payee.
  4. Only registered political parties, that have secured not less than 1% of votes polled in last election of Lok Sabha or legislative assembly of state, will be eligible to receive electoral bonds.

Choose the correct answrr from the codes given below

a) 1 and 2 only

b) 1, 2 and 4 only

c) 1, 2 and 3 only

d) All of the above

Answer: b) 1, 2 and 4 only

 


 

Topic: India, Japan sign $75 billion currency swap agreement

Topic in Syllabus: International Affairs

 

currency swap agreement

Why in news?

Japan and India entered into a $75-billion currency swap arrangement that will bolster the country’s firepower as it battles a steep drop in the rupee’s value. An agreement to this effect was signed during Prime Minister Narendra Modi’s ongoing visit to Japan.

 

More about on news:

  • India and Japan have signed a currency swap agreement during the visit of Prime Minister Modi to Japan on 28th of October 2018. The currency swap agreement is for US $75 bn and is a great opportunity for India to obtain foreign currency by exchanging rupee to Japan.
  • According to the initial reports, the swap involves US Dollar besides Japanese Yen and Indian Rupee. As part of the agreement, the Bank of Japan (Japanese central bank) will accept rupees and give dollars to the Reserve Bank of India (RBI) and, similarly, the RBI will take the yen and give dollars to the Bank of Japan to stabilize each other’s currency.
  • Though the central part of the agreement is Japanese commitment to exchange US Dollar for rupee from India, the Japanese Yen is one of the five currencies included in the IMF’s SDR basket and is counted as global hard currency. The India-Japan currency swap agreement seems to be exchange of reserve currency (Dollar) for non-reserve currency (rupee).
  • The currency swap with Japan will help India to pacify the depreciating trend of rupee. In future, the RBI can execute swaps rupee for Dollars to ensure stability in exchange rate.
  • Real utility of the currency swap agreement is that it will give the RBI to access $75 bn foreign exchange at a time when there are strengthening of current account deficit factors for India. It will give psychological effect on the foreign exchange market as the traders in the forex market will get convinced about the ability of the country to tackle foreign currency scarcity problem.
  • Already, the foreign exchange reserve of India came down from its peak of $413 billion in April 2018 to below $395 dollars, as on second week of October 2018.

 

What is a currency swap agreement?

  • The word swap means exchange. A currency swap between two countries is an agreement or contract to exchange currencies (of the two countries or any hard currency) with predetermined terms and conditions.
  • A currency swap involves exchanging principal and fixed interest payments on a loan in one currency for principal and fixed interest payments on a similar loan in another currency.
  • Often the popular form of currency swap is between two central banks. Here, the main purpose of currency swap by a central bank like the RBI is to get the foreign currency form the issuing foreign central bank at the predetermined conditions (like exchange rate and the volume of currency) for the swap. Besides supporting the domestic currency and foreign exchange market, another main purpose of currency swap is to keep the value of the foreign exchange reserves kept with the central bank.

 

liquidity boost

What is the purpose of currency swap?

  • As mentioned, the main purpose of currency swaps is to avoid turbulence and other risks in the foreign exchange market and exchange rate. Central banks and governments engage in currency swaps with foreign counterparts to ensure adequate foreign currency during the time of foreign currency scarcity. Both works with the same objective and through similar mechanism.
  • Often, the turbulence comes when a country faces scarcity of foreign currency which may led to currency crisis and steep depreciation of the domestic currency. In such a scenario, if the central bank/ government (read the RBI/Government) is able to get sizable foreign currency by exchanging domestic currency, it ensures availability of foreign currency. Hence the turbulence in the foreign exchange market or depreciation of the domestic currency/currency crisis can be avoided.
  • Besides currency or exchange rate stability, currency swaps between governments also have supplementary objectives like promotion of bilateral trade, maintaining the value of foreign exchange reserves with the central bank and ensuring financial stability (protecting the health of the banking system).
  • It is always desirable for a developing country like India to reach currency swap agreement with countries like USA/UK/EU/Japan whose currencies are hard currencies (used in international trade as medium of exchange).
  • Currency swap agreement can be bilateral or multilateral. The earliest currency swap was between U.S. Federal Reserve and the Central Bank of France signed on February 28, 1962.

