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(PRELIMS + MAINS FOCUS)

US Puts India on Currency Watchlist

Part of: GS Prelims and GS-II – International Relations & GS-III – Economy

In news

• Recently, the US treasury has placed India on its currency manipulator watch list.
• Vietnam and Switzerland have been labelled as currency manipulators.

Key takeaways

• USA lists those countries which it feels are engaging in unfair currency practices by deliberately devaluing their currency against the dollar.
• The US Department of Treasury releases the semi-annual report where it has to track developments in international economies and inspect foreign exchange rates.
• Lowering the value of its currency provides an unfair advantage to that particular country over others. 
• This is because the devaluation would reduce the cost of exports from that country and artificially show a reduction in trade deficits as a result.
• A country which meets two of the three criteria of the Trade Facilitation and Trade Enforcement Act of 2015 is placed on the Watch List. This includes: (1) A significant bilateral trade surplus with the US which is at least USD 20 billion over a 12-month period; (2) A material current account surplus equivalent to at least 2% of GDP over a 12-month period; (3) Persistent one-sided in at least six out of 12 months.
• Inclusion in the list does not subject to any kind of penalty and sanctions but it deteriorates the global financial image of the country.

Prime Minister’s Special Scholarship Scheme (PMSSS)

Part of: GS Prelims and GS-II – Policies and Interventions

In news

• AICTE has decided to release the instalment of Rs. 20,000/- as maintenance allowance under Prime Minister’s Special Scholarship Scheme (PMSSS).

Important value additions

Prime Minister’s Special Scholarship Scheme (PMSSS)

• An Expert Group was constituted by the Prime Minister for enhancing employment opportunity among youths of J&K and Ladakh and  to formulate job opportunities in public and private sectors.
• Implemented by: J&K Cell of All India Council for Technical Education(AICTE), New Delhi.
• The scheme helps J&K Students to pursue undergraduate studies outside the Union Territory. 
• Aim: To build the capacities of the youths of J&K and Ladakh by Educating, Enabling and empowering them to compete in the normal course.
• The youths are supported by way of scholarship in two parts – academic fee and maintenance allowance.
• Main objectives: (1) Evolving guidelines for proper implementation; (2) To Conduct Awareness Workshops about the Scheme; (3) To Conduct Counselling for admission of candidates to different programs/courses; (4) Disbursal of Scholarship for the eligible Candidates; (5) Redressal of Grievances of PMSSS Candidates.

Accelerating India’s Covid-19 Social Protection Response Programme

Part of: GS Prelims and GS-II – Policies and Interventions; Health

In news

• The Indian Government and the World Bank signed a $400 million project to support India’s efforts at providing social assistance to the poor and vulnerable households, severely impacted by the COVID-19 pandemic.
• The credit is from the International Development Association (IDA) – the World Bank’s concessionary lending arm.

Key takeaways

• This is the second operation in a programmatic series of two. 
• The first operation of $750 million was approved in May 2020.
• The programme will strengthen the capability of state and national governments in India to provide coordinated and adequate social protection to the poor and vulnerable from the shocks triggered by the COVID-19 pandemic.
• It will help further expand and deepen the coverage of India’s social protection systems by helping these vulnerable groups in urban and peri-urban areas.

Do you know?

• The International Development Association is an international financial institution which offers concessional loans and grants to the world’s poorest developing countries. 
• The IDA is a member of the World Bank Group.
• It is headquartered in Washington, D.C., USA

Related article:

• World Bank’s $750 million agreement: Click here

IFSCA issues consultation paper on proposed Aircraft Leasing Regulations

Part of: GS Prelims and GS-III – Infrastructure

In news

• International Financial Services Centres Authority (IFSCA) has issued consultation paper on proposed Aircraft Leasing Regulations.

Background

• India is poised to become the 3rd largest aviation market in the world by 2022.
• In January 2019, India’s Ministry of Civil Aviation published a report, ‘Project Rupee Raftar’, that provided roadmap to developing an aircraft financing and leasing industry in India.
• The report identified International Financial Services Centre (GIFT city) for developing aircraft leasing and financing eco-system in the country.

Key takeaways

• In October, 2020, on the recommendation of IFSCA, the Central Government had notified Aircraft lease which shall include operating and financial lease of aircraft or helicopter and their engines as a financial product under International Financial Services Centres Authority Act, 2019.
• Considering, Aircraft leasing is a relatively new industry in India and Aircraft Leasing related regulations are different across various financial centres, IFSCA has prepared draft regulations for Aircraft Leasing and in order to get inputs from stakeholders as well as public comments.

