No longer seeing eye to eye?- India-US relation
- Suhasini Haider, an foriegn policy expert, analyses India-US relation in the context of recent chnaging dynamics of India’s foreign policy
- Change in vision and relation of India and US is evident in the recent foreign policy speeches of PM Modi and U.S Defence secretary James Mattis at the Shangri-la Dialogue.
- Firstly, India and the U.S holds difference in opinion about Indo-Pacific region.
- According to PM Modi, Indo-Pacific region is not a strategic region but a free and inclusive natural geographic region.
- Mattis refers Indo-Pacific region as its priority in its security strategy. This is evident in renaming of Pacific Command to Indo-Pacific command.
- Secondly, India PM Modi mentions India’s good ties with US, Russia and China. While Mr Mattis referred to U.S National Defenfence strategy, which puts China and Russia as revisionist powers.
- Previously, India had the intention to counter China’s intervention in India’s neighborhood namely the post-Doklam.
- After a year when issues namely Doklam, BRI, have resolved, India holds a flexible foreign policy for China.
- Thirdly, another bigger challenge for the two countries is U.S. law called Countering America’s Adversaries Through Sanctions Act and the U.S.’s withdrawal from the Iran nuclear deal.
- India is dependent on defence hardware from Russia and energy from Iran.
- If implemented, the U.S sanctions will have adverse affect on India.
- Fourthly, India and U.S. has been facing trade disputes. One of the major is the Harley Davidson motor cycle case.
- S wants India to to scrap its 75-100% tariffs on Harley Davidson because U.S imposes 0% tariffs on the imports of Indian Royal Enfield motorcycles.
- According to U.S, if India scrapes its rate of tariff then it would see major benefits in other areas of commerce.
- Fifthly,PM Modi met Chinese President Xi Jinping and Russian President Vladimir Vladimirovich Putin in a series of formal and informal summits. But the 2+2 meeting between Defence and Foreign Minsters of India and U.S is delayed for two year and finally scheduled for July 6, 2018.
Defend the deal: on Iran nuclear deal
- Article deal with options available to Iran against the US sanctions.
- The Joint Comprehensive Plan of Action or the Iran nuclear deal is an agreement on the nuclear program of Iran between Iran and P5+1
- P5+1 -China, France, Russia, United Kingdom, and United States plus Germany
- U.S has recently pulled out from the Iran nuclear deal and has threaten to impose sanction on Iran.
- The other signatories are still a member of the agreement. But they are not able to come up with a framework to restore the deal.
- According to the deal, Iran can enrich uranium under strict restrictions.
- It is not against the agreement as long as it does not produces centrifuges.
- But most recently, Iran decides to open a centre for the production of new centrifuges at Natanz facility, which could be used for uranium enrichment capacity.
- A new production center itself is a provocative step by the remaining parties to the agreement.
- Iran should instead cooperate with Europe and China to protect the nuclear deal and face US sanctions.
- Because, once U.S sanctions are implemented, European countries might not continue to invest in Iran.
- An economic and legislative protection against U.S. sanctions is needed for Europe and Iran’s economic interests.
- U.S. withdrawal should not affect Iran’s oil exports and its access to the SWIFT international bank payments messaging system.
World Bank nod for ₹6,000 cr. groundwater recharge plan
1. The government has joined hands with the World Bank to execute scheme called the Atal Bhujal Yojana(ABHY).
Reasons to join hands with World Bank:
2. To address concerns about depleting groundwater reserves in India.
3. ABHY is designed as a Central Sector Scheme with a total outlay of Rs 6,000 crore.
4. The scheme is to be implemented over a period of five years from 2018-19 to 2022-23, as per the Union water Ministry.
5. The scheme proposal has already been recommended by the Expenditure Finance Committee.
6. The scheme is yet to be cleared by the Cabinet.
7. According to a sample assessment in 2011, groundwater in 19 of India’s 71 districts-about 26% were critical or exploited.
8. In another assessment in 2013, they included groundwater blocks in districts that had gone saline, and this percentage was up to 31%.
9. Central Ground Water Authority (CGWA) is regulating ground water development in 23 States/ UTs.
10. For enforcement of the regulatory measures in these areas, concerned Deputy Commissioners/ District Magistrates have been directed under Section 5 of ‘The Environment (Protection) Act, 1986’ to take necessary action in case of violations of directives of CGWA.
11. As per the assessment of dynamic ground water resources of country (As on 31stMarch 2013)carried out jointly by CGWB and State Ground Water Departments, out of the total 6584 numbers of assessment units (Block/ Taluks/ Mandals/ watershed/ Firkka), 1034 units have been categorized as ‘Over-exploited’.
