Comprehensive News Analysis - 08 July 2016

A. GS1 Related

1. ADB-aided project to renovate Danish fort

Topic: Colonial Heritage

Category: Culture

Key points:

• The ‘Dansborg’ Fort, situated right at the Arabian sea-front, was built in 1620 AD when Tarangambadi in Nagapattinam district became Denmark’s chief overseas settlement
• The Rs 4.83 crore project funded by the Asian Development Bank to renovate the 400-year-old Dansborg fort is nearing completion
• The Tamil Nadu Archaeological department is carrying out this heritage conservation and tourism promotion project
• The ADB-aided project-— ‘India Infrastructure Development Investment Program for Tourism’, envisages environmentally and culturally sustainable and socially inclusive tourism development

B. GS2 Related

Topic: NSG

Category: International Groupings

Key points:

• South Africa is the first NSG country that Mr. Modi is visiting since India failed to have its membership decided at the plenary session in Seoul
• However in Seoul, many countries, including Switzerland and South Africa are believed to have raised procedural concerns over the Non-Proliferation Treaty (NPT)

(When South Africa ended apartheid, it also destroyed its nuclear arsenal which it revealed only later [in 1993]. Therefore it retains a strong interest in non-proliferation)

• Another unspoken concern is China’s influence over South Africa that has grown considerably in the past few decades and now Beijing stands as South Africa’s biggest trading partner with more than $60 billion in trade as well as a key partner in the One Belt One Road projects that will draw infrastructure investment.

India pulled in at $9.4 billion in trade with South Africa in 2015-16, the lowest in the past 6 years, according to the MEA website

Topic: Federalism

Category: Polity

Key points:

• Thuingaleng Muivah (82), general secretary of the National Socialist Council of Nagalim (Isak-Muivah), which signed a framework agreement with the government last year, told that the outfit had not given up its demand for sovereignty
• Muivah also said that a separate flag and passport for Nagas was not just a “demand” but a right as the “Nagas were never under Indian rule”

Topic: Bangladesh

Category: India’s Neighbourhood

Key points:

• Suspected Islamist militants launched another deadly attack in Bangladesh using bombs, guns and machetes, on an Eid rally, killing two policemen and a woman. One of the attackers was shot dead by the police
• The incident occurred near the historic SholakiaEidgah in eastern Kishoregonj district, some 150 km north of Dhaka, where an estimated 3,00,000 people gathered to offer prayers

Topic: Russia

Category: International Affairs

Key points:

• Russian President Vladimir Putin has signed into law a package of controversial anti-terror amendments dubbed “Big Brother” measures by critics that may cost internet companies billions
• The measures, posted online by the government, boost the surveillance powers for the security services by requiring communication providers to store users’ calls, messages, photographs and videos for six months, as well as metadata for up to three years.They also have to provide security services with access to this data and any necessary encryption mechanisms necessary to use it
• They also criminalise several offences, lower the age of criminal responsibility to 14 for some crimes and extend prison sentences for online crimes like abetting terrorism

C. GS3 Related

1. A planet with three suns

Topic: Space

Category: S & T

Key points:

• For the first time ever, a team led by the University of Arizona astronomers has reported sighted a planet orbiting a triple star system in a study published online in Science
• The planet was found using sophisticated imaging equipment on the Very Large Telescope in Chile. This allows correcting for the image distortion (twinkle), introduced by the Earth’s atmosphere, and also to block out most of the starlight so that the faint planet next to it. This technique is called direct imaging, and is one of the most challenging observations possible in modern astronomy
• The sighting is unexpected because despite the inherent instability of the complicated dynamics of the three-star system, the planet, known as HD131399Ab, has stuck on to its stars
• Considering astronomical distances, the planet HD131399Ab is not too far from us. It is located about 320 light years away in the constellation of Centaurus, which contains the nearest star neighbour to the sun – Proxima Centauri.
• The discovery of this system shows that wide, and possibly unstable, orbits can be outcomes of the planet formation and migration processes
• It broadens our understanding of what types of planet are out there and in what sort of configurations. Piecing together how planets form in general can help us to understand how our own solar system formed and became habitable, and can inform us about where else habitable planets could exist in our own galaxy

Topic: Labour Issues

Category: Economy

Keypoints:

• “There is a considerable difference in the level of men and women participation in the labour market.”International LabourOrganisation (ILO) Director General Guy Ryderwho is on a three-day India visit to India said
• “In international comparison, the gap in India is very big and the level of women’s participation is going down which is a source of concern,” he said.
• While there is a difference of 25 per cent in workforce participation rate of men and women worldwide, in India it is up to 40 per cent, Mr. Ryder said.
• He said the ILO will work with the government in its labour reform process by bringing in international experience and setting international labour standards
• The Labour Secretary said India will ratify two core ILO conventions soon by amending the Child Labour Act. He said there were some issues related to ratifying the other two conventions related to right of forming unions and collective bargaining

Topic: Space

Category: S & T

Keypoints:

• A Russian space capsule was launched for a two-day trip to the International Space Station. The Soyuz capsule atop a towering Russian rocket blasted off from Russia’s manned space-launch complex in Baikonur, Kazakhstan
• It carried Russian Anatoly Ivanshin, NASA’s Kate Rubins and Takuya Onishi of the Japanese space agency JAXA
• The launch appeared flawless and the spacecraft entered orbit about 10 minutes after liftoff. The capsule is to dock with the orbiting space laboratory on Saturday
• The crew will join American Jeff Williams and Russians Oleg Skripochka and Alexey Ovchinin, who have been aboard since March

D. GS4 Related

E. Important Editorials: A Quick Glance

The Hindu

1. Grim lessons from the Iraq invasion

Topic: Iraq War

Category: International Affairs

Keypoints:

• For many, Britain’s Iraq War Inquiry report, released on Wednesday by Sir John Chilcot who headed the investigation, came as confirmation of what they already believed. Yet, the conclusions of a government-appointed committee that Prime Minister Tony Blair exaggerated the case for the 2003 invasion and led Britain to war before all peaceful options were exhausted are of great significance
• They have the power to influence both contemporary politics and future policy-making. The inquiry also found that Mr. Blair’s government was ill-prepared to face the consequences of the war
• Thirteen years after the U.S. and the U.K. invaded Iraq and toppled the regime of Saddam Hussein, the real motives of the war have still not been sufficiently explained. The case for war built by Mr. Blair and U.S. President George W. Bush crumbled to dust after the invasion. There were no weapons of mass destruction in Iraq, nor could the attackers prove any substantial link between al-Qaeda and Saddam. As a result, the war lacked all justification
• Hundreds of thousands of Iraqis were killed and millions wounded and displaced. The destruction of the Iraqi state and the chaos that followed set the stage for the rise of several extremist groups. The roots of the Islamic State, perhaps the most vicious and potent terrorist machinery today, go back to one such group, al-Qaeda in Iraq
• What is worse, the big powers refused to learn any lesson from the Iraq tragedy. Even after it was clear that the invasion was disastrous, the West forced another regime change in Libya in 2011, repeating the same mistakes committed in Iraq and creating another haven for extremists. British Prime Minister David Cameron, who voted for the Iraq war in 2003, wanted military action against Syrian President Bashar al-Assad, a proposal rejected by the House of Commons in 2013
• Though the U.S. and the U.K. shelved the plan to directly attack Syria, they continued supporting anti-regime rebels in the country, worsening its security situation and further helping terrorist groups such as the IS and Jabhat al-Nusra. There is no disputing the ruthlessness of these dictators. But toppling them through wars or weakening their regimes through proxy civil wars is far more dangerous, as these crisis-hit nations would recount
• The Iraq war set off the contemporary chaos in West Asia and North Africa, and no one knows where it will all end. Mr. Blair still has an unapologetic air, but his successors can’t turn a blind eye towards the Chilcot findings if they are serious about preventing more such misadventures

Topic: Nutrition and health

Category: Governance

Key points:

• While the economy’s revival is still a work in progress, higher food prices, especially of pulses, are affecting nutritional intake across India. The government is counting on a good monsoon season to spur growth and cool down the prices of essential food items
• The Economic Affairs Secretary said on Thursday that the government’s move to raise the minimum support price for pulses is expected to help push up their output and thereby contain food inflation
• While a good monsoon would increase output, it does not necessarily mean that food prices will come down, especially those of pulses. Monsoon rains between 2005-06 and 2008-09 were normal or above normal, yet the retail cost of pulses rose at an alarming pace in three of the four years
• The Centre has already undertaken some measures to deal with the current uptick in dal prices: creating a buffer stock, imposing stock limits, and offering tur dal at Rs.120 a kg through mobile vans
• The Prime Minister is signing a pact with Mozambique to double pulses imports from that country. More dal diplomacy is under way to scale up the approximately 5 million tonnes of pulses India procures from 46 countries
• But imports cannot be a sustainable solution. Farm policy makers need to wake up to the reality that demand for pulses is rising even in parts of the world where it hasn’t been a staple diet. Another warning came from the Food and Agriculture Organisation of the United Nations, which has incidentally designated 2016 as the year of pulses to highlight their importance in curbing malnutrition
• As population increases and incomes rise, pushing up demand for high-protein foods like pulses, the weaker sections may be forced to simply cut back on consumption. This is a worrying portent for a country where per capita pulse intake has already fallen by more than a third over the past 55 years
• There are structural problems in boosting output. Farmers, for instance, prefer to sow wheat and paddy instead of pulses, thanks to the Minimum Support Price regime. Since the Centre may not have the resources to procure dal on the same scale as wheat and paddy, it needs to think beyond the usual template. Now that it has allowed 100 per cent FDI in food processing, dismantling the Agricultural Produce Marketing Committee laws that cripple free trade for farmers could pave the way for them to deal directly with large traders and retailers, thereby creating the assured market they need and bringing down consumer costs by getting rid of the myriad intermediaries

