Comprehensive News Analysis - 22 September 2016

Table of Contents:

A. GS1 Related:
B. GS2 Related:

1. Managing the Cauvery dispute

C. GS3 Related:

1. Railway Budget, a vanishing trick

2. 31 nations join Paris climate pact

3. Current Account Deficit narrows

4. ‘High public debt cuts room for policy sops’

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

1. Live Mint: Aadhar Act: What it means for you

2. Business Standard: OECD sees globalization brake on growth

F. Concepts-in-News: Related Concepts to Revise/Learn:
G. BILLS/ACTS/SCHEMES/ORGS IN NEWS
H. Fun with Practice Questions 🙂
I. Archives

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Useful News Articles

A. GS1 Related

Nothing here today folks!


B. GS2 Related


  1. Managing the Cauvery dispute

Category: Dispute Redressal Mechanisms

Topic:  Tribunal

Key Points:

  • By directing the Centre to constitute a Cauvery Management Board within four weeks, the Supreme Court has created space for the water-sharing dispute to be handled in a scientific and responsible manner by a legally constituted technical body
  • Apart from permanent mechanisms, technical panels and seasonal adjudication, a spirit of accommodation is required among the basin States
  • Also needed is a clearer appreciation of the fact that the entire water yield in the Cauvery basin is not enough to provide for the requirements of both States
  • It is time for Karnataka and Tamil Nadu to take a hard look at their agricultural economies: the area under cultivation, the number of crops per year and the water-intensive nature of the crops
  • Unless these are adjusted to suit the water availability, such disputes will keep surfacing


C. GS3 Related


1. Railway Budget, a vanishing trick

Category: Economic Development

Topic:  Government Budgeting

Key Points:

  • The Railway Budget has been “merged” with the General Budget

Reasons:

  • The Indian Railways need not pay the annual dividend to the Government of India on the budgetary support given each year, saving the financially stressed Railways about Rs.10,000 crore annually
  • The Budget has been misused by politicians as a populist platform to enhance their own image
  • No other Ministry has a separate budget and the practice exists in no other country today
  • The Bibek Debroy Committee has recommended discontinuance of a separate Rail Budget and it is part of the Prime Minister’s reform programme
  • It is a colonial legacy
  • Railways’ share in the General Budget has progressively reduced over the years, making a separate budget an anachronism

 

Counter View:

  • Railways is indeed unlike any other Central ministry in size and scope:
  • It is an operational ministry
  • It earns as well as spends, unlike other ministries that only spend.
  • Its gross earnings are among the highest for any Indian organisation, public or private
  • It has a staff strength of around 13.2 lakh, one of the highest
  • It fully meets the pension liabilities of its retired employees (13.8 lakh) out of its own earnings unlike other ministries
  • It follows an accounting practice, though not up to the standards of a purely commercial establishment, that has a number of features of a commercially-run organization
  • The Debroy committee has recommended it not as a stand-alone step, but as part of a slew of measures such as: complete overhaul of the project financing architecture of the Railways involving ruthless weeding out of unviable/long-pending projects etc.

Suggestions:
Table an annual “Indian Railways Report” in Parliament on the lines of the Reserve Bank of India’s Economic Survey. That will signal reforms with transparency

 

2. 31 nations join Paris climate pact

Category: Environment

Topic:  Climate Change

Key Points:

  • Latin American powerhouses Argentina, Brazil and Mexico as well as major fossil fuel powers Brunei and the United Arab Emirates have recently joined the accord
  • To come into force, the Paris agreement needs ratification from 55 countries that account for at least 55 per cent of the planet’s greenhouse gas emissions
  • Currently, a total of 60 countries have joined the Paris accord, meeting the threshold
  • But they account for just less than 48 per cent of emissions

 

3. Current Account Deficit narrows

Category: Economic Development

Topic:  Indian Economy

Key Points:

  • India’s current account deficit (CAD) narrowed in the first quarter of the financial year to $300 million as compared with $6.1 billion in the year-earlier period
  • The deficit shrank to 0.1 per cent of GDP in the period

Reasons:

  • On the basis of balance of payments, merchandise imports declined sharply
  • Net services receipts declined on a year-on-year basis, largely due to a fall in net earnings on account of travel, financial services and other business services
  • Net foreign direct investment also moderated
  • Portfolio investments recorded a net inflow as against a marginal outflow

 

4. ‘High public debt cuts room for policy sops’

Category: Economic Development

Topic: Indian Economy

Key Points:

India’s economic growth rate is projected to remain strong at 7.5 per cent in 2016, but high public debt and current rates of inflation may limit room for supportive fiscal policies, according to an United Nations Conference on Trade and Development (UNCTAD) report
What the report says

  1. To address the stalled manufacturing share in India’s GDP
  2. The stagnation in the sector is reflected in its limited capacity to create jobs with higher wages
  3. India was an example of ‘stalled industrialisation’ – where shares of manufacturing value added and employment stagnate at modest levels
  4. In India, the share of manufacturing in total employment increased by only about two percentage points over four decades
  5. Private investment in India has weakened in the past few years, along with emerging debt-servicing difficulties
  6. Public investment is yet to take off in the context of serious infrastructure gaps that could constrain future growth
  7. Lack of global demand and stagnant real wages were the main problems behind the global trade slowdown


D. GS4 Related


E. Important Editorials: A Quick Glance


1. Live Mint: Aadhar Act: What it means for you

Category: Polity

Topic: Governance

Key Points:

  • Aadhaar has received a legal backing to be used in social welfare schemes and to disburse subsidies as well
  • The Supreme Court had last year ruled that use of this system will not be mandatory and can only be extended to services like transfer of cooking gas subsidy, Jan Dhan Yojana, and Mahatma Gandhi National Rural Employment Guarantee Act
  • The ambit has slowly increased as it is seen as a valid document in daily financial life as well

 

Use in transactions

  • Taxation:You can e-verify income tax returns with the help of Aadhaar
  • Mutual funds:Aadhaar-based e-KYC has been facilitated by the Securities and Exchange Board of India for mutual funds
  • Banking:It is mandatory for customers to provide certain details to comply with know-your-customer (KYC) norms. To make this process paperless, the Reserve Bank of India had introduced Aadhaar-based e-KYC, which substitutes the need to submit multiple documents 


2. Business Standard:  OECD sees globalization brake on growth

Category: International Relations

Topic: International institutions

Key Points:

  • Tradegrowth is set to lag growth in the broader world economy this year, the Organisation for Economic Cooperation and Development said in an update of its main economic forecasts
  • This is well below past norms and implies that globalisation as measured by trade intensity may have stalled
  • theOECD estimated the global economy would muster growth of only 2.9 per cent this year, down from a forecast of 3.0 per cent in its last estimates
  • TheOECD said many global supply chains that add economic value at each stage and are often rooted in China and other east Asian countries 
  • These were unravelling asChina sought to wean its economy off of exports for growth and some firms brought back production to their home countries.
  • A growing backlash against trade liberalisation as well as recessions in some big commodity-producing countries were adding to the trade slowdown
  • OECDwarned at this could erode already flagging productivity and thus ultimately living standards


F. Concepts-in-News: Related Concepts to Revise/Learn:
  • Aadhar Act
  • OECD
  • Current Account Deficit
  • Paris Climate meet
  • Budget
  • Tribunals


G. BILLS/ACTS/SCHEMES/ORGS IN NEWS

The Gazette of India – Ministry of Law & Justice




H. Fun with Practice Questions 🙂
Question 1: Which of the following is not a member of the OECD?
a) Australia

b) Switzerland

c) India

d) Mexico 


Question 2: Which of the following statement/s is/are true regarding budget in India?
  1. Annual Financial Statement (AFS), the document as provided under Article 112, shows estimated receipts and expenditure of the Government of India
  2. All grants given to the State Governments/Union Territories and other parties are also treated as revenue expenditure even though some of the grants may be used for creation of capital assets

a) Only 1

b) Only 2

c) Both 1 and 2

d) Neither 1 nor 2 


Question 3: Which of the statement/s is/are true regarding Current Account Deficit?
  1. Current account deficit is a measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the goods and services it exports
  2. A current account deficit represents negative net purchases abroad

a) Only 1

b) Only 2

c) Both 1 and 2

d) Neither 1 nor 2 


Question 4: Which of the following rivers emerges from the glacier,  passes through three countries and ultimately falls in the sea?
a) Indus

b) Ganga

c) Brahmaputra

d) Both a and c 


Question 5: Which of the statement/s is/are true regarding Aadhar act ?
  1. To obtain an Aadhaar number, an individual has to submit his, (i) biometric (photograph, finger print, iris scan) and (ii) demographic (name, date of birth, address) information
  2. The information may be revealed in the interest of national security only

a) Only 1

b) Only 2

c) Both 1 and 2

d) Neither 1 nor 2


Check Your Answers

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