Reasons for Over-exploitation:
12. Increase in population.
13. Rapid urbanization
Atal Bhujal Yojana:
15. To improve ground water management in priority areas in the country through community participation.
16. The priority areas indentified under the scheme fall in Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh.
17. These areas represent about 25% of the total number of over-exploited, critical and semi-critical blocks in terms of ground water in India.
|18. The Environment (Protection) Act, 1986:|
Maternal mortality ratio in the country drops to 130 from 167
- Maternal mortality ratio dropped across the country as per the latest Sample Registration System (SRS) data.
- As per the SRS data, the MMR (number of maternal deaths per 1, 00,000 live births) has dropped from 167 (in 2011-2013, the last SRS period) to 130 across the nation.
- The drop is the result of reducing the MMR in each of the States.
- States wise data:
- Kerala has the lowest MMR of 46, followed by Maharashtra with 61 and Tamil Nadu 66.
- The highest reduction from the last SRS is with the EAG States at 23%, a drop from 246(2011-13) to 188.
- Other States have dropped by 19%, taking the MMR down from 115 in 2011-13, to 93 at present.
- Uttar Pradesh/ Uttarakhand witnessed a massive drop of 29% , where the MMR had dropped from 285 to 201.
- The SRS segments States into three groups:
- Empowered Action Group (EAG)-Bihar Jharkhand, Madhya Pradesh, Chattisgarh, Odisha, Rajasthan, Uttar Pradesh/ Uttarakhand and Assam.
- Southern States: Andhra Pradesh, Telangana, Karnataka, Kerala and Tamil Nadu.
- Others: Remaining States and UTs.
7- As per the National Health Mission estimation:
- India has bettered the MDG target of 139 for 2014-16.
- This was possible because of systematic work undertaken by the Centre and States under the NHM that has resulted in saving 12,000 lives in 2015.
- Three states has already achieved the UN’s Sustainable Development Goal of MMR 70.
RBI hikes repo rate by 25 basis points to 6.25%
1. The RBI raises repo rate as international crude oil price surges.
2. The six-member monetary policy committee (MPC) of the Reserve Bank of India (RBI) increased the repo rate by 25 basis points to 6.25%.
3. The last hike was in January 2014.
Reasons for increased in repo rate:
Hardening inflation trends.
4. A firming up of growth recovery at home.
5. Global uncertainties affecting emerging markets.
6. The rupee, along with other emerging market currencies, is hurting too.
7. Crude oil prices have been the biggest factor at play, rising 12% from $66 a barrel when the MPC met in April to $74 a barrel.
RBI’s Inflation projection:
8. The RBI increased its inflation projection to 4.8% -4.9% in the first half (H1) of the financial year and 4.7% in the second half, as compared with 4.7-5.1% in H1 and 4.4% for H2.
9. The Apex bank said, the Indian crude basket surged to $74 a barrel from $66 since the last policy meeting in April.
10. Consumer price index-based inflation, or retail inflation, rose to 4.6% in April from 4.28% in March.
11. While the central bank has increased the inflation projection, it has maintained the ‘neutral’ stance for monetary policy.
GDP growth projection:
12. The outlook for GDP growth for 2018-19 has been retained at 7.4% as projected in the April Policy.
13. GDP growth is projected to be in the range of 7.5-7.6% in H1 and 7.3-7.4% in H2, with risks with risk evenly balanced.
14. As inflationary trends harden, the RBI’s rate hike will quell uncertainty in the markets.
|15. Important terminology related to this article:|
1- REPO RATE:
2- CONSUMER PRICE INDEX:
Co-op banks can become small finance banks, says RBI
- The Reserve Bank of India in its recent monetary policy statements announced to allow urban co-operative banks (UCB) to convert into small finance banks (SFB).
- The Reserve Bank of India has decided to allow voluntary transition of urban co-operative banks (UCB) into small finance banks (SFB).
- UCBs had been facing financial trouble couple of years ago which led RBI to stop issuing fresh licenses to UCBs.
- The monetary policy has noted that the performance of UCBs has improved recently while their numbers have come down due to mergers and closures.
- UCBs currently face regulation by both the RBI and the respective State governments.
- The conversion of UCBs into SFBs will allow them to be regulated only by the RBI.
- The Reserve Bank of India has also allowed all banks to spread their mark-to-market losses for the April-June quarter
- The Reserve Bank of India has decided to grant banks the option to spread the mark-to-market (MTM) losses on investments held in ‘Available for Sale’ and ‘Held for trading’ portfolio for the quarter ending June 30, 2018,
- Rising bond yields have resulted in mark-to-market losses for banks because Bond yields and prices are inversely related.
