28 March 2023

DAILY CURRENT AFFAIRS ANALYSIS

 1 – Sukanya Samriddhi Yojna: GS II – Topic Government Policies and Interventions:

 Context:

• It seems unlikely that investors in the well-known small savings programmes Public Provident Fund (PPF) and Sukanya Samriddhi Account (SSA), whose rates have not been changed since January 2019, would soon enjoy higher returns, according to a senior government official.

Benefits:

• Interest on deposits is 8.40% starting on October 1st, 2019. Compounded annually, with the option to compute interest payments on balances in completed thousands on a monthly basis.
• According to Section 80C of the IT Act, 1961, the programme has been expanded to include Triple Exempt Advantages, which means there will be no tax on the amount invested, the amount gained as interest, and the amount withdrawn.

Eligibility:

• Parents or legal guardians may open deposits on behalf of up to two daughters under the age of 10. This includes adopted girls.
• Three girl children are produced when twin girls are born, either as the second child or as the first child.
• A girl’s name may only be used to open one account.
• Initial deposits must be at least 250 rupees, with subsequent deposits in multiples of 150 rupees and a cap of 150000 rupees per fiscal year.
• After the account is opened, deposits can only be made for a maximum of 15 years.
• The account will mature when the account holder marries or when they have been open for 21 years, whichever comes first.

Source The Hindu

2 – FDI: GS II – Topic Indian Economy:

 Context:

• According to Finance Minister Nirmala Sitharaman, the government is still deliberating on up to 54 foreign direct investment (FDI) proposals involving investors or beneficial owners from China and Hong Kong.

About:

• A Foreign Direct Investment (FDI) is an investment made by a firm or individual in one country into business interests located in another country.
• An investor can buy a direct business interest in another country thanks to FDI.
• Investors have a variety of options for making FDI.
• Some popular ones include establishing a subsidiary in another nation, acquiring or merging with an existing overseas company, or starting a joint venture partnership with a foreign company.
• FDI has been a significant non-debt financial resource for the development of India’s economy in addition to being an essential engine of economic growth.
• It’s distinct from a foreign entity just purchasing stocks and bonds of a corporation, which is a foreign portfolio investment.
• FPI does not give the investor management of the company.

Components:

Equity capital:

• It is the foreign direct investor’s purchase of shares of an enterprise in a country other than its own.

Reinvested earnings:

• It consists of the portion of earnings that direct investors do not receive from affiliates in the form of dividends or other distributions.
• Affiliates invest such retained earnings.

Intra-company loans:

• They are short- or long-term borrowing and lending transactions involving affiliate businesses and direct investors (or enterprises).

Routes of FDI:

Automated Route:

• The government or the RBI’s previous consent is not necessary in this case for the foreign entity (Reserve Bank of India).
• In India, FDI is permitted up to 100% through the automatic route in non-critical sectors and does not require a security clearance from the Ministry of Home Affairs (MHA).
• Investments from Pakistan and Bangladesh, as well as those in sensitive industries including mining and the media, telecommunications, satellites, private security firms, and civil aviation, require prior government approval or security clearance from MHA.

Government Route:

• The foreign entity must obtain government approval in this.
• The Foreign Investment Facilitation Portal (FIFP) makes it easier to clear applications through a single window when they are approved. It is managed by the Ministry of Commerce and Industry’s Directorate for Promotion of Industry and Internal Trade (DPIIT).

How has the government increased FDI?

• The Indian government has recently adopted a number of efforts, including easing FDI restrictions in a variety of industries, including stock exchanges, telecom, PSU oil refineries, and defence.
• The “Made in India” and “Atmanirbhar Bharat” programmes, along with the improvement of India’s position in international supply chains, have fueled FDI inflows in recent years.
• Introduction of investment-attractive programmes include the Pradhan Mantri Kisan SAMPADA Yojana, the National Technical Textile Mission, and the Production Linked Incentive Plan.
• Around 300 of the 1,000 companies that relocated their headquarters out of China as a result of the first wave of the Covid-19 epidemic worked in the manufacturing of medical, electrical, mobile, and textile products.
• For India, companies like Lava International with over 600 employees declared their plan to transfer its base to India from China.
• Due to the liberal and appealing policy environment for investors, a favourable business climate, and a lax regulatory environment, higher FDI inflows have been made possible.

How can India Retain this Growth?