Do you know?

• IFSCA has an objective to develop a world class FinTech hub at the IFSC in GIFT City, Gandhinagar (Gujarat).
• Thus, it endeavours to encourage the promotion of financial technologies (‘FinTech’) initiatives in financial products and services across the fields of banking, insurance, securities and fund management.

Related articles:

• International Financial Services Centres Authority (Banking) Regulations, 2020 approved: Click here
• IFSCA Committee Report on Development of International Retail Business: Click here
• Framework For Regulatory Sandbox introduced: Click here

National Hydrology Project reveiwed

Part of: GS Prelims and GS-III – Infrastructure; Environment

In news

• Review of the National Hydrology Project was carried out by Minister of Jal Shakti recently.
• The project is World Bank supported initiative of Ministry of Jal Shakti

Important value additions

• National Hydrology Project (NHP) was started in the year 2016 
• It is a Central Sector Scheme with 100% grant to Implementing agencies on pan India basis.
• Budget outlay is of Rs 3680 Crore to be spent over a period of 8 years.
• Aim: (1) Improving the extent, reliability and accessibility of water resources information; (2) To strengthen the capacity of targeted water resource management institutions in India.
• Under the NHP, a nationwide repository of water resources data – NWIC has also been established.

Revised Cost Estimate of North Eastern Region Power System Improvement Project (NERPSIP) approved

Part of: GS Prelims and GS-III – Infrastructure

In news

• The Union Cabinet has approved the Revised Cost Estimate (RCE) of North Eastern Region Power System Improvement Project (NERPSIP) at an estimated cost of Rs. 6,700 crore.

Key takeaways

• The scheme is being implemented through POWERGRID, a Public Sector Undertaking (PSU).
• Ministry: Ministry of Power 
• Beneficiary states: Assam, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura.
• The scheme is targeted to be commissioned by December 2021. 
• After commissioning, the project will be owned and maintained by the respective North Eastern State Utilities.
• Objective of the project: Economic development of North Eastern Region through strengthening of Intra – State Transmission and Distribution systems.

Do you know?

• The Scheme was initially approved in 2014 as a Central Sector Plan Scheme of Ministry of Power.
• It is being funded with the assistance of World Bank fund and by the Government of India (Gol) on 50:50 basis except for the capacity building component for Rs 89 crore, which will be entirely funded by the Gol.

Government of India and New Development Bank sign a loan agreement for $1,000 million to provide support to Aatma Nirbhar Bharat Abhiyan through MGNREGS

Part of: GS Prelims and GS-III – Infrastructure

In news

• The Government of India and New Development Bank signed a loan agreement for $1,000 million to provide support to Aatma Nirbhar Bharat Abhiyan through Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

Key takeaways

• The programme will support Government to enable economic recovery in the rural areas through Natural Resource Management (NRM) works.
• The programme proposes creation of durable rural infrastructure assets relating to NRM and generation of employment opportunities for rural poor, especially migrant workers who have returned from urban areas and have lost their livelihoods due to the COVID-19 pandemic.
• The $1 billion loan from the NDB has a tenor of 30 years, including a 5-year grace period.
  

Do you know?

• The NDB was established based on the Inter-Governmental agreement among the BRICS countries (Brazil, the Russian Federation, India, China and South Africa) signed in 2014.
• Objective: To mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging market economies and developing countries.
• Headquarter: Shanghai, China. 
• The first regional office of the NDB is in Johannesburg, South Africa.

Proposal of Spectrum Auction approved

Part of: GS Prelims and GS-III – Infrastructure

In news

• The Union Cabinet has approved a proposal of the Department of Telecommunications to conduct spectrum auction through which spectrum will be assigned to the successful bidders for providing commercial mobile services.

Key takeaways

• The auction will be for spectrum in 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz frequency bands.
• Spectrum will be offered for assignment for validity period of 20 years.
•  A total of 2251.25 MHz is being offered with total valuation of Rs. 3,92,332.70 crore (at reserve price).
• By winning right to use spectrum through the auction, incumbent telecom service providers will be able to augment their network capacity whereas new players will be able to start their services.
• Successful bidders may pay entire bid amount in one go (upfront) or may exercise an option to pay a certain amount upfront and remaining amount in a maximum up to 16 equated annual instalments, after a moratorium of two years.
• In addition to the bid amount, successful bidders will also have to pay 3% of the Adjusted Gross Revenue (AGR) excluding wireline services as spectrum usage charges for the spectrum won through this auction.