Topic: India and Africa

Category: International Relations

Key points:

• Lessons to be learnt from Africa:
• The first is the death penalty. For the simple reason that in three of the four countries the PM is visiting, namely, Mozambique, South Africa and Kenya, the death penalty now belongs to the past, the first two having abolished it by law and the third stopped it de facto. With 385 persons, as on date, on its active death row, India is behind these three countries. And Asia as a whole is behind Africa. The Continental Conference on the Abolition of the Death Penalty in Africa in 2014 recognised the trend towards abolition and asked African countries to support the abolition of the death penalty in Africa
• The matter is not theoretical. It is integral to any discussions on terrorism. One of the main justifications advanced for retaining the death penalty is that it acts as deterrence against terror. But does it really? By making martyrs of terrorists, it makes role models of them for ‘the cause’. And does the death penalty have any value against men who are not just prepared to, but want to die for their cause? What abolitionist Africa feels on this is important for us to know
• The second is the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (commonly known as the United Nations Convention against Torture). India signed the Convention in October 1997 during the Prime Ministership of InderGujral, but it has yet not ratified it.Tanzania too has neither signed nor ratified it. Mozambique, Kenya and South Africa have, all three, signed and ratified it. Why are we behind them? What are our constraints? Is it discomfort with external inspection? A habituation to the ‘third degree’?
• If torture is savage, Africa is civilisationally ahead of Asia and, more specifically, these three countries are ahead of India
• Africa’s ‘sense’ of India is two-fold: it has great admiration for the political support it has received from India’s leaders, Jawaharlal Nehru in particular. But it has anything but admiration for commercial India’s glad-eyeing of its resources, for the latent racism of large sections of its people. It has great scepticism about present-day India’s craving for superpower status

Topic: Terrorism-Radicalisation

Category: Security

Key points:

• The fact that the Dhaka attackers were mostly from privileged backgrounds is not surprising. There is enough data available in various academic studies to show that more educated, and relatively better off, people are more likely to take to terrorism than their poorer compatriots
• That statistic is a stark warning to Indian law enforcement agencies that, of late, they might be searching mostly in the wrong places for potential terrorists — in poor Muslim ghettos and among the weakest of them
• Economist Alan Krueger of Princeton University who has done pioneering terrorism studies, argues in his book, What Makes a Terrorist: Economics and the Roots of Terrorism, that to understand who joins terrorist organisations “instead of asking who has a low salary and few opportunities, we should ask: who holds strong political views and is confident enough to try to impose an extremist vision by violent means?”
• Prof Krueger points out that most terrorists are not so desperately poor that they have nothing to live for: “Instead, they are people who care so fervently about a cause that they are willing to die for it.”
• Look at South Asia. While the region has had innumerable insurgencies, only few have produced suicide terrorism, the highest form of sacrifice for the aggrieved mind
• The Liberation Tigers of Tamil Eelam (LTTE) of Sri Lanka produced almost 200 suicide bombers. Many recruits were beneficiaries of secular education. Among the suicide attackers were a few Christians, no Muslims, and the rest were Hindus. Religion was not a mobilising factor — an extreme sense of grievance against the Sri Lankan establishment was
• In contrast, the Kashmir militancy did not witness suicide attacks until 1999, when a local boy drove a car packed with explosives into the 15 Corps headquarters. However, a vast majority of the suicide terrorists were from across the border
• There is a commonality between the two insurgencies. In both Sri Lanka and Kashmir it was a generation of educated youth who began armed movements in response to their perceived grievances
• The more educated are more susceptible to disappointment with the prevailing situation. And their outrage would be far higher too, compared to their contemporaries who are less educated
• This is a reality very visible within Indian insurgencies too, but our security and political establishment is not willing to accept that fact. Because the moment you accept that grievances of an educated and relatively better off person are the root cause of such a perverted response, then there is more pressure on you to initiate steps to address those grievances
• In the Kashmir Valley the new wave of local militants, primarily from four districts of South Kashmir — Pulwama, Anantnag, Kulgam and Shopian — are mostly from middle class families and have had a good education
• Not different is the story of the Islamic State sympathisers intercepted by the Indian agencies in the early phase of their operations. They were mostly educated and relatively affluent.The stories of numerous persons tracked by Indian agencies across the country as the IS fervour gripped West Asia a couple of years ago are similar.
• Irresponsible arrests by the security establishment can add to the grievances that fuel modern-day terrorism
• If available data point towards the educated lot taking to terrorism much before their poor cousins, then India’s Central and State governments have a lot of steps to take, from reining in ministers given to making polarising statements as well as countering blatantly communal leaders across political parties. But addressing these real reasons to contain terrorism is to challenge the modern-day political playbook

1. A note on Higher Education

Topic: Education

Category: Governance

Key points:

• In India, our institutes of higher education have entered into a period of decline. The causes for this decline are many, and various. There are four factors, that, operating singly and in combination, have plagued our universities in recent decades
• The first is the excessive stranglehold of the bureaucracy. Rather than let universities or IITs or IIMs set their own standards, their own curricula, their own norms of recruiting faculty and students, or allow them to charge reasonable fees and raise funds, these processes have been directed from above, by the University Grants Commission and the HRD ministry. The educational bureaucracy has become a behemoth, interested in perpetuating and enhancing its power rather than in encouraging quality institutions to flourish
• The second factor is ideological bias, promoted by parties in power from time to time
• The third factor is regional chauvinism. The faculty of Mumbai University once came from all over India, in keeping with the city’s cosmopolitan character. Now it is dominated by Maharashtrians. Likewise, Kolkata, Madras, Bengaluru, Lucknow and Allahabad universities, all once had many fine teachers from other parts of the country, but have now become parochial ghettos
• The fourth factor is corruption, financial as well as moral. In some states it is not unknown to have vice chancellorships bought and sold. The appointment by heads of department of under-qualified friends and associates, or ideological kinsmen, to teaching and research posts is of course far more widespread
• For all this, the higher education scenario is not entirely bleak. There are some genuine centres of excellence, such as the IITs and IIMs, and the Indian Institute of Science. Our central universities still have many fine scholars, and there are even state universities which have top-class departments
• There is something here that can be renewed and redeemed.
• Teaching and research can flourish only in conditions of intellectual autonomy and the pluralism of ideas. The new HRD minister has his task cut out: To clear the debris left behind, and then seek to renew our universities and research institutes
• First, we should reduce the hold of the UGC and expand the autonomy of research centres and universities. Second, we should create conditions for quality private universities to flourish, which can then challenge public universities to up their game too. Third, we should find ways of encouraging bright young scholars currently based abroad to come back and work in India (the revival of Chinese universities was greatly enabled by the return of their own intellectual emigres)

1. PIB

Centre has Clear Road Map and Vision for Agricultural Development and Welfare of Farmers: Shri Radha Mohan Singh 

The Union Minister of Agriculture & Farmers Welfare inaugurated two-day Conference on “Innovations in Agricultural Mechanization – Development of linkage among R&D Institutes – Industry – Farmers” today at VigyanBhawan, New Delhi

In his inaugural address the Union Minister emphasized that agricultural mechanization is essential for agricultural modernization and accordingly its benefits need to be extended to all categories of farmers in each agro-climatic zones of the country. Shri Singh also stressed upon the need to transfer the latest technology to the farmers so that their income may be doubled by way of reducing the cost of cultivation and increasing production.

The minister requested all manufacturers to come forward for the commercialization of technology so that the appropriate technology may reach to the farmers to benefit them. The Union Minister stressed upon the need for saving the water and the mantra “per drop, more crop”.

Four new Farm Machinery Training & Testing Institutes are to be established in  Bihar, Gujarat, Maharashtra and Uttar Pradesh. The Union Minister also informed about the initiatives taken by his Government by which the farmers of the country have been benefited especially Pradhan Mantri Gram SinchayeeYojana; Solar Pumping Set System; Soil Health Cards etc. He talked about custom hiring centers for agriculture that would make farm machinery affordable to farmers.
The Secretary, Department of Agriculture, Cooperation & Farmers Welfare stressed upon the formidable challenges in the agriculture sector such as shrinking land base, dwindling water resources, shortage of farm labour, increasing costs and uncertainties associated with volatility in international markets. However, the challenges can be addressed and the productivity of the farm in-turn can be realized by increasing land and labour efficiency in agriculture through appropriate farm mechanization.

The national innovation foundation has stressed upon the need for standardization of grass root technologies developed by the rural innovators / artisans. The technologies developed in the R&D systems of ICAR and private sector were shown to farmers and Government officials for their promotion and popularization. Some of the innovations have also been offered for commercialization such as

• variable rate fertilizer applicator

• Check basin former

• Turmeric rhizomes planter

• Ultrasonic sensor based sprayer

• Unmanned autonomous vehicle for agriculture

The Department of Telecommunication has clarified the following information on understatement of revenue by telecom service providers in 2006-07 to 2009-10:-

CAG Report on understatement of revenue by six Telecom Service Providers by Rs 46000 crores was received in February 2016. The Report pertains to four years i.e. 2006-07 to 2009-2010. The Report points out a shortfall of Rs 5000 crore of License Fee and Spectrum Usage Charge andRs 7000 crore of interest. The 6 service providers are Bharti, Vodafone, Aircel, Reliance, TATA and Idea

The Department received the key documents scrutinized by the CAG in mid-June 2016. These are being vigorously examined and the process of issue of demands for the four financial years for six operators in 22 license service areas in consonance with license agreement is currently ongoing.

Demands raised from this exercise will be recovered with due interest and penalty as applicable under license agreements. There is therefore no loss of revenue to Government.

