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When:
November 28, 2018 @ 11:30 am
2018-11-28T11:30:00+05:30
2018-11-28T11:45:00+05:30

NEWS 

28 NOVEMBER 2018

Sr. No.

Topic

News

1.

GS III: ECONOMY – BANKING

RBI Governor stresses need for autonomy of central bank

2.

GS III: ECONOMY – DEMONETISTION

Demonetisation effect lingered on food prices

3.

GS III: ECONOMY –DEMONETISATION

Agriculture Ministry takes back report on note ban

4.

GS III: S&T- SPACE

ISRO’s imaging satellite HysIS is all set for Thursday launch

5.

GS III: CORRUPTION

Inexplicable delay in coal scam cases, SC told

6.

GS II: SOCIAL – LABOUR

SC to hear plea on PF pension plan

7.

GS II: INTERNATIONAL – EUROPE

Ukraine declares martial law

8.

GS III: ECONOMY – BANKING

NPAs on downhill path since March peak, says RBI

9.

GS III: ECONOMY – BANKING

Reserve Bank to inject Rs. 40,000 crore in Dec.

10.

GS III: ECONOMY – INDICATORS

Economy faces several risks to fiscal health

11.

GS III: ECONOMY – STOCKS

Norms for interoperability of clearing corporations issued

12.

GS III: ECONOMY – PSUs

Delay likely in merger of insurance companies

GS III: ECONOMY – BANKING

RBI Governor stresses need for autonomy of central bank

  • Reserve Bank of India Governor Urjit Patel batted for autonomy of the institution in strong terms in his deposition before the Parliamentary Panel on Finance.
  • Patel made a presentation on the impact of demonetisation and the status of non-performing assets in the banking sector.
  • According to sources, while he steered clear of controversial questions, including the recent friction between the government and the RBI, Mr. Patel assured the Committee, headed by Congress MP M. Veerappa Moily, that he would submit written answers to all the questions posed by the members.
  • Patel made three key points at the meeting. First, he said, depositors’ interests were of primary importance for which autonomy was non-negotiable.
  • Second, monetary policy should be the exclusive domain of the RBI.
  • He also asserted that maintaining the central bank’s reserves was extremely essential to maintaining the country’s AAA rating.
  • On been asked why India should follow the Basel III norms for the banking sector, Mr. Patel replied it was “obligatory” to follow the norms as per G20 commitments made by the government.

GS III: ECONOMY – DEMONETISTION

Demonetisation effect lingered on food prices

  • While the effect of demonetisation lingered on food prices, it was transient on the broader economy, the Reserve Bank of India (RBI) said.
  • “The Monetary Policy Committee observed that the transitory effects of demonetisation had lingered on in price formations relating to salient food items, entangled with excess supply conditions with respect to fruits and vegetables, pulses and cereals,” the RBI said in its submissions to the Standing Committee on Finance.
  • “At the same time, the effects of demonetisation on the broader economy were sector-specific and transient.”
  • Following the “transient” slowdown in the April-June quarter of 2017-18 due to demonetisation and the uncertainties in the run up to the roll-out of GST, GDP growth rebounded in the July-September quarter and has sustained momentum thereafter, the RBI said.
  • The central bank also made it a point to note that the shortfall in the government’s non-tax revenue should be viewed in the context of demonetisation and the impact this had on the surplus the RBI could transfer to the Centre.
  • It added that while cash in circulation as on March 31, 2018 accounted for 101.8% of its pre-demonetisation levels, it worked out to only about 88% of the three-year trend if there had been no demonetisation.
  • The RBI noted that demonetisation had a sharp effect on the volume of digital transactions, which grew from about 900 million transactions in October 2016 to about 1,500 million in December 2016 and to 1,750 million in June 2018.

GS III: ECONOMY – DEMONETISATION

Agriculture Ministry takes back report on note ban

  • Reversing its earlier report that conceded for the first time that demonetisation had affected millions of farmers, the Union Agriculture Ministry has submitted a fresh report claiming that there was no “adverse impact.”
  • In the fresh report, the Ministry claimed that a multi-pronged strategy was adopted to ensure availability of credit, seeds, fertilizers and marketing avenues for the farmers.

