18 February 2023

DAILY CURRENT AFFAIRS ANALYSIS

1 – G Secs: GS III – Topic Indian Economy:

Context:

• On Friday, the Reserve Bank of India published draught rules for the lending and borrowing of public assets with increased market activity.
• The RBI suggested the implementation of securities lending and borrowing in government securities (G-secs) earlier this month in an effort to promote increased investor participation in the securities lending market by giving investors a chance to utilise idle assets and enhance portfolio returns.

Government securities fall into a number of kinds:

• T-bills, also referred to as Treasury Notes, are only ever issued by the Indian central government.
• They have a shorter maturity than a year because they are short-term money market products.
• Treasury bills now come in three different maturities: 91, 182, and 364 days.
• Even though the majority of financial products offer you a return on your investment in the form of interest, the Treasury Bill is referred to as a zero-coupon security.
• Due to the fact that these securities are issued at a discount and redeemed for face value on the maturity date, investing in them will not yield any interest.
• Cash Management Bills (CMBs) are a newer class of financial instrument in India. They were first introduced by the Indian government and Reserve Bank of India in 2010.
• CMBs are financial securities with zero coupons that mimic Treasury notes. The only difference between the two categories of government securities is the maturity date.
• Cash Management Bills (CMBs), an extremely short-term investment option, have a maturity of under 91 days.
• Dated with a G-sec. date G-Secs is an additional form of governmental security available in India. In contrast to T-bills and CMBs, G-Secs are long-term money market securities with a wide range of maturities, starting at 5 years and reaching up to 40 years.
• The interest rate on these instruments, sometimes known as the “coupon rate,” is either set or variable.
• Loans for State Development (SDLs) – In India, state governments only offer SDLs to sustain their operations and meet their financial responsibilities, as the name would imply.
• They resemble vintage G-Secs. The sole difference between these two is that SDLs are granted by state governments while G-secs are issued by the federal government.

 Volatility of government securities:

• On the secondary market, government securities are traded at a range of prices. The sudden fluctuation is explained by the following factors:
• The economy can be impacted by changes in interest rates as well as other macroeconomic variables like inflation and liquidity.
• new developments, among others, in the capital, currency, and financial markets.
• Bond market movements on a global scale, particularly for US Treasury bonds.

Conclusion:

• As part of the G-sec Acquisition Program, the Reserve Bank of India (RBI) recently announced that it would purchase government securities on the open market for Rs 25,000 crore (G-SAP 2.0). The initial acquisition of government securities under G-SAP 1.0 cost about Rs. 25,000 crore. The objectives of the government securities are to establish a stable and orderly evolution of the yield curve as well as effective liquidity management in the economy. The G-Secs are a source of debt for the government and aid in reducing deficits.

 Source The Hindu

 2 – Article 370: GS II – Topic Indian Constitution:

Context:

• The repeal of Article 370 of the Constitution, which deprived Jammu and Kashmir of its special privileges and led to the State’s division in two in 2019, was challenged in petitions, and Chief Justice D.Y. Chandrachud of the Supreme Court of India reiterated on Friday that he will “take a call” on whether to list those petitions.

Article 370:

• Article 370: On October 26, 1947, when the ruler, Maharaja Hari Singh, signed the Instrument of Accession, the princely state of Jammu and Kashmir became a part of the Dominion of India. Its section states that only Articles 1 and 370 of the Indian Constitution apply to J&K. The President was required to consult with the state administration before deciding whether or not to apply the Additional Articles.

 About Article 370:

• Maharaja Hari Singh, the former king of J&K, signed the Instrument of Accession in 1947, which led to the creation of Article 370. Jammu and Kashmir was exempted from the Indian constitution by Article 370 of the Indian constitution, which was passed on October 17, 1949, as a “temporary clause,” allowing the state to establish its own constitution and restricting the Indian Parliament’s legislative authority there. In the draught constitution, Sir Narasimha Gopalaswami Ayyangar proposed it as Article 306A.
• The Jammu and Kashmir Constituent Assembly, which drafted the state constitution, was dissolved on January 25, 1957, although it did not adopt either the repeal or revision of Article 370, casting doubt on the provision’s future.

