Weekly Current Affairs Prelims (4th to 11th April, 2019)

Weekly Current Affairs Prelims (4th to 11th April, 2019)

(Info graphic Summary at the end)

 

Topic : Indian Advance Pricing Agreement regime moves forward with signing of 18 APAs by CBDT

Topic in Syllabus: Indian Economy

 

Why in news?

The Central Board of Direct Taxes (CBDT) has entered into 18 APAs in the month of March 2019, which includes 03 Bilateral APAs (BAPAs).

 

More about on news:

  • With the signing of these APAs, the total number of APAs entered into by the CBDT in the year 2018-19 stands at 52, which includes 11 BAPAs.
  • The total number of APAs entered into by the CBDT as of now stands at 271, which inter alia includes 31 BAPAs.
  • The BAPAs and Unilateral APAs (UAPAs) entered into during the month of March 2019 pertain to various sectors and sub-sectors of the economy like anti-friction bearings, risk management solutions platforms, BPO, IT/ITeS, ATMs, industrial and institutional cleaning and hygiene products, etc.
  • The progress of the APA scheme strengthens the Government’s resolve of fostering a non-adversarial tax regime.
  • The Indian APA programme has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.

 

The International Transactions covered in all these Agreements, inter alia, include the following, –

  • contract manufacturing
  • provision of software development services
  • back office engineering support service
  • provision of back office (ITeS) support services
  • provision of marketing support services
  • payment of royalty for use of technology and brand
  • trading
  • payment of interest

 

Advance-Pricing Agreement:

  • An APA is a contract for multiple years, between a taxpayer and at least one tax authority specifying the pricing method that the taxpayer will apply to its related-company transactions.
  • These programs are designed to help taxpayers voluntarily resolve actual or potential transfer pricing disputes in a proactive, cooperative manner, as an alternative to the traditional examination process.

 

Benefits of APA:

  • Provide certainty to taxpayers
  • Reduce disputes
  • Enhance tax revenues
  • Make country an attractive destination for foreign investments
  • As agreements are binding both on the taxpayer as well as the government hence reduce complaints and litigation costs.
  • Progress of APA schemes removes adversarial tax regime
  • Indian APA programs are appreciated nationally and internationally for addressing complex transfer pricing issues in a fair and transparent manner.

 

Sample Question:

Which of the followings are correct with respect to Advance Pricing Agreement

  1. It is an agreement between taxpayers (corporates) and the central tax authority (in case of India it is CBDT)
  2. It determines transfer pricing methodology for determining the value of assets and taxes on intra-group overseas transactions
  3. It aims to avoid disputes between taxpayer and tax regulator.

 

Choose the correct answer from the above

a). 1 only

b). 2 and 3 only

c). 1 and 2 only

d). All of the above

Answer: d)

 


 

Topic :  NuGen Mobility Summit 2019

Topic in Syllabus:  Science & Technology

 

Why in news?

The International Centre for Automotive Technology (ICAT) is organizing a NuGen Mobility Summit, 2019, at Manesar, NCR, from 27th to 29th November 2019.

 

More about on news:

  • This event will help in building a platform for bringing together all stakeholders in the automotive industry to understand global advancements in technologies.
  • The Summit is being organized in association with SAENIS, SAE INDIA, SAE International, NATRiP, DIMTS, Department of Heavy Industry, Ministry of Road Transport and Highways, SIAM and ACMA.
  • More than 2500 participants and over 250 exhibitors are expected to take part in the Summit.
  • The event aims to bring together the automotive OEMs, professionals, researchers, academic experts, vehicle system suppliers, test equipment supplier, quality managers, product planners, component developers, SAE members and students from all over the world.

 

Objectives:

The objective of the Summit is to

  • share new ideas,
  • learnings,
  • global experiences,
  • innovations and future technology trends for faster adoption,
  • Assimilation and development of advanced automotive technologies for a smarter and greener future.

