Current Affairs 18-10-2017

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answered Oct 18 by prashant1984 (20,280 points)

The right to breathe

Context- The Supreme Court judgment banning the sale of firecrackers this Diwali is a call to action. All Delhi residents must welcome this first step towards ensuring clean air in the city.

Air Quality in Delhi- Air quality readings in Delhi are extremely poor, once again, at this time of the year.

- In November 2016, Delhi witnessed a public health emergency with the air pollution hitting perilous levels and smog covering the city.

-The situation repeats itself year after year.

Issues related to SC decision-

1.some are concerned about the commercial interests of traders and the firecrackers that will probably lie unsold. 

2. The apex court’s ban on firecrackers may hurt the interests of the traders in the short run. But then, clean air is a basic human right.

3.  Air is a great equaliser. It treats everyone the same — the rich and poor alike.

Particulate Matter in Firecracker-

  1. Firecrackers are Stuffed with potassium nitrate (75 per cent), carbon (15 per cent) and sulphur (10 per cent).
  2.  PM 2.5 enters the blood stream through the lungs and cannot be filtered out. They act as silent killers causing cancer, respiratory and cardiovascular diseases.

Pollution effect-1. Air pollution is an inescapable horror for the residents of Delhi with children being most vulnerable.

2.The haze that permeates the city after sundown is a lethal blend of toxic fumes that blacken our lungs like that of the smokers and cling to the tissue like slime.

3. Delhi is silently suffering from a severe paediatric respiratory crisis with children suffering from irreversible lung damage.

4. Half of Delhi’s schoolchildren will never recover full lung capacity, surveys reveal.

5. Its deathly air has led to generations with choked lungs, weak hearts and a failing immune system.

Other serious impacts-1. Delhi is among those with the poorest air quality, according to a World Health Organisation report.

2.To contend with the poor air quality, embassies and international businesses in Delhi considered reducing staff tenures, advised staff to reconsider bringing their children to Delhi and provided high-end air purifiers.

Why it is Important for India to solve problem-

  1. India needs to showcase its capital by meeting international standards on pollution control, and adhering to the quality of living index etc. 
  2. world’s manufacturing hub and seeking foreign investment, the country needs to walk the talk and attain global standards. Delhi needs to be safe and inviting for the global community.

History of solving pollution in Delhi-1. Delhi has managed to clean up its air before.

2.At the turn of the century, polluting industries were made to leave the city.

3.  Coal-burning power plants were shut down.

A historic Supreme Court judgment in 1998 — compelling all public transport vehicles to run on CNG — had reduced levels of Respirable Suspended Particulate Matter (RSPM) significantly.

Way forward-1. The government and NGOs should have come forward to create awareness among the people about the order.

2.No campaign for a clean Delhi can be a success without community participation.

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answered Oct 18 by prashant1984 (20,280 points)

Outstanding credit grows 14.6% in 1 year; non-food loans fall to 13.6%

Context- Outstanding credit — loans, bonds and commercial papers (CPs) — grew 14.6 per cent year-on-year (y-o-y) between September 30, 2016 and September 30, 2017.

-The growth has been lower 13.8% in the same period last year.

Growth in other sector-1.  the growth in non-food credit in the fortnight to September 29, 2017, was slightly lower at 13.6 per cent y-o-y.

2. The outstanding loans (non-food credit) from banks to industry and individuals stood at Rs 80.09 lakh crore at the end of September 2017.

3. The net corporate bonds outstanding, as at the end of September, was Rs 25.87 lakh crore, up 18 per cent from as per latest data released by the Securities and Exchange Board of India (Sebi).

Reason for growth-1. Higher-rated corporates have in recent days chosen to borrow from the markets rather than from banks as the former route has turned out to be cheaper.

2. Bankers and sector analysts have in recent days made a case for measuring credit growth in terms of outstandings on loans as well as bonds as better-rated corporates are borrowing increasingly from the money markets.

3.With the participation of Banks in Bond market,the share of bonds in total market is rising.

4. Between June 2016 and June 2017, around Rs 40,000 crore had moved from the bank’s loan book to the markets.

5. A large portion of it — about 70 per cent of it — is in the CPs, or commercial papers. These commercial papers swing between the loan book and the markets, depending on the price, availability, etc.

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answered Oct 18 by prashant1984 (20,280 points)

Centre taking steps to formalise gold trade

- The Centre is taking steps for greater formalisation of the gold trade with an eye on the future.

- Country launched its first commodity options trading in the precious metal on the Multi Commodity Exchange (MCX).

- Gold option contract, with gold (1 kg) futures as underlying, expiring on November 28, 2017, and January 29, 2018, are made available for trading from today.

- As an introductory measure, No charges on any transaction fee on this product till December.

- This marks a very important evolution in the trading of the yellow metal itself. It [options] hedges all risks for those dealing in gold.

- Given that Indians were big buyers of gold,It is expected that new product would be extremely successful, adding that it would, with appropriate policy measures, help formalise the gold trade.