India – USA MOU In Electricity Sector

Part of: GS Prelims and GS-III – Infrastructure

In news

• Union Cabinet has approved MoU between India and USA for exchange of information in areas of mutual interest in the electricity sector.

Key takeaways

• Central Electricity Regulatory Commission (CERC), India and Federal Energy Regulatory Commission (FERC), United States of America (USA) will enter into a MoU for exchange of information and experiences in areas of mutual interest to both in the electricity sectors.
• The MoU will help in improving regulatory and policy framework for developing efficient whole sale power market and enhancing grid reliability.
• Under the MoU, the two sides will identify energy-related issues and develop topics and possible agendas for the exchange of information and regulatory practices in areas of mutual interest.

(Mains Focus)

ENVIRONMENT/ GOVERNANCE

Topic: General Studies 2,3:

• Conservation, environmental pollution and degradation
• Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

A four-point action plan to improve Delhi’s air

Context:  The deteriorating air quality in Delhi has led the Centre to set up the Commission for Air Quality Management in National Capital Region and Adjoining Areas. 

Every year, as the air quality reaches dangerous proportions, emergency measures are taken to ease the situation. However, in the absence of a long-term strategy, the problem recurs every winter. 

The causes of poor air in the National Capital Region (NCR)

• Stubble-burning in neighbouring states
• Construction dust
• Industrial pollution
• Localised bonfires to meet the heating needs of the poor 
• Emissions from motor vehicles (on-road vehicular exhaust emissions account for nine per cent to 38% of particulate matter (PM2.5) in the atmosphere)

A sustainable plan to reduce emissions from the transport sector requires a comprehensive and multi-year effort. A four-pronged approach could help. 

1. Deployment of Clean Technologies

• Electric mobility is a rapidly-growing choice, globally. 
• India is focused on this sector, having formulated a National Electric Mobility Mission Plan and has instituted programmes that offer financial incentives for electric buses and other vehicles. 
• However, effective deployment requires a comprehensive and actionable road map involving all stakeholders that must cover supply- and demand-side interventions like mandating purchase of Electric Vehicles (EVs), establishing charging and swapping stations, awareness campaigns, setting standards and incentives to vehicle and component manufacturers. 
• Hydrogen Fuel Cell vehicles (HFCs), though not yet commercialised, are said to be a fitting complement to EVs, especially to cover long distances of freight and passenger commute.

2. Adopting shared and non-motorised transport.

• The key to effecting a modal shift is to persuade people to move from personal motor vehicles to either shared modes, like buses, metro rail and shared taxis or to non-motorised modes, like cycling and walking.
• Unfortunately, the quality of India’s public transport systems – especially our city buses – are primarily designed for affordability, not quality thus discouraging private vehicle commuters from making a shift.
• Affluent commuters seek high-quality options, featuring door-to-door travel, greater comfort, less crowding, and tracking and smart ticketing choices. 
• They are willing to pay higher fares for such services. To earn their buy-in, public transport should incorporate a variety of premium services that ensure quality even if it means steeper ticket prices.
• Meanwhile, Mobility as a Service (MaaS) is an emerging concept in some European cities that allows transportation services to be available on demand and as per need, through a mobile app. 
• Identical to the app-based taxi services in India, MaaS cuts across modes of transport to offer multi-modal trip options based on willingness to pay, time availability and other parameters. In India, MaaS can revolutionise daily commutes and offer the much-needed solution for a modal shift.
• To promote non-motorised modes, NCR must invest in well-planned and safer infrastructure for cycling and walking

3. Improving traffic flow

• If traffic congestion is reduced and vehicles move seamlessly, then vehicular pollution will diminish. This is because moving vehicles will disperse the emissions effectively, ensuring they don’t get locked up in one location.
• Staggering peak time travel could be a solution to distribute the movement of traffic over a longer period of the day. Offices and commercial establishments can adopt staggered and flexible timings for employees.

4. Reducing travel demand

• Improving online delivery of public services can help reduce the average number of trips people make. Policies and supporting infrastructure that allow citizens to work from home and shop online will help this effort. 
• Likewise, mixed land-use planning could reduce trip lengths. Newly-developing areas should co-locate offices, commercial and residential addresses to minimise long commutes.