Article 35 A:

• The right to purchase property there, preference in hiring for positions in the public sector, and other benefits were guaranteed to permanent residents of Jammu and Kashmir under Article 35 A. According to this article, only people who dwell in Jammu and Kashmir full-time are eligible to vote in local elections and purchase property there. Article 35A was removed by the Jammu and Kashmir Reorganization Act of 2019.
• The Central Government will no longer require the state governments’ permission to implement laws after Article 370 has been properly removed. After Article 370 was repealed, Article 35 A of the Indian Constitution was rendered completely ineffective. In other words, there won’t be any distinction between J&K residents and those in the rest of the state.

 The repeal of Article 370:

• The previous special status granted to Jammu and Kashmir was revoked by the President of India on August 5, 2019, in accordance with the authority granted under Clause (1) of Article 370 of the Indian Constitution. This order was published as the Constitution (Implementation to Jammu and Kashmir) Order, 2019.
• Jammu and Kashmir no longer has its own constitution, flag, or anthem, and its people do not hold dual citizenship as a result of the repeal of Article 370. Jammu and Kashmir now abides by all legislative amendments made by the parliament, such as the Right to Information Act and the Right to Education Act.
• With the deletion of Article 370, Jammu & Kashmir now fully adheres to the Indian Constitution and all 890 Central laws. Jammu and Kashmir was seen as being a part of India in both letter and spirit after Article 370 was repealed. The Indian Constitution’s Article 370 was viewed as a temporary and ineffectual provision that needed to be eliminated.

 Source  The Hindu

3 – G 20: GS II – Topic International Relations:

Context:

• India’s top diplomatic apparatus has been on the phone and clocking up flight miles in order to make sure that the G-20 Foreign Ministers’ Meeting (FMM), which will feature Russian Foreign Minister Sergey Lavrov, goes off without a hitch on March 1, which is the one-year anniversary of the Ukrainian War.
• The national security adviser, Ajit Doval, just returned from high-profile trips to Moscow, London, and Washington. The minister of external affairs, S. Jaishankar, will be in Australia this weekend. The foreign secretary visited Dhaka, Vinay Kwatra. V. Muraleedharan, the Minister of State (MoS), will travel to Singapore this week after visiting Australia. All of these nations have received invitations to the G-20 meetings this year. The Prime Minister Narendra Modi has spoken to the American leaders.

What verdict did the Summit come to?

• Condemning Russian Aggression: Member nations issued a statement in which they “strongly” condemned Russian aggression in Ukraine and demanded a prompt and complete withdrawal.
• Despite the fact that the majority of the members had expressed opposition to the conflict in Ukraine, they acknowledged that “there were other opinions and diverse appraisals of the situation and sanctions.”
• Emphasis on the Global Economy: This year’s G20 declaration placed greater focus on the global economy than it did last year, when the G20 economies pledged to pace interest rate increases cautiously to avoid spillovers and warned of “increasing volatility” in currency fluctuations.
• Food Security: The leaders praised the notion of cultivating grains in the Black Sea and pledged to cooperate in addressing issues relating to food security.
• Climate Change: G20 leaders reaffirmed their support for the Paris Agreement’s temperature goal by pledging to keep working to keep the increase in global temperature to 1.5 degrees Celsius.
• Leaders have acknowledged the significance of the digital transformation in achieving the sustainable development goals.
• They promoted worldwide cooperation to advance digital literacy and skills in order to maximise the benefits of the digital transition, particularly for women, girls, and those who are vulnerable.
• Health: Executives reaffirmed their dedication to encouraging a strong and sustained recovery that will aid in establishing and maintaining universal health coverage.
• The World Bank launched the “Pandemic Fund,” a new financial intermediary fund for pandemic prevention, preparedness, and response, and they commended it.
• The World Health Organization (WHO) has reaffirmed the commitment of world leaders to strengthen global health governance with the assistance of other international organisations.