Benefit to consumers-1.It is in consonance with the business environment for the future.

2. The more the Gold trade formalises, the better it is for consumers, jewellers and traders.

3. The European-styled gold options are hedger-friendly and physically settled, which means on exercise at expiration, the options position develops into corresponding underlying MCX one kilogram gold futures position at the strike price of the exercised options.

4. By hedging risk of rise in gold prices using ‘Gold Call Options Contract,’ a jeweller would not only be protected against price rise, but also would benefit from fall in gold prices.

By hedging risk of fall in gold prices using a ‘Gold Put Options Contract’, a jeweller would not only be protected against price fall, but would benefit from rise in gold prices.

5. Gold is the first product for options trading that SEBI had permitted after modern commodity derivatives trading started 14 years ago.

6. The Finance Ministry had set up a committee for suggesting measures to transform India’s gold market.

Steps taken by Government-There has been a very conscious effort by the government and SEBI to develop and integrate commodity markets in a phased manner.

 The introduction of options gives a strong impetus towards systematic development and transformation of commodity derivatives market in India, ushering in a new era in price risk management in response to stakeholder expectations.

-To further strengthen the market, a panel had been constituted in NITI Aayog to integrate spot and derivative markets.

-  The gold option is an extremely low-cost product.

14 year time period would be good enough to develop the market.

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answered Oct 18 by prashant1984 (20,280 points)

Retrench India’s farm economy to sustain it

Background- 1.In 2007-08, Madhya Pradesh government announced a bonus of Rs150 above the minimum support price (MSP) per quintal of wheat.

2.Predictably, a large segment of farmers in the state shifted to the crop.

3. Come 2014 and the bonus was stopped. Farmers who had shifted production were left holding the bag.

4. They were not pleased.

5. It fed into the resentment that would eventually erupt in widespread farmer agitations in the state this year.

Artificial Incentives-  These policies have created artificial incentives that are unsustainable, an inefficient drain on public funds, or both.

-Madhya Pradesh is now attempting to address some of this with a policy that is aimed at reducing the distortionary impact of the prevailing procurement regime.

-The Bhavantar Bhugtan Yojana, launched,will replace government procurement with compensatory payments when market prices are below the MSP.

-It is being implemented as a pilot scheme for eight crops.

Expectation From scheme- 1.This will sidestep the implementation shortcomings of the procurement system.

2.These extend from the lack of government storage facilities and supply chain logistics .

3.This supports the fact that despite the government declaring MSPs for 25 crops, it largely procures only rice and wheat.

 4.It will be less distortionary, freeing up space for the market to set rates.

-The knowledge that the government will make up the shortfall will incentivise traders to set rates well below the MSP.

-The scheme has a two-month window, which means that the rush to sell in that period will also push prices down.

Agriculture reform-needed-1. Truly transformative agricultural reforms will require work on three levels.

2.First step is Modification in Mandi system-

-With the 2003 and 2017 versions of the model Agricultural Produce Market Committee (APMC) Act, successive Governments administrations have attempted to liberalize this system,

-providing for private markets

-and integrated state markets as a step towards a national market facilitated by the National Agriculture Market (eNAM).

-Teething troubles aside, the problem with this is that it still operates within the mandi system.

The government should get out of the business altogether—and that is only possible with a switch from the public distribution system to direct benefit transfers.

3.Reform at the input- The Pradhan Mantri Krishi Sinchayee Yojana aims to extend irrigation cover to all forms and maximize water-use efficiency over a period of five years with an outlay of Rs50,000 crore.

 In a water-stressed yet groundwater-dependent country like India, this is only possible with comprehensive rural electrification, allowing for techniques such as drip irrigation.

- The other major reform needed here is access to formal credit.

The current dependence on informal credit leaves farmers beholden to middlemen and traders who are often the credit suppliers, thus undercutting the former’s bargaining power.

4. The third level of reforms should be no.of people involved in agriculture to be reduced.

 Independent India has a long and unfortunate tradition of romanticizing the rural economy and those who participate in it.

-For a sustainably healthy agricultural economy, there is one prerequisite above all:

- The number of people participating in it must be drastically reduced and the entire endeavour must be corporatized to the extent possible. 

-  As per the last Agriculture Census, the average farm holding in India is a minuscule 1.15 hectares, with 85% of the holdings in the marginal and small categories. Their number has been on the rise since the 1970s and is expected to touch 91% by 2030.

- Measures such as enabling large-scale contract farming and corporate farming will help here—but the only genuine solution is job creation in non-agricultural sectors.

Conclusion- The agricultural sector is one of the handful where inelastic demand for the products, the deleterious public effects of supply shocks and inherent risks for suppliers mandate a government role.

Except New Zealand—a low population, high gross domestic product per capita state—no country has successfully managed to do without it.

The trick is to limit that role to the essential, improve its efficiency and allow the market to operate unfettered to the largest extent possible. That will require expending more political capital than any government has been willing to do so far.

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