An Apparel Training Centre has been established in Kaduna, Nigeria under the Cotton Technical Assistance Programme (Cotton TAP) for Africa which is being implemented by Department of Commerce, Government of India under 2nd India Africa Forum Summit. This is a first of its kind centre in Nigeria set up in partnership with Government of Nigeria. The Centre was inaugurated on 22nd June, 2016. The Center is aimed to support and catalyze the initiative of the Government of Nigeria in realizing the objectives to rebuild the cotton & textile value chain and address the need for skilled workforce for domestic as well export-oriented apparel industry in the west African region.

The Ministry will encourage such entrepreneurship and business establishments which generate employment for the youth in the region. For this purpose, the assistance to North Eastern Development Finance Corporation (NEDFI) would incorporate a component of higher interest subsidy for such units which give more employment. DoNER Ministry is coordinating with Union Ministry of Finance in this regard.

Spelling out the action plan for the year to come, the ministry gave details of Venture capital funds as another incentive for those undertaking “Startup” initiatives in the North-Eastern region. This will be an added attractive feature for youth from all over India who wish to avail the benefit of Prime Minister’s “Startup India, Standup India” programme by setting up an establishment in Northeast.

In a meeting held recently with the North Eastern Space Applications Centre (NESAC), it was decided to carry out satellite based survey for planning and monitoring of projects in the region. This will help in expediting the projects and also avoid discrepancies. In a similar initiative, all the 8 States of Northeast region have agreed to cooperate in carrying out geo-tagging by giving GPS details of various ongoing schemes in the respective States.

DoNER Ministry will also take up waste management project under North East Rural Livelihood Project (NERLP) and North Eastern Region Community Resource Management Project (NERCORMP). In this case, the Ministry would study the other tried models of waste management including the Tamil Nadu model under the Capacity Building & Technical Assistance (CB&TA) scheme.

Topic: Agriculture

Category: Economy

Key points:

• The Maharashtra government saying it is about to issue an ordinance to end the Vashimandi’s monopoly over sales of fruits and vegetables (F&V) in the state—the country’s second-largest market deals with 6,000 tonnes of F&V every day—is good news as it gives lakhs of farmers the option to sell in other markets instead of in only the heavily cartelised mandi where buyers call the shots, and where heavy market charges also need to be paid. But there is an important caveat here. The move has been made twice before, of which once was by the DevendraFadnavis government that had to withdraw the ordinance after it was cleared by the state’s cabinet. But, even if the move gets gazetted—it is only then that a law becomes final—this is unlikely to make too much of a difference unless other conditions are met
• Once the move is finalised, it will allow large buyers, like say a Wal-Mart, to contract directly from the farmgate, to even enter into long-term contracts with farmers for such supply. But for farmers who don’t have such contracts, there is no option but to sell at Vashi since there are few other mandis he can sell in. A good example of this is Delhi’s Azadpur which lost its monopoly over F&V in September 2014—there was, however, no discernible change in sales since the Delhi government did not allot land for alternate mandis; so if Maharashtra wants to make an impact on its farmers lives, it will have to allot land for alternate mandis in the Mumbai area
• Theoretically, as the prime minister has said, the National Agriculture Market (NAM)—an electronic trading portal connecting various existing Agriculture Produce Marketing Committee (APMC) mandis—is the solution for non-F&V products since it provides a unified national market for farm produce
• The state governments are simply not interested in freeing up markets for farmers as there is lots of revenue to be collected from the mandi taxes—these go up to around 15% in states like Punjab and Haryana—and the powerful mandi cartels probably have political connections as well
• Since fruits and vegetables are outside the purview of NAM, the creation of the alternative mandis is critical. But even for other agriculture commoditie, the states would ensurethat the NAM portal would have to be located only in existing mandis and that the mandi charges would continue to be paid
• While states like Punjab and Maharashtra were not even willing to allow traders from outside the state to bid online, Madhya Pradesh allowed NAM in only one of its 546 mandis, and Haryana said it would experiment with just safflower which is a minor rabi oilseed
• In such a situation, since farmers don’t get the price benefits of a free market, it is not surprising they prefer to focus on wheat and rice since there is at least an assured buyer in the form of FCI and various state buying agencies, apart from an assured prize—freeing up agriculture markets is a critical part of the prime minister’s farm strategy but, for now, this remains badly stuck

Topic: Agriculture

Category: Economy

Key points:

• Farming, especially in small and marginal farms that constitute 80 per cent of our farm holdings for the last many agricultural seasons, is returning negative incomes. The problem is aggravated in rainfed areas covering 55 per cent of our agricultural land, and contributing to nearly 40 per cent of farm output, including pulses and oilseeds. Lack of fair market access for a basket of commodities is foremost among factors making farming a non-remunerative proposition
• It has been rightly pointed out that farming is among the only businesses where the entrepreneur (farmer) buys retail and sells wholesale. This severely restricts her bargaining and negotiating capacities while battling borrowing, production and marketing risks
• A disproportionate amount of risks lie with the farmer; they remain alienated from the post harvest segment where much of the agricultural value lies, making for a skewed risk-reward situation
• In this backdrop, farmer producer companies are a powerful institution to confront issues faced by our farmers. Farmer producer companies were introduced through an amendment of the Companies Act, 1956 in 2002, that allowed for farmers to be organised as shareholders of enterprises they collectively own
• The enterprise can then undertake commercial activities related to agriculture, mitigating risks while adding and creating value
• RamrahimPragati Producer Company, an enterprise owned by 3,000 women and tribal farmers, was formed in 2012 to take up challenges confronting the farmer. These women belonged to over 200 self-help groups (SHGs). These SHGs became the shareholders of the enterprise. The advantage was that SHGs, which are also linked to commercial banks, channelise public finance at competitive interest rates to their members and also earn interest income from the differential in interest rates of borrowing and lending
• Unlike private microfinance institutions, this interest income belongs to the collective, and can be used for collective assets such as a grading machine or to even contribute to start-up capital required to form a producer company as in this case. The equity could then be leveraged for working capital and capital expenditure needed for aggregating, value addition and marketing of produce.
• However, faced with mandi and entry taxes of 2 per cent and 1 per cent, respectively, taxes which are exempt for the farmer, and additional 2 per cent commission costs at the mandis, the producer company was forced to hold the produce till the time market prices would allow it could break even. This also entailed additional costs of storage and interest. Farmers stood completely exposed to market risks and possibility of windfall losses, in case prices fell post harvest
• To combat this, after a year-long process in 2014, RamRahim was able to get the required clearances from the Forwards Markets Commission to use the futures platform of the National Commodities and Derivatives Exchange. In May 2014, farmers through the enterprise were able to hedge and lock onto to soyabean prices at near-₹4,500 levels. When prices crashed by over 30 per cent post May, farmers of RamRahim did not lose a single rupee
• By 2015, the company had evolved a mechanism to use futures prices on the exchange as a minimum support price mechanism to insulate farmers from market volatility, which is high in primary agricultural produce
• Historically, it can be seen for most commodities that prices during the harvest season are at a trough. By taking positions ahead of the season on the futures exchange at prices agreeable to the farmer, producer companies can ensure a minimum support price to their farmers
• In case the prices rise during and post harvest, by taking long positions a producer company can pass on benefits of the price rise even after harvest(In finance, a long positionin a security, such as a stock or a bond, or equivalently to be long in a security, means the holder of the position owns the security and will profit if the price of the security goes up. Going long is the more conventional practice of investing and is contrasted with going short)
• This mechanism can also improve a farmer’s portfolio of crops, especially, pulses, and increase crop diversity in the local agro ecological zone. The current subsidy based model for wheat and rice procurement skews production in favour of these crops even in areas that are not suitable for them
• Crop diversification also brings down the risks of mono-cropping, a result of procurement of wheat and rice at MSP. Through the introduction of options in the commodity markets, farmers though producer companies can fully insulate themselves from downside risks while retaining their choice to sell higher
• While government based public procurement needs to continue, a good portion of subsides can be channelised for investments in public infrastructure like marketing and storage yards, instead of hard-to-phase-out consumption subsides
• The enterprise in October 2014 in partnership with NCDEX also made it possible for creation of a national level online marketplace for farmers and buyers, enabling listing for FPCs as members of the exchange. This created a scenario where farmers could exercise freedoms of where to sell, when to sell and at what prices to sell through mutually agreeable prices. The forwards platform along with the electronic National Agricultural Market can enable farmers to claim their fair share of consumer rupee spent, even while allowing private entities to procure, process and retail at lower transaction costs bringing down consumer costs as well
• Farmers are showing the grit to make markets and capital work for all. To borrow from Keynes, it is ideas which are more powerful than vested interests for both good and bad. And, the time for good ideas has come

Topic: India and Africa

Category: International Relations

Key points:

• The Prime Minister’s ongoing four nation tour to Africa — Mozambique, South Africa, Tanzania and Kenya — comes at a time when Africa is changing fast, with this change auguring well for India-Africa relations
• In South Africa, an aspirational middle class is, by reliable accounts, is growing in numbers. Mozambique is the latest market where the Made-in-India hatchback Renault Kwid has just gone on sale
• In Tanzania, the mobile phone sector is one of the most sophisticated in Africa, not to forget Kenya, where growth of digital banking has ushered in next generation ATMs to help make bill payments and reduce wastage of time at long queues