 

The International Centre for Automotive Technology (ICAT):

  • ICAT Manesar is a division of NATRIP Implementation Society (NATIS) under the Department of Heavy Industries, Government of India.
  • It provides services for testing, validation, design and homologation of all categories of vehicles and has a mission to assist the automotive industry in adopting cutting edge technologies in vehicle evaluation and component development to ensure reliability, durability and compliance to the current and future regulations in new generation mobility solutions.
  • ICAT Centre-II is under brisk renovation to create a world-class state-of-the-art facility for organizing such significant and sizeable events for the automotive fraternity.
  • It has a mission to assist the automotive industry in adopting cutting edge technologies in vehicle evaluation and component development in new generation mobility solutions.

 

Sample Question:

TheNuGen Mobility Summit, 2019 will be organized by

a). Ministry of Heavy Industries and Public Enterprise

b). NITI Aayog

c). National Highways Authority of India

d). The International Centre for Automotive Technology

Answer: d)

 


 

Topic :  RBI sets WMA Limit for Government

Topic in Syllabus: Indian Economy

 

Why in news?

The Reserve Bank of India, in consultation with the Government of India, has decided that the limits for Ways and Means Advances (WMA) for the first half of the financial year 2019-20 (April 2019 to September 2019) will be Rs 75000 crore.

 

More about on news:

  • The Reserve Bank may trigger fresh floatation of market loans when the Government of India utilizes 75% of the WMA limit.
  • The Reserve Bank retains the flexibility to revise the limit at any time, in consultation with the Government of India, taking into consideration the prevailing circumstances.
  • The interest rate on WMA will be Repo Rate and overdraft will be 2% above the Repo Rate.
  • The Reserve Bank, in consultation with Government of India, will put in place a rule- based WMA limit in future, based on objective parameters.

 

Ways and Means Advance:

  • Ways and Means Advance (WMA) is a temporary finance facility provided to Government of India by RBI to accommodate temporary mismatch in the government’s receipts and payments.
  • This is not a permanent source of financing the government’s deficit.
  • The WMA scheme was introduced by RBI with effect from 1st April, 1997.
  • With this scheme, the old age practice of financing the budget deficit through system of ad hoc Treasury Bills came to an end.

 

Period of Ways and Means Advance:

  • When government runs short of cash, the WMA is provided by RBI for period of 90 days.
  • When limit of WMA is crossed the overdraft is provided to the government for periods not exceeding ten consecutive working days.

 

Interest on Ways and Means Advance

The interest rate on WMA/overdraft is:

  • WMA: Repo Rate
  • Overdraft: Two percent above the Repo Rate

 

States ways and Means Advance:

The Reserve Bank of India as a banker to state government provide temporary finance to tide over temporary mismatches in the cash flow of their receipts and payments as WMA. The temporary finance to states is provided in three ways:

  • Special Drawing Facility (SDF): The SDF is provided against GoI securities including Auction Treasury Bills (ATBs). The interest rate on SDF is charged at repo rate of RBI.
  • WMA: The WMA is provided to state after it has exhausted its quota of SDF. The interest rate on WMA is charged at repo rate of RBI.
  • Overdraft: The overdraft is given after state has exceeded its limit of WMA. A State can be in overdraft for 14 consecutive working days with not more than 36 working days in a quarter. The rate of interest on overdraft is 2 per cent above report rate if Overdraft is used up to 100 per cent of WMA limit. In case Overdraft is used above 100 per cent of WMA limit, rate of interest is 5 per cent above report rate.

 

WMA limits:

  • RBI, in consultation with the Government of India, has decided that that the limits for WMA for the first quarter of the financial year 2018-19 (April 2018 to June 2018) will be Rs 60,000 crore.
  • The WMA quantum for states works out to Rs 32,225 crore as per revised formula in 2016.

 

Sample Question:

With respect to Ways and Means Advance, consider the following statements

  1. Ways and Means Advance (WMA) is a temporary finance facility provided to Government of India by RBI to accommodate temporary mismatch in the government’s receipts and payments.
  2. This is a permanent source of financing the government’s deficit.

 

Choose the correct answer from the above

a). 1 only

b). 2 only

c). Both 1 and 2

d). Neither 1 nor 2

Answer: a)

 


 

Topic :  Roadis, NIIF to invest $2 billion

Topic in Syllabus: Infrastructure

 

Why in news?