 

GS III: S&T- SPACE

ISRO’s imaging satellite HysIS is all set for Thursday launch

  • HysIS, the country’s first hyperspectral imaging satellite for advanced earth observation, is slated for launch on 29 November 2018 from Sriharikota.
  • About 30 small satellites of foreign customers will also be ferried on the PSLV C-43.
  • A hyperspectral imaging camera in space can provide well-defined images that can help identify objects on earth far more clearly than regular optical or remote sensing cameras, ISRO Chairman K. Sivan said.
  • The technology will be an added advantage in watching over India from space across sectors including defence, agriculture, land use and mineral exploration.
  • “The primary goal of HysIS is to study the Earth’s surface in visible, near-infrared and shortwave infrared regions of the electromagnetic spectrum,” ISRO said.
  • HysIS will be ISRO’s first full-scale working satellite with this capability.

GS III: CORRUPTION

Inexplicable delay in coal scam cases, SC told

  • Coal scam special public prosecutor and senior advocate R.S. Cheema informed the Supreme Court that certain cases have been inexplicably delayed though the field investigation was long over.
  • Cheema submitted before a three-judge Bench of Justices Madan B. Lokur, Kurian Joseph and A.K. Sikri that these cases were either awaiting scrutiny by the heads of branches of the investigating agencies concerned or approval from the supervisory authority or grant of sanction for prosecution.
  • The court asked the CBI and the Enforcement Directorate to file a fresh status report on the various stages of investigation and prosecution.
  • It also asked the CBI SIT to file a similar status report on the investigation into the alleged conduct of the former CBI chief Ranjit Sinha.

GS II: SOCIAL – LABOUR

SC to hear plea on PF pension plan

  • The Supreme Court has posted for hearing on January 25 a petition filed by retirees and members of the Employees Pension Scheme (EPS), 1995 against the government and the Employees Provident Fund Organisation (EPFO), which administers the scheme.
  • The petitioners claim that a 2014 amendment and a 2017 circular exclude thousands from receiving their rightful benefits under EPS 95.
  • The petitions represent the members of the National Confederation of Retirees, that is about 42,555 former employees from the private and public sector who are members of EPS 95, and the National Confederation of Officers Association, which represents 19,118 people working in Central public sector organisations. Most of the latter group are members of EPS 95.
  • “It is a settled law that pension is not a bounty payment to which an employee is entitled to as a matter of right as retiral benefit for services rendered by him. It is a social security provided for him to lead a dignified life,” the petitioners argued.
  • The EPFO’s August 28, 2014 amendment had raised the wage ceiling amount for the scheme to Rs. 15,000 and amended the option for contribution on higher salary for existing employees, introducing a cut-off date of September 1, 2014.
  • It also reduced the pensionable salary considerably by averaging 60 months salary instead of 12 months to determine the last drawn salary amount.
  • According to the petition, the effect of this amendment is to exclude all new employees who joined after September 2014 from joining the pension scheme altogether; to exclude serving employees from benefiting from the option of contributing to the pension scheme on maximum salary; and to deny the benefit of opting for the scheme to retired employees if they missed the cut-off date.
  • The amendment and cut-off date were not given sufficient publicity to allow employees to opt for pension on higher salary if they wished, says the petition, adding that, “It is in these circumstances that the majority of the employees remained ignorant of the options available to them for the betterment of their life after retirement.”
  • In an October 2016 order, the SC had struck down the cut-off date clause in the amendment.

 

 

GS II: INTERNATIONAL – EUROPE

Ukraine declares martial law

  • Russian President Vladimir Putin warned Ukraine against any “reckless acts” after Kiev declared martial law in response to Moscow’s seizure of three of its Navy vessels, off the coast of Crimea.
  • The Ukrainian Parliament voted in favour of President Petro Poroshenko’s request for the introduction of martial law in border areas for 30 days.
  • The incident sparked the most dangerous crisis between the ex-Soviet neighbours in years.
  • The incident was the first major confrontation at sea in the long-running conflict pitting Ukraine against Moscow and Russian-backed separatists in the country’s east.
  • It has raised fears of a wider escalation — in a conflict that has killed more than 10,000 people since 2014 — and prompted international calls for restraint.
  • Martial law gives Ukrainian authorities the power to mobilise citizens with military experience, regulate the media and restrict public rallies in affected areas.

