Comprehensive News Analysis - 05 October 2016

Table of Contents:

A. GS1 Related:
B. GS2 Related:

1. Cauvery board formation put off, SC gives nod for technical team

2. Latin America gradually marches towards the Right

3. Santos, FARC scramble to save deal

4. Hurricane Matthew

C. GS3 Related:

1. EU vote paves the way for Paris deal ratification

2. New regime at RBI

3. Final black money tally may increase by Rs.10,000 crore

D. GS4 Related
E. Important Editorials : A Quick Glance

The Hindu

1. Clinching the N-deal with Japan

2. Bolstering growth amid risks

F. Concepts-in-News: Related Concepts to Revise/Learn:
H. Fun with Practice Questions 🙂
I. Archives



Useful News Articles

A. GS1 Related

Nothing here today folks!

B. GS2 Related
  1. Cauvery board formation put off, SC gives nod for technical team

Category: Polity

Topic: Inter-state river waste disputes

Key Points:

  • The Supreme Court put on hold its order to constitute the Cauvery Management Board (CMB) and finally settled for the Centre’s suggestion to appoint a technical team to visit the Cauvery basin and report back on the ground reality there. The centre said while the CMB was recommended by the Cauvery Water Disputes Tribunal in its final order in 2007, the tribunal award itself was under challenge in the Supreme Court. “I am only asking this court to defer its order for the constitution of the Board till disposal of the appeals,” Attorney general Mukul Rohatgi submitted.

Technical team – It will be led by G.S. Jha, Chairman, Central Water Commission will visit the river basin along with nominees of Karnataka, Tamil Nadu, Puducherry and Kerala to submit a report in the Supreme Court by October 17. The court will hear the matter on October 18.

  • Tamil Nadu’s stand – It accused the Centre of playing into the hands of the Karnataka government to deny the people of Tamil Nadu their share of Cauvery water.

Meanwhile, the Apex court ordered Karnataka to release 2,000 cusecs of water from October 7 to 18.

  • The court recorded Karnataka’s submission that, pursuant to the apex court orders, it has released 17.5 TMC water from September 5 to 30. This was disputed by Tamil Nadu, which said that only 16.9 TMC was released during the period. Tamil Nadu submitted that Karnataka was in deficit of 4.6 TMC in September and has to release 22 TMC in October as per the 2007 tribunal award. Karnataka informed the court that it would complete the release of 3.1 TMC by October 6.


  1. Latin America gradually marches towards the Right

Category: International

Topic: Latin America

Key Points:

  • It was not a good time for Latin America’s Leftists. Colombia rejected a peace deal with Marxist rebels, delivering a very public victory to Alvaro Uribe, the conservative former President who campaigned passionately against it. The voters in Brazil too handed a resounding defeat to the Leftist party that once controlled their country, knocking it down in municipal elections.
  • It was just another sign of the shift to the Right in Latin America. In less than a year, voters have thwarted the Leftist movement in Argentina and elected a former investment banker as President of Peru, while lawmakers impeached the Leftist leader of

Factors responsible: The sharp drop in commodities prices has eroded economic growth around Latin America and the support Leftist governments once drew from it. The clout of evangelical Christian mega-churches is expanding, and they are confronting socially liberal policies and channelling widespread dissatisfaction with the status quo; Leaders embracing market-friendly policies are eclipsing the Leftists who exerted sway around the Americas in the previous decade. Once-powerful Leftist Presidents like Luiz Inácio Lula da Silva of Brazil and Cristina Fernández de Kirchner of Argentina now face corruption inquiries.


  1. Santos, FARC scramble to save deal

Category: International issues

Topic: FARC – Colombia

Key Points:

  • Colombian government opened a new national dialogue to seek peace with FARC (Revolutionary Armed Forces of Colombia – People’s Army) rebels as both sides scrambled to revive a peace deal to end the half-century conflict.

In an address a day after voters rejected the agreement in a referendum, Colombian President Juan Manuel Santos asked the government’s chief negotiator Humberto de la Calle to “begin discussions as soon as possible addressing all the necessary issues to have an agreement and realise the dream of every Colombian to end the war with the FARC”.


FARC – It is a guerrilla movement involved in the continuing Colombian armed conflict since 1964. It has been known to employ a variety of military tactics in addition to more unconventional methods, including terrorism.


  1. Hurricane Matthew

Category: International issues

Topic: Disasters

Key Points:

  • Hurricane Matthew churned across the Caribbean toward Haiti with devastating force after claiming its first victims in the impoverished island nation. More than 6,400 people had been evacuated to temporary shelters immediately across Haiti.