National Investment and Infrastructure Fund (NIIF) of India and European highway concession manager Roadis recently announced the creation of a platform that will invest up to USD 2 billion in highways projects in India.

 

More about on news:

  • With 710 km of highways under ownership and management, Roadis is the largest European highway concession manager in India and is a wholly-owned subsidiary of the Public Sector Pension Investment Board (PSP Investments), one of Canada’s largest pension funds.
  • NIIF is a fund manager that invests in infrastructure and related sectors in the country.
  • This agreement, which aligns with our growth strategy, strengthens our long-term commitment to India.
  • NIIF is a partner that perfectly fits our profile given its commitment to infrastructure investment and the robust governance standards it follows,
  • The road network is a key enabler for the Indian economy to grow and sustain its position as the fastest growing major economy in the world, and this provides significant upside potential for investments, while creating value for users.

 

Benefits:

  • With strong investment and operational expertise, the platform intends to operate the roads portfolio with the highest global standards, creating maximum value for shareholders, the statement said.
  • This jointly-held platform will benefit from the expertise and value creation capabilities of both the entities, the statement said and added that with strong investment and operational expertise
  • The platform intends to operate the roads portfolio with the highest global standards, while creating maximum value for the shareholders.

 

National Investment and Infrastructure Fund (NIIF):

  • It is a fund created by the Government of India for enhancing infrastructure financing in the country.
  • It is registered as a category II alternative investment fund with the Securities and Exchange Board of India.
  • A sort of sovereign fund, for development of infrastructure projects, including the stalled ones.
  • It is India’s first sovereign wealth fund
  • It aims to attract investments from both domestic and international sources for infrastructure development in commercially viable projects both Greenfield and Brownfield, including stalled projects.
  • It has proposed corpus of Rs. 40,000 crores.
  • Government’s contribution to NIIF is 49% of total commitment at any given point of time.
  • The remaining 51% will be raised from domestic and global investors, including international pension funds, sovereign wealth funds, and multilateral/bilateral investors.
  • Its Governing Council is chaired by Finance Minister and has already been set up to act as an advisory council to the NIIF.

 

Objective:

  • The objective of NIIF would be to maximize economic impact mainly through infrastructure development in commercially viable projects, both Greenfield and brownfield, including stalled projects.
  • It could also consider other nationally important projects, for example, in manufacturing, if commercially viable.

 

Functions of NIIF:

The functions of NIIF are as follows:

  • Fund raising through suitable instruments including off-shore credit enhanced bonds, and attracting anchor investors to participate as partners in NIIF;
  • Servicing of the investors of NIIF.
  • Considering and approving candidate companies/institutions/ projects (including state entities) for investments and periodic monitoring of investments.
  • Investing in the corpus created by Asset Management Companies (AMCs) for investing in private equity.
  • Preparing a shelf of infrastructure projects and providing advisory services.

 

Sample Question:

Consider the following statements with respect to National Investment and Infrastructure Fund (NIIF)

  1. It is a fund created by the Government of India for enhancing infrastructure financing in the country.
  2. it is established in 2016
  3. It has proposed corpus of Rs. 40,000 crores.

 

Choose the correct answer from the above

a). 1 only

b). 1 and 2 only

c). 1 and 3 only

d). All of the above

Answer: c)

 


 

Topic : Health Ministry forms a Solidarity Human Chain; reaffirms commitment towards Universal Health Care

Topic in Syllabus: Indian Society

 

Why in news?

Ministry of Health and Family Welfare along with World Health Organization (WHO) recently formed a Solidarity Human Chain as part of the World Health Day celebrations to reaffirm their commitment to bridging gaps and working collaboratively towards Universal Health Coverage (UHC).

 

More about on news:

  • The theme of World Health Day 2019 is Universal Health Coverage: Everyone, Everywhere.
  • This event emphasizes our commitment to ensure all people and communities have access to quality healthcare services, where and when they are required, without suffering financial hardship.
  • The solidarity pledge to work towards making universal health care available to everyone, everywhere.
  • The government is committed to strengthening 1, 50,000 health facilities as Health and Wellness Centres which will deliver Comprehensive Primary Health Care closer to where people live in the rural and urban areas.
  • As of today, more than 17,000 HWCs are operational across the country and are providing services for non-communicable diseases in addition to existing services for reproductive and child health, communicable diseases etc.