 

Sample Question:

Q) India recently have signed a currency swap agreement with

a) Africa

b) Indonesia

c) Japan

d) China

Answer: c)

 


 

Topic: India jumps 23 places to rank 77 in World Bank’s ‘ease of doing business’ index

Topic in Syllabus: Indian Economy

 

ease of doing business ranks 2018

Why in news?

India became South Asia’s top-ranked economy, jumping 23 spots to rank 77 out of 190 countries in the World Bank’s ‘ease of doing business’ index released on recently.        

 

More about on news:

  • The rankings give a measure of how friendly the regulatory environment of a country is for doing business.
  • In its annual ‘Doing Business’ 2019 report, World Bank said India improved on six of the 10 parameters relating to starting and doing business in a country.
  • New Zeland has held on to the top spot, while Somalia is the worst place to begin a business.
  • China is one of this year’s top 10 improvers, advancing more than 30 spots to 46th place in the global rankings. Pakistan is placed at 136.
  • “This year’s top 10 improvers, based on reforms undertaken, are Afghanistan, Djibouti, China, Azerbaijan, India, Togo, Kenya, Côte d’Ivoire, Turkey and Rwanda. With six reforms each, Djibouti and India are in the top 10 for a second consecutive year.
  • Afghanistan and Turkey, top improvers for the first time, implemented record single-year reforms, with five and seven, respectively,”

 

India’s improvement:

  • Last year, India had moved up 30 places to 100th position, showing an improvement on eight out of 10 indicators for “Doing Business”.
  • In 2016, 2015 and 2014, India had not improved much and was placed at 130th, 131st and 134th positions respectively.
  • Last year’s improvement, the World Bank said, came on the back of “sustained business reforms” over the previous four years.
  • In 2016, 2015 and 2014, India had not improved much and was placed at 130th, 131st and 134th positions respectively. Last year’s improvement, the World Bank said, came on the back of “sustained business reforms” over the previous four years.
  • “India also replaced the value-added tax with the GST (Goods and Services Tax) for which the registration process is faster,” the World Bank said.
  • India reduced the time and cost of export and import through various initiatives, including the implementation of electronic sealing of containers, the upgrading of port infrastructure and allowing electronic submission of supporting documents with digital signatures.
  • World Bank said India has further streamlined the process of obtaining a building permit and made it faster and less expensive to obtain a construction permit. It also improved building quality control by introducing decennial liability and insurance.

 

ease of doing business

Ease of Doing Business Index:

  • Ease of doing business is an index published by the World Bank.
  • It is an aggregate figure that includes different parameters which define the ease of doing business in a country.
  • It is computed by aggregating the distance to frontier scores of different economies.
  • The distance to frontier score uses the ‘regulatory best practices’ for doing business as the parameter and benchmark economies according to that parameter.
  • More specifically, this index takes a closer look at regulations impacting eleven specific areas and how these affect how easy it is to conduct business in a country.
  • These areas are: 1) starting a business; 2) dealing with construction permits; 3) getting electricity; 4) registering property; 5) getting credit; 6) protecting minority investors; 7) paying taxes; 8) trading across borders; 9) enforcing contracts; 10) resolving insolvency, and; 11) labor market regulation.

 

Sample Question:

Q) Which of the following statements are correct with respect to Ease of Doing Business Index

  1. Index is released by IMF.
  2. A higher ranking of country in this list means that its regulatory environment is more conducive and favourable for the starting and operation of firms.
  3. India became South Asia’s top-ranked economy, jumping 23 spots to rank 77 out of 190 countries.