10. Co-operative are the bank that holds deposits, makes loans and provides other financial services to cooperatives and member-owned organizations.
ICICI Bank’s growing troubles
1. Companies linked to ICICI Bank controversy come under Ministry of Corporate Affairs (MCA)
2. Since March 2018, one of India’s largest privater lenders – ICICI Bank – and its Managing Director and CEO Chanda Kochhar, have been in the spotlight for all the wrong reasons.
3. The allegations include a potential violation of the bank’s code of conduct and of quid pro quo in dealing with certain borrowers.
4. The ministry is looking at allegations with respect to fraudulent, preferential or under-valued transactions.
5. Last month, markets regulator Securities and Exchange Board of India (SEBI) had served a notice on Kochhar on dealings of the bank with Videocon Group and Nupower.
6. The ministry, which is implementing the Companies Act, has powers to take stringent action against entities for violations.
ICICI Bank Controversy:
7. There are allegations of involvement of Kochhar and her family members in a loan provided to Videocon group a quid pro quo basis.
8. It was also alleged that Videocon Group pumped money into NuPower Renewables, a firm owned by Deepak Kochhar, husband of Chanda Kochhar
9. The controversy came to light last March when the media reported Mr Gupta’s allegations.
ICICI Bank’s reponse:
10. The board of ICICI Bank had reposed confidence in Ms. Kochhar after the issue came to light in March, denying any conflict of interest.
11. ICICI Bank also said that the total loan extended by the lenders’ consortium to the Videocon group, which included Videocon Industries and 12 of its subsidiaries, was around ₹40,000 crore.
12. The bank highlighted the fact that it was not the lead bank in the consortium.
13. The bank said the committee of creditors that sanctioned loans to Videocon was chaired by the then chairman of ICICI Bank, K.V. Kamath, and it included independent and working directors of the bank.
Investigation agency’s reaction:
14. The Central Bureau of Investigation has registered a preliminary enquiry against Deepak Kochhar.
15. However, this inquiry did not name Chanda Kochhar.
16. Last week, the bank’s board ordered a probe by an ‘independent and credible’ person following fresh allegations from another whistleblower against Ms. Kochhar.
17. The allegations include a potential violation of the bank’s code of conduct and of quid pro quo in dealing with certain borrowers.
18. The board’s Audit Committee will appoint the head of the inquiry panel, outline its terms of reference and specify the period covered by the probe.
RBI tweaks norms to boost affordable housing lending
- RBI has made changes in PSL norms to boost affordable housing.
- RBI has increased the loan limit of priority sector lending (PSL).
- The change in norms are:
- For metropolitan areas, loan limits have been raised from Rs 28 lakh to Rs 35 lakh, and
- For other areas, loan limits have been raised from Rs 20 lakh to Rs 25 lakh.
- The overall cost of the home does not exceed Rs 45 lakh and Rs 30 lakh respectively.
- Banks may tighten loan to value ratio (amount of loan to the total cost of a house) or increase the risk weight if there is a need.
- However according to RBI analysis, NPA (Non-performing assets) for housing loan data has been increasing.
- To address the issue, banks need to strengthen screening and follow-up measures.
India’s rank marginally improves in peace index
1. India’s rank has marginally improved in “global peacefulness” according to the Global Peace Index(GPI)
2. The GPI is released by Australia-based Institute for Economics and Peace (IEP).
3. There is an overall decline of global peace owing to escalation of violence in West Asia and North Africa.
4. The IEP is the world’s leading think tank that develops metrics to analyse peace and quantify its economic value.
5. Peace continues to record a “gradual, sustained fall” across the world, the report noted.
6. The results of the 2018 GPI find that the global level of peace has deteriorated by 0.27% last year, marking the fourth successive year of deteriorations.
Country wise ranking noted:
7. India’s GPI rank was 137 out of 163 countries in 2017, when the year 2016 was assessed.
8. In 2018, when the year 2017 is assessed, India’s rank moved up to 136. This is in line with the performance of some of the South Asian countries.
9. Nepal moved up from 93 to 84, while Sri Lanka moved up too, from position 80 to 67.
10. Pakistan too has improved marginally from 152 to 151.
11. South Asia experienced the largest regional improvement in peacefulness.
12. However, the best performer of South Asia, Bhutan, has slipped from 13 to 19.
13. Bangladesh moved from 84 to 93.
14. Syria remained the least peaceful country in the world, a position that it had held for the past five years.
15. Iceland continues to remain the most peaceful country in the world, a position it has held since 2008.