 

The World Health Day:

  • April 7 of each year marks the celebration of World Health Day.
  • This year’s World Health Day will focus on equity and solidarity.
  • From its inception at the First Health Assembly in 1948 and since taking effect in 1950.
  • The celebration has aimed to create awareness of a specific health theme to highlight a priority area of concern for the World Health Organization.
  • Over the past 50 years this has brought to light important health issues such as mental health, maternal and child care, and climate change.
  • The celebration is marked by activities which extend beyond the day itself and serves as an opportunity to focus worldwide attention on these important aspects of global health.
  • The theme of World Health Day 2019 is Universal Health Coverage: Everyone, Everywhere.

 

Universal Health Coverage (UHC):

  • Universal coverage” refers to a scenario where everyone is covered for basic healthcare services.
  • This is a scheme, under which all Indian citizens, regardless of their economic, social or cultural backgrounds will have the right to affordable, accountable and appropriate health services of assured quality defined in a published package of services and benefits.
  • It is also a supplemental system of financing to protect people from increasing medical expenses.
  • UHC is basically means providing affordable, accessible and quality health care facility to all citizens of India irrespective of their income, caste, gender or religion.
  • Under this every Indian citizen will be covered by a National Health Package that has a choice of facilities that are guaranteed by the government.
  • The package will cover, free-of-charge, all Primary, Secondary and some Tertiary care services.

 

Sample Question:

Which of the followings are correct with respect to Universal Health Coverage (UHC)

  1. Universal health coverage refers to a scenario where everyone is covered for basic healthcare services.
  2. Under this every Indian citizen will be covered by a National Health Package that has a choice of facilities that are guaranteed by the government.
  3. It is also a supplemental system of financing to protect people from increasing medical expenses.

 

Choose the correct answer from the above

a). 1 only

b). 2 and 3 only

c). 1 and 3 only

d). All of the above

Answer: d)

 


 

Topic : ADB cuts India’s growth rate to 7.2% in 2019-20

Topic in Syllabus: International Affairs

 

Why in news?

Asian Development Bank (ADB) recently lowered India’s growth by 40 basis points to 7.2 per cent in fiscal year 2019-20.

 

More about on news:

  • It will be fastest growing economy in the world.
  • The growth rate in FY 2020-21 likely to be 7.3 per cent.
  • ADB projection is slightly higher than projections by other agencies which estimated growth rate between 7 to 7.1 per cent.
  • India will remain one of the fastest-growing major economies in the world this year given strong household spending and corporate fundamentals.

 

Asian Development Outlook 2019:

  • ADB, in its flagship publication Asian Development Outlook 2019, mentioned that recent policy measures by the Government to improve the investment climate and boost private consumption and investment will help India to lift economic growth in the next two fiscal years.
  • For the entire Asia, the multilateral agency forecasted that growth will soften to 5.7 per cent in 2019 and 5.6 per cent in 2020.
  • Developing Asia’s growth in 2018 was 5.9 per cent.
  • Excluding the newly industrialized economies of Hong Kong (China), South Korea, Singapore, and Taipei (China), developing Asia is forecast to expand 6.2 per cent in 2019 and a slightly slower 6.1 per cent in 2020.
  • Still, it is lower than 6.4 per cent growth recorded in 2018.
  • Income support to farmers, hikes in procurement prices for food grains, and tax relief to tax payers earning less than Rs 5 lakh will boost household income.
  • Declining fuel and food prices are also expected to provide an impetus for consumption.
  • An increase in utilization of production capacity by firms, along with falling levels of stressed assets held by banks and easing of credit restrictions on certain banks, is expected to help investment grow at a healthy rate.