Choose the correct answer from the codes given below

a) 1 and 3 only

b) 1 and 2 only

c) 2 and 3 only

d) All of the above

Answer: c) 2 and 3 only

 


 

Topic: Karnataka launches SC/ST entrepreneurship scheme

Topic in Syllabus: Schemes and Programmes

sc st entrepreneurship scheme

Why in news?

Karnataka Social Welfare Department recently launched the Samruddhi scheme to boost employment opportunities for SC/ST youth through entrepreneurship. For this, the government is partnering with private enterprises to train the youth from backward communities.

 

More about the scheme:

  • “The government is planning to create ‘industry owned private enterprise’ to make them financially independent,”
  • “The Samruddhi scheme is targeted at socially marginalised communities to provide them with skill development and alternate means of employment,”
  • To create industry owned private enterprise, the State government signed a memorandum of understanding (MoU) with 30 retail companies of the 62 which have shown interest.
  • The 30 companies which have signed MoU are to provide self-employment opportunities for around 25,000 beneficiaries from the SC/ST communities.
  • The department is hoping to create around 10,000 entrepreneurs annually in the next three years from among the economically and socially marginalised communities in the State.

 

Objectives:

  • To empower SC/ST youth
  • To create self-employment opportunities
  • To create jobs in the state
  • To boost state economy

 

Samruddhi Scheme Eligibility:

  • Scheme is applicable only in Karnataka.
  • Youth from SC/ST categories only can apply for the scheme.

 

Samruddhi Scheme Benefits:

  • Skills development trainings and certificates will be provided to aspiring SC/ST youth.
  • Seed fund for the aspiring entrepreneurs.
  • The trainings and funding will help entrepreneurs start their retail outlet or franchise.

 

Samruddhi Scheme Highlights & Implementation:

  • A scheme by the Department of Social Welfare Government of Karnataka.
  • Industry owned private enterprise will be created.
  • Karnataka government has signed MOU with 30 retail companies.
  • The scheme will benefit 25,000 youth from SC/ST categories in Karnataka.
  • The government is planning to create 10,000 entrepreneurs annually for next three years.
  • The scheme will benefit economically and socially marginalized societies in the state.
  • The scheme will focus on the rural areas and tier-II cities in the Karnataka.
  • Government will provide seed grant to the aspiring entrepreneurs also under the scheme.
  • The financial assistance will help trained youth to start their franchises or retail outlets.

 

Sample Question:

Q) With respect to Samruddhi Scheme, consider the following statement

  1. Youth from SC/ST categories only can apply for the scheme.
  2. Scheme is applicable only in Karnataka.
  3. The Samruddhi scheme is targeted at socially marginalized communities to provide them with skill development and alternate means of employment.

Choose the correct answer from the above

a) 3 only

b) 1 and 3 only

c) 2 and 3 only

d) All of the above

Answer: d) all of the above

 


 

Topic: Cabinet nod for opening up of Solar Alliance to all UN countries

Topic in Syllabus: Energy and Infrastructure

 

international solar alliance 2018

Why in news?

The Union Cabinet recently gave its approval for moving a resolution in the first assembly of the International Solar Alliance (ISA) to amend the framework agreement of the alliance to open up its membership to all UN countries.

 

More about on news:

  • The decision was taken to put solar energy on the global agenda with the universal appeal for developing and deploying solar energy.
  • The Cabinet also apprised of a Memorandum of Understanding (MoU) and a Memorandum of Cooperation (MoC) with Russia on October 5.
  • The MoUs/ MoCs provide a platform for Indian Railways to interact and share the latest developments and knowledge in the railway sector. They will also facilitate exchange of technical experts, reports and technical documents, training and seminars/ workshops focusing on specific technology areas and other interactions for knowledge sharing.

 

Significance:

  • It will strengthen cooperation in the field of tourism, the Cabinet approved signing of a MoU between India and Korea.
  • The aim is to expand bilateral cooperation in the tourism sector and to encourage investment in the tourism and hospitality sectors.