Cuba evacuated some 316,000 people from the east of the island.

C. GS3 Related
  1. EU vote paves the way for Paris deal ratification

Category: Environment

Topic: Ratification of Paris pact

Key Points:

  • A majority of the members voted in favour of ratifying the Paris Agreement in a historic vote held at the plenary session of the EU Parliament in Strasbourg.

As per the rules of the Paris pact, adopted last year the cumulative emissions of the ratifying parties must cross the minimum required threshold of 55 per cent of global emissions for it to enter into force. EU’s vote will help the treaty to cross this minimum. Accounting for approximately 12 per cent of greenhouse gas (GHG) emissions globally, the EU-28 nations will add to the 52 per cent of global emissions that the 62 ratifying parties have covered already.

  • France said that the EU is looking to formally submit its ratification instruments very shortly, which will ensure that the treaty comes into force by November 7, when the 22nd Conference of the Parties (COP) to the UN Framework Convention on Climate Change takes off in Marrakesh, Morocco. As per the rules, the Agreement will enter into force 30 days after at least 55 parties, representing at least 55 per cent of global emissions have ratified it.


2. New regime at RBI

Category: Economy

Topic: RBI

Key Points:

  • The Monetary Policy Committee (MPC) decided at its first policy review to reduce the benchmark repurchase rate by 25 basis points to 6.25 per cent. The Reserve Bank of India’s key policy interest rate has now been cut to its lowest level since 2011.

The decision of the MPC is consistent with an accommodative stance of monetary policy in consonance with the objective of achieving consumer price index inflation at 5 per cent by Q4 of 2016-17.

  • MPC also, hinted that there was scope for policy interest rates to ease further when he said the neutral rate is 1.25 per cent, which is lower than the 1.5-2 per cent regime that prevailed under the previous governor Raghuram Rajan.

The neutral rate is the difference between the risk free rate and inflation – a key determinant of the policy rate.

RBI says NPA situation to be dealt with firmness, pragmatism –

  • The NPA situation is an important issue for the RBI and India. RBI said it will deal the situation with firmness and pragmatism so the economy does not feel any lack of credit to support the growth in the economy. But we must remember that the situation has not occurred overnight and therefore will require skill and thoughtful endeavour to resolve.

Just five sectors contribute 61 per cent of the stressed assets of the banking sector – infra, steel, textiles, power and telecom. The sectors are each individually important and dealing with stressed assets will require skill and creativity. There are many reasons that led to this situation, but now helping banks to deal with this situation is of the utmost importance for the country. We will move at various levels to address the situation and we have indeed done so. We are working with the banks and the government on the subject.


3. Final black money tally may increase by Rs.10,000 crore

Category: Economy

Topic: Black money

Key Points:

  • The final black money disclosures tally may grow by an estimated Rs.10,000 crore, as part of the declarations made under the Income Declaration Scheme (IDS), as the Income Tax department is expected to submit final verification of the records to the Central Board of Direct Taxes (CBDT).

Union Finance Minister Arun Jaitley recently announced Black money amounting to Rs.65,250 crore was declared through the one-time declaration window as part of Income Declaration Scheme (IDS).


D. GS4 Related
E. Important Editorials: A Quick Glance
The Hindu
  1. Clinching the N-deal with Japan
  • India has completed agreements for civil nuclear cooperation with 11 countries so far, including the U.S., Russia, Australia, Canada and South Korea, but the upcoming agreement with Japan could be the most significant.
  • Japan is the only country to have been the victim of a nuclear attack, and its decision to sign an agreement with India, a country that has not signed the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), would be a first. Reservations in Japan against nuclear energy have hardened after the Fukushima accident. Tokyo’s support to the deal so far is therefore an indication of the importance it accords to relations with India.
  • For India, the civil nuclear agreement with Japan is especially important for the message of trust it would convey to Nuclear Suppliers Group members in a year the country hopes to have its admission accepted. Japan’s support at the NSG has been particularly marked. In fact, India and Japan share many multilateral platforms, including membership of the G-4 group that is knocking at the UN Security Council’s door for reform.
  • Beyond symbolic reasons, Japanese nuclear energy technology and safety parameters are widely considered to be cutting-edge, and many critical parts needed for Indian reactors are made by Japanese manufacturers. These will not be available to India until the agreement is done. Although India has even considered trying to manufacture them locally, there won’t be alternatives to Japan for several years. Even the U.S. civil nuclear deal, that is yet to be actualised, is contingent on the deal with Japan, given that the current discussions for six reactors in Andhra Pradesh are with Westinghouse, which is owned by the Japanese company Toshiba.