 

Areas of concern:

However, there are some areas of concern. According to the report,

  • Downside risks to growth include a higher-than-expected moderation in global demand and a potential escalation of trade tensions.
  • Lower-than-targeted tax revenues or a delay in strengthening bank and corporate balance sheets could also undermine economic expansion.
  • Consumer price inflation is expected to rise to 4.3 per cent in FY 2019 and 4.6 per cent in FY2020 as food costs increase slightly and domestic demand strengthens.
  • Given that inflation is expected to average around 4 per cent in the first half of FY2019, the central bank would have some room for lowering policy rates.
  • Imports are expected to rise mainly due to stronger domestic demand while a growth slowdown in India’s key export destinations would dent export growth.
  • The current account deficit is expected to widen a bit to 2.4 per cent of GDP in FY2019 and 2.5 per cent of GDP in FY2019.
  • The deficit is expected to be financed comfortably by capital flows, given that India has emerged as an attractive destination for foreign investment.

 

Asian Development Bank (ADB):

  • The Asian Development Bank (ADB) is a regional development bank established on 19 December 1966, which is headquartered in the Ortigas Center.
  • It is a multi-lateral lending agency
  • It is modeled on the World Bank
  • It has a similar weighted voting system where votes are distributed based on member’s capital subscriptions.
  • ADB borrows from international capital markets with its capital as guarantee.
  • Japan and USA are its major donors.
  • There has been criticism that ADB’s large scale projects cause social and environmental damage due to lack of oversight
  • India has about 6% voting rights (4th highest; Japan highest, USA 2nd highest)
  • It is owned by 67 members – 48 from the region including India.
  • It provides finance to both sovereign countries as well as to the private parties.
  • It provides hard loans to middle-income countries and soft loans to poorer countries.

 

Sample Question:

Which of the followings are correct with respect to Asian Development Bank (ADB)

  1. It has a similar weighted voting system where votes are distributed based on member’s capital subscriptions.
  2. ADB borrows from international capital markets with its capital as guarantee.
  3. It provides finance to only sovereign countries not to private parties.

 

Choose the correct answer from the above

a). 1 only

b). 2 and 3 only

c). 1 and 2 only

d). All of the above

Answer: c)

 


 

Topic : India retained top spot in remittances in 2018: World Bank

Topic in Syllabus: International Affairs

 

Why in news?

India retained its position as the world’s top recipient of remittances with its diaspora sending a whopping USD 79 billion back home in 2018, the World Bank said in a report recently.

 

More about on news:

  • India has retained its top spot on remittances, according to the latest edition of the World Bank’s Migration and Development Brief.
  • Over the last three years, India has registered a significant flow of remittances from USD 62.7 billion in 2016 to USD 65.3 billion 2017.
  • Remittances grew by more than 14 percent in India, where a flooding disaster in Kerala likely boosted the financial help that migrants sent to families
  • According to the report, remittances to low-and middle-income countries reached a record high of USD 529 billion in 2018, an increase of 9.6 per cent over the previous record high of USD 483 billion in 2017.
  • India was followed by China (USD 67 billion), Mexico (USD 36 billion), Philippines (USD 34 billion) and Egypt (USD 29 billion).

 

Global scenario:

  • Global remittances, which include flows to high-income countries, reached USD 689 billion in 2018, up from USD 633 billion in 2017
  • Remittances to South Asia grew 12 per cent to USD 131 billion in 2018, outpacing the six per cent growth in 2017.
  • In Pakistan, remittance growth was moderate (seven per cent), due to significant declines in inflows from Saudi Arabia, its largest remittance source.
  • In Bangladesh, remittances showed a brisk uptick in 2018 (15 per cent).
  • The Gulf Cooperation Council (GCC) is a regional inter-governmental political and economic bloc of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.
  • The Bank in its report rued that the global average cost of sending USD 200 remained high, at around seven per cent in the first quarter of 2019.
  • Remittance costs across many African corridors and small islands in the Pacific remain above 10 per cent.

 

Foreign remittance:

  • A remittance is a transfer of money by a foreign worker to an individual in his or her home country.
  • Money sent home by migrants competes with international aid as one of the largest financial inflows to developing countries.
  • Workers’ remittances are a significant part of international capital flows, especially with regard to labour-exporting countries.