 

isa target

International Solar Alliance:

  • International Solar Alliance (ISA), an alliance of 121 solar resource rich countries lying fully or partially between the Tropics of Cancer and Capricorn.
  • ISA was jointly launched by India and France on November 30, 2015 in Paris, France on the side-lines of the 21st Conference of Parties (CoP 21) to the United Nations Framework Convention on Climate Change.
  • The ISA Framework Agreement was opened for signature on 15 November 2016 in Marrakech, Morocco, on the side-lines of CoP-22.
  • The idea was to form a coalition of solar resource-rich countries to collaborate on addressing the identified gaps in their energy requirements through a common approach.
  • The ISA has set a target of 1 TW of solar energy by 2030, which current French President Emmanuel Macron said would require $1 trillion to achieve.
  • So far, however, only 56 countries have signed the ISA Framework Agreement. These include Australia, Bangladesh, Benin, Brazil, Burkina Faso, Cabo Verde, Cambodia, Chad, Chile, Comoros, Costa Rica, Cote d’Ivoire, Cuba, Djibouti, Dominican, Republic, DR Congo, Equatorial Guinea, Ethiopia, Fiji, France, Gambia, Gabon, Ghana, Guinea, Guinea-Bissau, Guyana, India, Kiribati, Liberia, Madagascar, Malawi, Mali, Mauritius, Mozambique, Nauru, Niger, Nigeria, Peru, Rwanda, Sao Tome, Senegal, Seychelles, Somalia, South Sudan, Sri Lanka, Sudan, Suriname, Tanzania, Togo, Tonga, Tuvalu, UAE, Uganda, Vanuatu, Venezuela and Yemen.

 

india's contribution to isa

India’s role

  • Apart from being a founding-member, India plays a significant role in the alliance in terms of being a host as well as a major contributor to the achievement of the target.
  • The ISA is the first international body that will have a secretariat in India.
  • India, with a target to produce 100 GW of solar energy by 2022, would account for a tenth of ISA’s goal.
  • India will produce 175 GW electricity from renewable sources by 2022 and 100 GW will be from solar energy.

 

Sample Question:

Q) Which of the following statements are correct with respect to International Solar Alliance

  1. The ISA was launched at the 2015 Paris Climate Change Summit (COP21)
  2. It seeks to empower solar-rich countries located between the tropic of Cancer and the tropic of Capricorn to make collaborative efforts to harness solar energy to generate the electricity.
  3. As of now the ISA Framework Agreement has been signed by 80 countries.

Choose the correct answer from the codes given below

a) 1 and 3 only

b) 2 and 3 only

c) 1 and 2 only

d) All of the above

Answer: c) 1 and 2 only 

 


 

Topic: NSDL commences operations as a payments bank, says RBI

Topic in Syllabus : Indian Economy

 

nsdl payments bank

Why in news?

NSDL Payments Bank has commenced operations as a payments bank, the RBI said recently.

 

More about news:

  • In November 2014, the RBI had granted ‘in-principle’ approval to 11 applicants, including National Securities Depository Ltd (NSDL) to set up payments banks.
  • NSDL Payments Bank Limited has commenced operations as a payments bank with effect from October 29, 2018.
  • The Reserve Bank has issued a license to the bank under Section 22 (1) of the Banking Regulation Act, 1949, to carry on the business of payments bank in India,
  • The launch comes at a time when other payments banks are under scrutiny of the RBI regarding compliance with operating guidelines.
  • Other payments banks that have started operations are India Post Payments Bank, Airtel Payments Bank, Aditya Birla Idea Payments Bank and Jio Payments Bank.