It may appear baffling why the deal has taken so long to negotiate. The main sticking point has been India’s refusal to sign the NPT, as it considers the treaty unfair to the developing world. This is why New Delhi is keen on ensuring that in the haste to seal the deal by the time Prime Minister Narendra Modi visits Japan this winter, it doesn’t give in to pressure to adhere to anything more than its own self-declared moratorium on testing.

  • The Japanese insistence on a nullification clause that the agreement would cease as soon as India tests will be judged with this balance in mind. Particularly post-Fukushima, Japanese manufacturers will also be expected to be more generous with India on the liability issue, given their own experience with the enormous cost of cleaning up. As always, and even more so than with the India-U.S. agreement, the devil will be in the detail of the final draft.


  1. Bolstering growth amid risks
  • The Monetary Policy Committee’s decision, at its maiden meeting, to cut the benchmark repurchase (repo) rate by 25 basis points held no surprise for markets. What had been on watch was the language of the policy statement, the extent of consensus in the committee and the manner in which the new Reserve Bank of India Governor and chairman of the MPC, Urjit Patel, presented the central bank’s positions.
  • Articulating the main concern that informed the newly constituted rate-setting panel’s rationale for reducing interest rates, Mr. Patel said the global demand environment was clearly looking far bleaker than previously anticipated, with the forecast for world economic growth set to be downgraded further. The focus, he signalled, therefore needs to remain on supporting the domestic economy through an accommodative monetary stance. That the MPC has opted to lay primacy on ‘supporting growth’ while keeping its sights firmly trained on the RBI’s central remit to target a medium-term retail inflation objective of 4 per cent, within a band of plus/minus 2 per cent, bodes well. Decision-making by committee is never easy, and given the short time the MPC had since its constitution last month, the lucidity of the policy statement shows its six members have hit the ground running.
  • While the minutes of the meeting that will reveal each member’s arguments will become available on October 18, all six voted for the rate cut. The decision reflects the broad consensus that the risks to growth from global uncertainty and financial markets volatility remain high, especially ahead of the U.S. presidential election, and that a rate stimulus was warranted given the recent slowing in retail inflation.
  • Even as it expects an improvement in the outlook for food inflation on the back of increased sowing and supply management measures undertaken by the government, the MPC has been cautious in flagging the risks to the trajectory for price gains. In the panel’s opinion, the main factors that could play a contributory role in furthering a fresh ‘cost spiral’ would be the higher house rent allowances mandated by the Seventh Pay Commission, the increase in minimum wages and the possible spillovers through minimum support prices. Multiple factors augur well for the outlook for both the industrial and services sectors. But the worsening trade demand could offset the gross value added (GVA) momentum, the MPC noted, while retaining the RBI’s GVA growth forecast of 7.6 per cent. That the panel has made a decisive start to rate-setting through deliberation is clear; how it weathers harsher domestic and external challenges, should they emerge, remains to be seen.

F. Concepts-in-News: Related Concepts to Revise/Learn:
  • Non-performing assets
  • UNFCCC – Paris pact
  • Gross value addition (GVA)
  • Monetary policy committee
  • Inter-State river water disputes act, 1956
  • River boards act, 1956 – Cauvery water management board
  • Art 262


Paris pact

H. Fun with Practice Questions 🙂
Question 1: Which country was recently hit by Hurricane Mathew?
a) Haiti

b) West Indies

c) Australia

d) Mexico

Question 2: Which Organization won the 2016 UN Climate award for promoting the use of clean technologies to promote sustainable development?
a) Union ministry of environment and forests

b) National Green corps

c) Swayam Shikshan Prayog – an Indian NGO

d) Environment management and policy research institute (EMPRI)

Question 3: How many times India has hosted Conference of parties (COP) to UNFCCC i.e. Climate change summit?

a) Once

b) Twice

c) Thrice

d) India has never hosted it

Question 4: The famous Keshavananda Bharati case -1973 is related to
a) Basic structure of the Indian constitution

b) Preamble

c) Both a and b

d) Neither a nor b

Question 5: Consider the following rivers :
  1. Arkavathi
  2. Sharavathi
  3. Netravathi
  4. Kabini

Which of the above are tributaries of River Cauvery?

a) 1,2 and 3

b) 1,3 and 4

c) 1 and 4 only

d) 2 and 3 only

Check Your Answers

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