• The PM’s visit is significant from two perspectives

• First, it is a build-up of the momentum struck during the India-Africa Forum in October last year, which was the largest gathering of pan African leaders in India
• The second factor is the growing importance of India and Africa to each other economically and strategically. India has been a strong partner in Africa’s growth story, underlined by progress, potential, profitability and expanding footprints of Indian industry. Africa’s is an emerging force with the continent’s collective GDP expected to touch $3.6 trillion by 2020, up from $2.1 trillion in 2011 and a burgeoning market projected to expand to $1.4 trillion by 2020, from $860 billion in 2008
• Africa is key to India’s economic and maritime interests in the Indian Ocean region. The Prime Minister’s emphasis on the “blue economy initiative” which aims to build on maritime trade links between India and the countries situated along the Indian Ocean is significant. With South Africa, Kenya and Mozambique among these, is important for India to establish deeper links with Africa so as not to get crowded out by other Asian giants
• Even as a vibrant India and a resurgent Africa bond over economic and strategic complementarities, industry would like to see a more robust partnership in trade and investment
• Industry believes that manufacturing has tremendous potential. Africa’s automotive sector is growing on the back of rapid urbanisation, a growing consumer base with rising disposable income and a huge regional market. It needs investments for creating infrastructure in ports, roads and railways, and training programmes to build a skilled labour force. These are incentives Indian auto manufacturers need to tap. India’s capability in high value-added production and manufacturing along with African products and technology would help in developing a mutually rewarding long-term partnership. Our expertise and human resources in building roads, airports, ports, railways, economic zones and industrial corridors should be shared
• India must not overlook the prospects of commercialisation of Indian innovation and technology in Africa. For instance, a unique opportunity lies in Africa’s agriculture sector which suffers from low productivity, limited use of technology, lack of high yielding varieties of crops and good quality seeds. This opens a window for Indian entrepreneurs in high social impact sectors including agriculture, information and communication technology, pharmaceuticals, energy and healthcare
• There is a growing interest among Indian entrepreneurs to invest in Africa in diverse sectors including mining. A natural and lucrative partnership between India and Africa is waiting to happen in renewable energy. India has set a target of adding 175 Gigawatts of capacity in the next seven years and East Africa is witnessing significant advancements as well. Indian solar energy firms can partner with African banks to advance low-interest loans for purchase of equipment — solar panels, and solar-powered water heaters, lamps and TVs — and then invest in facilities to manufacture solar equipment. There are gains on both sides
• Further, opportunities are abundant in agriculture and agro-processing as well
• India can also unleash massive possibilities in digital penetration in the continent. The Digital India initiative can be useful as Africa steps up its IT spend on e-government solutions, new banking platforms, security to information management. Indian industry has technical expertise in these areas as well as in setting up low cost IT parks which could be an asset to Africa’s nascent IT sector
• It is obvious the possibilities in relationship building are infinite. All we have to do is to push the boundaries

Topic: India and Qatar

Category: International Relations

Key points:

• For a country so tiny, Qatar punches far above its weight
• Perhaps in recognition of its importance, the Prime Minister recently made a short trip to its capital, Doha, where, amongst other agreements, he also signed an important memorandum of understanding between the two countries to share intelligence on the movement of cash through hawala. Expectedly, the need for the two countries to share this information was couched in the desire to fight the scourge of global terror. The question is: Is this the only reason?
• Qatar, sitting on huge gas reserves, has roughly 5.45 lakh Indians, far more than its local people, who send $4.2 billion (2015) every year. Still about 30-40 per cent of the total funds move through the informal hawala channels to India. How much really goes to funding terror networks? The India-Qatar agreement tries to target both the issues, but for different reasons
• In recent times, India is extremely worried due to the precipitous fall in remittances from the Gulf region. April 2016 saw a dramatic fall of 87 per cent in remittances due to the collapse of oil prices. The non-resident deposit fell to $302 million from what it was a year ago at $2,406 million
• The NRI rupee account fall was equally dismal. All these years, India got about $71 billion through remittances with the bulk coming from West Asia. Reports emanating from these countries suggest more downsizing of businesses and more pain
• India wants to share intelligence with Qatar on hawala funds to pressure the ordinary Indian workers to send their money through official banking channels only. There is a reason. It is cognisant of the dramatic rise in hawala remittances after the 2001 World Trade Centre attack by Al-Qaeda. This could be used to meet its development objectives
• The India-Qatar agreement aims to control terror funding, but the tiny peninsula has not adequately explained how it defines terror. Over the years it has spent billions of dollars to fund Islamic militants to bring down Libya’s Muammar Gaddafi and later to haemorrhage Syria’s government
• It is not really clear what kind of intelligence Qatar will share with India on terror funding. Would that intelligence be against Pakistan-based terrorists or against the Islamic State, whom it has been accused of supporting from time to time?
• The link between terror and hawala funding is tenuous. Funds are needed in building terror networks and initiating murderous attacks on their targets like we see in the case of Islamic State. But there is more to hawala than teaches the eye
• In 1991, the lid on Jain Hawala scandal was blown off during the investigation into terror funding, but what emerged was sinister and deep. Multinational corporations were using the informal hawala payment channels to pay-off bribes to politicians and bureaucrats
• Besides, hawala is not just about terror, but it is also about hard working workers employed in difficult areas sending their earnings to their loved ones back homes speedily and efficiently. This cannot always be grudged even when the state seems to have other plans

Topic: Banking

Category: Economy

Key points:

• Speedy recapitalisation of banks must be a priority for the government as bad loans of state-owned banks have jumped. Their gross non-performing assets stood at 11.5% of total lending at end-March 2016, and the RBI says banks’ capital position may impact their ability to meet credit delivery
• Clearly, weak capital adequacy and internal generation abilities make it tough for banks to raise capital. Funds from the Budget will not suffice to recapitalise public sector banks (PSBs) that are overstretched. The ideal solution is to let the banks issue fresh equity and let state ownership fall below 50%. The political economy would appear to be not ready for that
• The way to retain state ownership while infusing huge amounts of capital into the banks is via a common, state-owned holding company for all public sector banks
• So long as the state holds a majority of the holding company’s equity, and the holding company owns a majority of the equity in every public sector bank, the banks will continue to be state-owned. If the holding company raises debt and the debt-equity ratio is 4:1, the same combined state investment in PSBs can become almost tenfold
• If x is the combined state owned equity of PSBs, the holding company’s total equity would be 2x. Add four times that of debt, the total investible resources available to the holding company become 10x. Every additional rupee that the government has to spare to capitalise banks can be raised tenfold via the holding company route. But who would run the holding company? To appoint the boards of PSBs and to hold them to account, the government has already appointed a Banks Board Bureau. This can convert into the board of the holding company
• Rating agency Fitch estimates that Indian banks will need $90 billion to meet new Basel III capital norms to be implemented by the financial year ending March 2019, and half of this amount has to come from equity. The government has reportedly committed to inject about $7 billion as capital in state-owned banks by March 2019. The holding company is the obvious solution

International Labour Organisation on Thursday raised “strong questions” on the decency quotient of the informal jobs in India even as the global think-tank on labour praised the government’s job creation initiatives like ‘Make in India’.

“There are strong question marks whether many of these jobs in the informal economy reach the threshold of decency (in India). I think in many cases they do not. So, it is the quality of the job, formalisation and examining these issue of casualisation, contractulisation. It is extending a good social protection to all section of the population,” said the ILO director general

Initially, the government will likely allow the FDI only in non-litigious areas — especially transactional legal services and international arbitration — and won’t permit foreign law firms to offer direct litigation services in Indian courts, the sources said. This is being done to balance the interest of domestic lawyers with the requirement of bringing in competition and further efficiency in the sector

The Finance Ministry has imposed definitive anti-dumping duty on purified terephthalic acid (PTA) imports from China, Iran and Indonesia.

PTA — a white, free flowing crystalline powder– is the primary raw material for the manufacture of polyester chips which in turn is used in a number of applications in textiles, packaging, furnishings, consumer goods, resins and coatings.

Eager to generate non-fare revenue from various sources, the Railways is firming up proposals to sell the garbage generated at stations across the country.

“We are examining a proposal from a waste management group which has offered ₹1.50 a kg for garbage to be collected at railway stations,” said a senior railway official involved in exploring various avenues for generating non-tariff revenues.

To protect India Inc against unrestricted inflow of goods from China and other members of the proposed Regional Comprehensive Economic Partnership (RCEP), New Delhi is planning to suggest moderation of import tariffs on goods instead of total elimination of duties in the on-going negotiations.

A submission against tariff elimination is likely to be made by India in the forthcoming inter-sessional meeting in Jakarta this month.

World food prices posted their biggest monthly rise for four years in June, buoyed by a surge in sugar and increases for most other edible commodities, the United Nations food agency said.

Food prices have been gaining ground since hitting a near seven-year low in January after four straight annual declines, and the United Nations Food and Agriculture Agency (FAO) now expects them to be stable for the next decade.

The government is mulling to raise the foreign direct investment limit in newspapers and periodicals to 49 per cent from 26 per cent at present.

F. Concepts-in-News: Related Concepts to Revise/Learn:

• Colonialism
• Asian Development Bank
• Iraq war
• NSG
• NSCN
• Proxima Centauri
• ILO
• ISS
• Soyuz Capsule
• UN Convention against Torture
• North Eastern Space Applications Centre
• National Agriculture Market
• RCEP
• Banks Board Bureau

G. Fun with Practice Questions 🙂

Question 1: Which of the followingis/are explicitly included in the mission 'Indradhanush' launched by the government to revamp PSU banks?

Question 2: Who were the first European colonialists to come to India?

Question 3: Which of the following statements is/are correct?

Question 4: Which of the following statements is/are correct about the Chilcot Committee Report?

Question 5: Which of the following werespace stations to be inhabited by crews at some point of time?

H. Archives:

You can check out some more recent News Analysis sections to build even more context

7th July 2016: Daily News & Current Affairs Analysis

6th July 2016: Daily News & Current Affairs Analysis

5th July 2016: Daily News & Current Affairs Analysis

4th July 2016: Daily News & Current Affairs Analysis

3rd July 2016: Daily News & Current Affairs Analysis

2nd July 2016: Daily News & Current Affairs Analysis

1st July 2016: Daily News & Current Affairs Analysis

List of all DNA Articles

Practice More: Enroll for India’s Largest All-India Test Series