 

Background:

  • In September 2013, the Reserve Bank of India constituted a committee headed by Dr Nachiket Mor to study ‘Comprehensive financial services for small businesses and low income households’.
  • The objective of the committee was to propose measures for achieving financial inclusion and increased access to financial services.
  • The committee submitted its report to RBI in January 2014. One of the key suggestions of the committee was to introduce specialized banks or ‘payments bank’ to cater to the lower income groups and small businesses so that by January 1, 2016 each Indian resident can have a global bank account.

payments bank

Payments Banks:

  • A payments bank is like any other bank, but operating on a smaller scale without involving any credit risk.
  • In simple words, it can carry out most banking operations but can’t advance loans or issue credit cards.
  • It can accept demand deposits (up to Rs 1 lakh), offer remittance services, mobile payments/transfers/purchases and other banking services like ATM/debit cards, net banking and third party fund transfers.
  • The main objective of payments bank is to widen the spread of payment and financial services to small business, low-income households, and migrant labour workforce in secured technology-driven environment.
  • With payments banks, RBI seeks to increase the penetration level of financial services to the remote areas of the country.
  • They also can distribute non-risk sharing simple financial products like mutual funds and insurance products.

 

Sample Question:

Q) Consider the following statements with respect to payments banks

  1. It can carry out most banking operations but can’t advance loans or issue credit cards.
  2. A payments bank is like any other bank, but operating on a smaller scale without involving any credit risk.

Choose the correct answer from the codes given below

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

Answer: c) both 1 and 2

 


 

Topic: Successful test-fire of Indian ballistic missile Agni-I

Topic in Syllabus : Science and Technology

agni 1

Why in news?

India recently successfully conducted the night trial of the indigenously developed nuclear capable Agni-I ballistic missile off the Odisha coast.

 

More about on news:

  • The surface-to-surface missile test was test-fired as part of a user-trial from the Abdul Kalam Island off Odisha coast.
  • Defence sources said Strategic Forces Command of Indian Army test-fired the missile and the night trial of Agni missile was successful.
  • The night trial of the ballistic missile with a strike range of 700 km was first conducted in April 2014, said sources.
  • The missile with a strike range of beyond 700 km has a specialised navigation system. It has already been inducted in the Indian Army.
  • The missile, launched from a test range off the coast of the eastern state of Odisha as part of regular training activities, hit the target area with accuracy.

 

Agni-I:

  • Agni-I (Agni means “Fire”) is a short-range ballistic missile developed by DRDO under the Integrated Guided Missile Development Program.
  • It is a single-stage missile developed to fill the gap between 250 km range of Prithvi-II and 2,500 km range of Agni-II.
  • It was first launched on 25 January 2002 from a road mobile launcher at Integrated Test Range (ITR), Wheeler Island. Less than 75 launchers are deployed.
  • Agni-I was first tested at the Interim Test Range in Chandipur in 1989.
  • The Agni I has a range of 700–900 km. It is claimed to be a part of the “Minimum credible deterrence”.
  • Agni-I is a single stage, solid fuel, road and rail mobile, short-range ballistic missile (SRBM).
  • The need for the Agni-I was felt after the Kargil war with Pakistan. It took DRDO 15 months to develop the Agni-I after having completed Agni-II development.

 

Ballistic missile:

  • A ballistic missile follows a ballistic trajectory to deliver one or more warheads on a predetermined target.
  • These weapons are only guided during relatively brief periods of flight—most of their trajectory is unpowered, being governed by gravity and air resistance if in the atmosphere.
  • Shorter range ballistic missiles stay within the Earth’s atmosphere, while longer-ranged intercontinental ballistic missiles (ICBMs), are launched on a sub-orbital flight trajectory and spend most of their flight out of the atmosphere.
  • These weapons are in a distinct category from cruise missiles, which are aerodynamically guided in powered flight.

 

Sample Question:

Q) Which of the followings are correct with respect to Agni-I

  1. Agni-I is a long-range ballistic missile developed by DRDO.
  2. It is a single-stage missile developed to fill the gap between 250 km range of Prithvi-II and 2,500 km range of Agni-II.

Choose the correct answer from the codes given below

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

Answer: b) 2 only