What issues are faced by the G-20 members?

• Geopolitical instability and the rate of inflation around the world have both considerably grown as a result of Russia’s invasion of Ukraine.
• The simultaneous Western sanctions have made the situation worse.
• The erosion of purchasing power in many nations as a result of continuously high inflation, which is at historic highs in several countries, has hampered economic progress.
• Effect of escalating inflation Global central banks have increased interest rates in response to rising inflation, which has further hindered economic development.
• It’s anticipated that some of the major economies, like those in the US and the UK, will go into recession, while others, including those in the euro zone, will come to a near full halt.
• Significant Economies Slowing: China, one of the main engines of the global economy, is currently experiencing a severe slowdown as a result of its protracted real estate crisis.
• Rising Geopolitical Tensions: The global economy is having difficulty coping with rising geopolitical tensions like the conflict between the world’s two largest economies, the US and China, or the drop in trade between the UK and the euro area following the Brexit vote.

About the G20:

• In the midst of the late 1990s financial crisis, which mostly impacted East Asia and Southeast Asia, the G20 was established in 1999.
• Middle-income countries are encouraged to participate in order to guarantee the stability of the global financial system.
• Together, the G20 nations account for 60% of the world’s population, 80% of its GDP, and 75% of its commerce.
• Saudi Arabia, South Africa, Turkey, the United Arab Emirates, Argentina, Australia, Brazil, Canada, China, Denmark, Finland, France, Germany, Greece, Hong Kong, Italy, Japan, the Republic of Korea, Mexico, Russia, the United Kingdom, the United States, and the European Union are just a few of the members.

How to Continue:

• Slowing the rise of inflation is the G-20 nations’ top concern.
• Governments must, however, find measures to assist the weak without escalating debt levels. The need to regularly monitor external hazards would be a key issue with this strategy.
• A strong, sustained, egalitarian, and all-inclusive recovery depends on G-20 cooperation, which also entails maintaining Ukrainian peace while “helping prevent future fragmentation.”
• The leaders of the G20 must encourage “more open, stable, and transparent rules-based commerce” to alleviate the current global goods scarcity.
• Enhancing the global value chains’ resilience would assist safeguard against impending shocks.

Source  The Hindu

4 – Pangolin Conservation: GS III – Topic Environmental Conservation:

Context:

• On the occasion of World Pangolin Day, which is observed on February 18, a data sheet stating that 1,203 pangolins were uncovered in the illegal wildlife trade in India from 2018 to 2022 was published. The non-profit organisation focuses on the global trafficking of plants and animals.
• Up to 24 States and one Union Territory have used pangolins and their derivatives.
• The anteater-like pangolin has thick keratin scales covering its skin as a form of defence. Only these mammals have been found to exhibit this characteristic.
• When attacked, it curls into a ball and defends itself by using these scales as armour.
• Pangolins, which are nocturnal insectivores, mostly eat ants and termites, which they capture with their long tongues.
• Of the eight pangolin species, two are found in India: the Chinese Pangolin (Manis pentadactyla) and the Indian Pangolin (Manis crassicaudata).
• An enormous anteater with a back covered in 11–13 rows of scales, the Indian pangolin.
• The Chinese pangolin lacks a terminal scale on the underside of its tail, whereas the Indian pangolin does.

Habitat of Indian pangolins:

• It is extensively scattered throughout India, with the exception of the arid region, the high Himalayas, and the North-East.
• The species is also present in Bangladesh, Pakistan, Sri Lanka, and Nepal.
• The foothills of the Himalayas in Southern China, Eastern Nepal, Bhutan, Northern India, and North-East Bangladesh are home to Chinese pangolins.
• Threats to pangolins in India include hunting and poaching for local use (such as as a source of protein and traditional medicine) and international trade for its flesh and scales in East and South East Asian countries, primarily China and Vietnam.
• It is said that they are the animal that is traded the most globally.

 Source The Hindu