GS III: ECONOMY – BANKING

NPAs on downhill path since March peak, says RBI

  • Both gross and net non-performing assets (NPAs) of scheduled commercial banks have reduced in the two quarters ending September 30, 2018 since their peak in March 2018, the Reserve Bank of India (RBI) said.
  • However, the RBI did point out that the profitability of banks was still impacted due to a decline in earnings from loan assets and on higher provisioning required due to deterioration in asset quality.
  • That said, it highlighted the bank credit growth that had accelerated over the last two quarters.
  • The RBI, in its submissions to the Standing Committee on Finance, said that the gross and net NPAs of scheduled commercial banks had reduced due to the concerted efforts taken by the government and the central bank to address the problem.
  • Where public sector banks accounted for 86.6% of all gross NPAs of scheduled commercial banks, this fell to 85.9% by September 30, 2018.
  • “The annualised slippage ratio (e. the percentage of fresh NPAs as percentage of standard advances at the beginning of the quarter) has also witnessed a declining trend over the past two quarters, which is again reflective of the improving credit discipline,” it said.

GS III: ECONOMY – BANKING

Reserve Bank to inject Rs. 40,000 crore in Dec.

  • The RBI will pump in more liquidity in December 2018 by infusing Rs. 40,000 crore into the system through purchase of government securities under open market operations (OMOs).
  • The Reserve Bank will give details about the auction dates for the OMOs in due course.
  • The RBI has already infused Rs. 40,000 crore into the system.

GS III: ECONOMY – INDICATORS

Economy faces several risks to fiscal health

  • The Reserve Bank of India (RBI) has highlighted several risks to the Indian economy, including oil prices, the uncertainty over the effect of the minimum support price (MSP) hike and the revenue impact of the lower-than-expected GST collections and the cut in excise duty on fuel.
  • These risks, the central bank said in its submissions to the Standing Committee on Finance, could pose a challenge to the government’s commitment to meeting the Fiscal Responsibility and Budget Management targets.
  • “The key downside risks to growth are high international commodity prices — especially of crude oil (although they have eased recently, there are significant uncertainties), spillovers from tightening global financial conditions, geo-political tensions, trade wars, financial turbulence, and the overhang of impairment in domestic banking and corporate balance sheets,” the RBI said.
  • The central bank added that the decline in the gross saving rate, mainly due to the decline in household gross financial savings, is another cause for concern.
  • Regarding inflation, the RBI said that the outlook calls for a “close vigil” over the next few months as several upside risks persist.
  • The RBI said that there are factors both on the revenue and expenditure side that pose risks to the overall fiscal outlook.
  • “Accordingly, concerted efforts towards consolidation will be needed for achieving the revised FRBM targets, i.e., the central government debt to GDP ratio of 40% and the general government debt to GDP ratio of 60% by 2024-25,” it said.

GS III: ECONOMY – STOCKS

Norms for interoperability of clearing corporations issued

  • The Securities and Exchange Board of India (SEBI) has announced the guidelines for interoperability of clearing corporations – an issue that was under discussion for many years.
  • Such interoperability is expected to bring down the compliance costs for market intermediaries and thereby the trading costs as well, which are among the highest in the world.
  • Interoperability among clearing corporations refers to the linking of multiple clearing corporations, which effectively allows market participants to consolidate their clearing and settlement functions at a single clearing corporation, irrespective of the stock exchange on which the trade is executed.
  • The capital market regulator said that all the products available for trading on the stock exchanges except commodity derivatives would be made available under the interoperability framework.
  • The watchdog has directed all clearing corporations to establish peer-to-peer link for ensuring interoperability.
  • Further, clearing corporations will have to maintain sufficient collateral with each other so that any kind of default would be covered without risking financial loss to the other clearing corporations.
  • “It is expected that the interoperability among clearing corporations would lead to efficient allocation of capital for the market participants,” said the circular.

GS III: ECONOMY – PSUs

Delay likely in merger of insurance companies

  • The merger of three public sector insurance companies, announced by Finance Minister Arun Jaitley in 2018-19 Budget speech, will have to wait — at least until the beginning of the 2020-21 financial year.
  • Jaitley had, while announcing the merger of United India, National Insurance and Oriental Insurance, visualised it to be a reality by the end of the 2018-19 financial year.
  • The delay is said to be due to the complications involved in welding together three companies with different systems, styles, workforces and IT platforms.
  • The merger would “weed out some amount of self-destructive competition” and also add to size, scale and financial strength.
  • The merged entity would have a market share of 35% and hence would be a dominant player in the non-life insurance products sector.
  • It is projected that motor, health and agriculture — in that order — would continue to be the three major components of the non-life insurance companies in India, both public and private, for a long period.

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