Conclusion

• These actions to reduce vehicular pollution could begin the process of improving NCR’s air quality. However, the need of the hour is a focused, comprehensive, systematic and multi-year effort across sectors. 
• Today, Delhi looks up to the commission to develop a scientific plan with a long-term vision, be adequately resourced and empowered to implement it. This holds out a glimmer of hope that people can breathe easy in future winter seasons.

INTERNATIONAL / ECONOMY

Topic: General Studies 2,3:

• Effect of policies and politics of developed and developing countries on India’s interests.
• Indian Economy and issues relating to planning, mobilization, of resources, growth, development 

Currency manipulation

Context: The United States has once again included India in its monitoring list of countries with potentially “questionable foreign exchange policies” and “currency manipulation”. This comes a year after India was removed from the watchlist in the US Treasury Department’s semi-annual foreign-exchange report to the US Congress

What does the term ‘currency manipulator’ mean?

• This is a label given by the US government to countries it feels are engaging in “unfair currency practices” by deliberately devaluing their currency against the dollar. 
• The practice would mean that the country in question is artificially lowering the value of its currency to gain an unfair advantage over others. 
• This is because the devaluation would benefit exporters as their earnings would increase

What are the parameters used?

An economy meeting two of the three criteria in the Trade Facilitation and Trade Enforcement Act of 2015 is placed on the Monitoring List. This includes:

1. A “significant” bilateral trade surplus with the US — one that is at least $20 billion over a 12-month period.
2. A material current account surplus equivalent to at least 2 percent of gross domestic product (GDP) over a 12-month period.
3. “Persistent”, one-sided intervention — when net purchases of foreign currency totalling at least 2 percent of the country’s GDP over a 12 month period are conducted repeatedly, in at least six out of 12 months.

Once on the Monitoring List, an economy will remain there for at least two consecutive reports “to help ensure that any improvement in performance versus the criteria is durable and is not due to temporary factors,” according to the US treasury department.

US administration will also add and retain on the Monitoring List any major US trading partner that accounts for a “large and disproportionate” share of the overall US trade deficit, “even if that economy has not met two of the three criteria from the 2015 Act”.

Which are the other countries in the latest monitoring list?

• The US Department of the Treasury Office of International Affairs, in its latest report to the US Congress, has included India, Taiwan and Thailand to its Monitoring List of major trading partners that “merit close attention” to their currency practices and macroeconomic policies.
• Other countries in the latest list comprise China, Japan, Korea, Germany, Italy, Singapore, Malaysia.
• India was last included in the currency watchlist in October 2018, but removed from the list that came out in May 2019.

Why is India back in the Monitoring List again?

• India, which has for several years maintained a “significant” bilateral goods trade surplus with the US, crossed the $20 billion mark, according to the latest report. Bilateral goods trade surplus totalled $22 billion in the first four quarters through June 2020.
• Based on the central bank’s intervention data, India’s net purchases of foreign exchange accelerated notably in the second half of 2019. 
• Following sales during the initial onset of the pandemic, India sustained net purchases for much of the first half of 2020, which pushed net purchases of foreign exchange to $64 billion–or 2.4% of GDP–over the four quarters through June 2020.

Consequences of being designated as Currency manipulator

• The designation of a country as a currency manipulator does not immediately attract any penalties, but tends to dent the confidence about a country in the global financial markets.

(TEST YOUR KNOWLEDGE)

Model questions: (You can now post your answers in comment section)

Note: 

• Correct answers of today’s questions will be provided in next day’s DNA section. Kindly refer to it and update your answers. 
• Comments Up-voted by IASbaba are also the “correct answers”.

Q.1 Which of the following country releases currency manipulator watch list?

1. USA
2. China
3. Russia
4. UK

Q.2 Prime Minister’s Special Scholarship Scheme (PMSSS) is launched for which of the following Union Territories?

1. Jammu and Kashmir
2. Puducherry
3. Ladakh
4. Daman and diu
5. Dadra and Nagar Haveli

Select the correct code:

1. 1, 2 and 5 only
2. 1 and 3 only
3. 1 , 3 and 4 only
4. 3 and 4 only

Q.3 International Development Association (IDA) is financial lending institution of which of the following?

1. World bank
2. IMF
3. BRICS
4. WEF

Q.4 Where is International Financial Services Centre (GIFT city) situated?

1. Delhi
2. Gandhinagar
3. Gurugram
4. Lucknow

Q.5 The New Development Bank is headquartered at which of the following?

1. Shanghai
2. Johannesburg
3. New Delhi
4. Moscow

ANSWERS FOR 17th December 2020 TEST YOUR KNOWLEDGE (TYK)

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