 

Significance:

  • Remittances are on track to become the largest source of external financing in developing countries.
  • The high costs of money transfers reduce the benefits of migration.
  • Renegotiating exclusive partnerships and letting new players operate through national post offices, banks, and telecommunications companies will increase competition and lower remittance prices.
  • Reducing remittance costs to three per cent by 2030 is a global target under Sustainable Development Goal (SDG) 10.7.

 

Sample Question:

With respect to the latest edition of the World Bank’s Migration and Development which of the following statements

  1. India has retained its top spot on remittances
  2. Remittances to South Asia grew 12 per cent to USD 131 billion in 2018, outpacing the six per cent growth in 2017.
  3. Reducing remittance costs to three per cent by 2020 is a global target under Sustainable Development Goal (SDG).

 

Choose the correct answer from the above

a). 1 only

b). 1 and 3 only

c). 1 and 2 only

d). All of the above

Answer: c)

 


 

Topic : India, US navies set up first ever secure communication link under COMCASA

Topic in Syllabus: Security Issues

 

Why in news?

The first-ever secure communication link between the Indian Naval Headquarters and the US Central as well as Pacific Naval Commands was recently set up by a visiting US team.

 

More about on News:

  • The Communications Compatibility and Security Agreement (COMCASA), which paves the way for transfer of communication security equipment from the US to India, was signed after the first 2+2 dialogue between the two countries last year.
  • With COMCASA in place, India will not only be able to obtain critical defence technologies from the US but also gain access to critical communication network of the US armed forces and real-time American intelligence.
  • The US has now also activated the Selective Availability Anti-Spoofing Module GPS system in some of the Indian Air Force’s C-130 and C-17 transport aircraft. The two upgrades will allow both sides to share real-time operational intelligence.
  • Before the agreement was signed, these American aircraft – or any other military US-origin platforms – purchased by India lacked such secured communication gear because the US said it could not part with the encryption codes.
  • The choice to upgrade would rest with India, instead of being wholly-determined by the US.
  • India has also been assured that the US will not share data from Indian platforms with another country, nor access such data without prior permission.
  • In due course, the agreement will enable both sides to operate on the same communication systems, thus ensure interoperability among the armed forces of both countries.

 

About COMCASA:

  • India and the U.S. on September 6 signed the foundational or enabling agreement COMCASA on the side-lines of the inaugural 2+2 dialogue.
  • COMCASA stands for Communications Compatibility and Security Agreement and is one of the four foundational agreements that the U.S. signs with allies and close partners to facilitate interoperability between militaries and sale of high end technology.
  • COMCASA is an India-specific version of the Communication and Information on Security Memorandum of Agreement (CISMOA). It comes into force immediately, and is valid for a period 10 years.
  • COMCASA allows India to procure transfer specialised equipment for encrypted communications for US origin military platforms like the C-17, C-130 and P-8Is. Currently, these platforms use commercially available communication systems.
  • The joint statement issued after the 2+2 dialogue said that it would facilitate access to advanced defence systems and enable India to optimally utilize its existing U.S.-origin platforms.
  • Specific additional provisions have been incorporated in the text to safeguard our security and national interests.
  • This will also enable greater communications interoperability between the militaries of India and the US. Data acquired through such systems cannot be disclosed or transferred to any person or entity without India’s consent.
  • Both countries will implement this agreement in a manner that is consistent with the national security interests of the other.
  • India had signed the General Security of Military Information Agreement (GSOMIA) in 2002 and the Logistics Exchange Memorandum of Agreement (LEMOA) in 2016. The last one remaining is the Basic Exchange and Cooperation Agreement for Geo-spatial Cooperation (BECA).

 

 

Sample Question:

Which of the following statements are correct with respect to COMCASA

  1. COMCASA is one of three foundational agreements that guide Russia high technology cooperation in defence sector with other countries
  2. It is an enabling instrument and does not commit India to acquiring U.S. platforms
  3. It will enable Indian military to get a better picture of the Indian Ocean Region (IOR) which is seeing increasing Chinese movements.

 

Choose the correct answer from the above

a). 1 and 3 only

b). 2 only

c). 2 and 3 only

d). All of the above

Answer: c)

 


Info graphic Summary