• In order to create a favourable environment for international investors, government policies and decisions are of utmost importance. India now has the chance to widen its global reach thanks to the pandemic’s disruptions.
• With a variety of legislative initiatives and changes at all levels, the government is attempting to improve the environment for foreign direct investment.
• To further increase exports, promote inclusive development, and support R&D (research and development) in order to make our industry competitive globally, this must also be supplemented by a sensible trade strategy.
• Foreign Portfolio Investments are less likely than FDIs to help the Indian economy grow (FPI).
• India should be kept as a desirable, secure, and reliable location for serious, long-term investors.
• If we want ongoing foreign investment, we need a level playing pitch. Sneaking loyalty towards local players should be avoided.

Source The Hindu

3 – LAC: GS III – Topic Internal Security:

 Context:

• According to General Manoj Pande, the Chief of Army Staff, violations along the Line of Actual Control (LAC) with China continue to have the potential to get worse. India has enough reserves, according to him, and is prepared to deal with any unanticipated circumstances.
• The long-running boundary issue, he emphasised, cannot be divorced from the bilateral relations between the two Asian heavyweights, and he noted that China has accumulated enormous capacities for force mobilisation, application, and maintenance of military operations.

China and India’s shared border:

• Relations between India and China date back more than 2,000 years. Ancient antiquity saw the beginning of the two countries’ economic and cultural relations.
• Modern-day border disputes between China and India have sparked armed conflicts like the 1962 Sino-Indian War, the Chola Incident in 1967, the 1987 Sino-Indian War, and the 2020 India-China battle.
• During the past ten years, the Line of Actual Control border standoffs have frequently put India and China’s relations under “severe stress.”

India and China’s border issue is largely caused by:

• Four states share a border with China: Himachal Pradesh, Uttarakhand (which was originally a part of UP), Sikkim and Arunachal Pradesh, and Union Territories of Ladakh (which was formerly the state of Jammu & Kashmir). Both nations dispute this border, which stretches 3,440 kilometres (2,100 miles) and is not clearly defined.
• The Sino-Indian border is divided into three sectors, known as the Western, Middle, and Eastern sectors.

Places of conflict along the LAC:

• China asserts that Arunachal and around 90,000 square kilometres of northeastern Indian territory are its own, whereas India argues that 38,000 square kilometres of land in Chinese-occupied Aksai Chin should be part of Ladakh.
• There are several disputed areas along the Line of Actual Control (LAC), including those in Himachal, Uttarakhand, and Sikkim.

Source The Hindu

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

 Context:

• The oceans hold untrammelled opportunities for the prosperity of our planet. It is therefore not surprising that the most prosperous cities and countries are endowed with a coast. The G20 countries together account for around 45% of the world’s coastlines and over 21% of the exclusive economic zones (EEZs). The oceans are reservoirs of global biodiversity, critical regulators of the global weather and climate, and support the economic well-being of billions of people in coastal areas. The term ‘blue economy’ includes not only ocean-dependent economic development, but also inclusive social development and environmental and ecological security. Recognising the contribution of the ocean economy for sustainable development, Prime Minister Narendra Modi said, “To me, the blue chakra in India’s flag represents the potential of the… ocean economy.”

Introduction:

• The G20 or Group of Twenty is an intergovernmental forum comprising 19 countries and the European Union (EU)
• The G20 is composed of most of the world’s largest economies, including both industrialized and developing nations, and accounts for around 90% of gross world product (GWP), 75–80% of international trade, two-thirds of the global population, and roughly half the world’s land area
• The G20 was founded in 1999 in response to several world economic crises
• Since 2008, it has convened at least once a year, with summits involving each member’s head of government or state, finance minister, foreign minister, and other high-ranking officials; the EU is represented by the European Commission and the European Central Bank.

Chair rotation:

• To decide which member nation gets to chair the G20 leaders’ meeting for a given year, all members, except the European Union, are assigned to one of five different groupings
• All countries within a group are eligible to take over the G20 Presidency when it is their group’s turn. Therefore, the states within the relevant group need to negotiate among themselves to select the next G20 President
• The G20 operates without a permanent secretariat or staff
• The incumbent chair establishes a temporary secretariat for the duration of its term, which coordinates the group’s work and organizes its meetings
• The 2023 and 2024 summits will be hosted by India and Brazil respectively
• In addition to these 20 members, the chief executive officers of several other international forums and institutions participate in meetings of the G20

Financial Focus:

• The initial G20 agenda, focused on the sustainability of sovereign debt and global financial stability in an inclusive format that would bring in the largest developing economies as equal partners
• Further, the recurring themes covered by G20 summit participants have related in priority to global economic growth, international trade and financial market regulation.

Inclusive growth:

• After the adoption of the UN Sustainable Development Goals and the Paris Climate Agreement in 2015, more “issues of global significance” were added to the G20 agenda, which include migration, digitisation, employment, healthcare, the economic empowerment of women and development aid.

Source The Hindu