Daily Current Affairs

Prelims Prominence - August 21, 2018

FOCUS

The falling of rupee What does that mean for economy? Good for Exports and bad for Imports

What

  • With the rupee recently weakening past ₹70 to a dollar and hovering about that level since, concerns over the impact of the devaluation on economic indicators are intensifying.

Here is what happens when the rupee falls:

What happens to inflation

  • One of the first visible effects of currency depreciation is the country’s imports become more expensive and exports cheaper.
  • The reason is simple. It takes more rupees to pay for the same quantum of imports and fewer dollars for a buyer to pay for the same quantity of exports.
  • More expensive imports are likely to drive inflation upward, especially in India where input products constitute a large part of our imports.
  • In addition, a depreciating rupee also impacts the oil import bill since it costs more rupees per barrel of oil, which plays its own part in pushing inflation up.

What happens to GDP growth?

  • This is a more complex question given the number of factors that affect GDP growth.
  • On the one hand, costlier inputs and the subsequent increase in the prices of finished goods should have a positive impact on GDP.
  • But the consequent decrease in demand due to higher prices could nullify this.
  • A depreciating rupee certainly affects the exports and imports, since exports are likely to receive a boost while imports could flag somewhat.
  • It remains to be seen what impact a reduction in household consumption would have on demand, especially when the festive season is nearing.

What does this mean

  • A depreciating rupee means higher prices of goods and services, costlier petrol and trips abroad turning more expensive.
  • On the flip side, the domestic tourism could grow as more tourists visit India since their currency now buys more here. In the medium term, export-oriented industries may also create more jobs.

Economy

India will be back on 7.5%-plus growth track this fiscal Tariff war is an opportunity to increase exports to U.S.

What

  • India’s economic growth seems to be back on a recovery path and the country will be on a firm 7.5%-plus growth track this fiscal

Beneficial for India’s Export

  • The U.S.-China tariff war provides an opportunity to increase India’s exports to the U.S.
  • Economic growth, which has been subject to many ups and downs over the past seven years, seems to be back on a recovery path.
  • Domestically, the main risk to macro stability is politically-driven government consumption spending at the cost of investment and fiscal prudence.
  • The U.S.-China tariff war, however, provides an opportunity to increase India’s exports to the U.S. and to attract labour-intensive elements of the global supply chain unsettled by higher ‘China risk’ to India

Ministry of Defence

Exercise Pitch Black 2018, RAAF Base Darwin, Australia (24 Jul 18 – 18 Aug 18)

What

  • Ex Pitch Black a biennial multi-national large force employment warfare exercise was hosted by Royal Australian Air Force (RAAF) from 24 Jul 18 to 18 Aug 18 in Darwin, Australia.

Enlighten about the exercise

  • Indian Air Force had earlier participated in the exercise as observers and this was for the first time that IAF participated with air assets in the Exercise Pitch Black (PB-18).
  • With participation of 16 nations and more than 140 aircraft, the current edition was the largest Pitch Black ever conducted by Australia.
  • The objectives for the exercise were to foster closer relationship between the participating friendly forces and to promote interoperability through exchange of knowledge and experience.
  • The aim for participating crew and specialist observers was to expose them to op environment in international scenarios.
  • The exercise comprised of 2 phases, first being the Force Integration week. During the Force Integration week, the forces flew basic missions with an aim to get to same working platform.

Successful Flight Test of ATGM ‘HELINA’

What

  • Indigenously developed Helicopter launched Anti-Tank Guided Missile ‘HELINA’ has been successfully flight tested from Army Helicopter at 1400hrs in the ranges of Pokhran, today.
  • The weapon system has been tested for its full range.
  • The ‘HELINA’ weapon system released smoothly from the launch platform has tracked the target all through its course and hit the target with high precision.
  • All the parameters have been monitored by the telemetry stations, tracking systems and the Helicopters.
  • The Missile is guided by an Infrared Imaging Seeker (IIR) operating in the Lock on Before Launch mode. It is one of the most advanced Anti-Tank Weapons in the world

Successful Flight Tests of Smart Anti Airfield Weapon

What

  • Indigenously designed and developed guided bombs Smart Anti Airfield Weapon (SAAW) were successfully flight tested from IAF aircraft at Chandan range.

Enlighten about it

  • The weapon system was integrated with live warhead and has destroyed the targets with high precision.
  • The telemetry and tracking systems captured all the mission events.
  • This weapon is capable of destroying variety of ground targets using precision navigation.
  • A total of three tests with different release conditions were conducted during 16 to 18 August 2018 and all the mission objectives have been achieved.
  • The weapon has undergone eight developmental trials till date and performance of system for different ranges under multiple launch conditions has been demonstrated.

Ministry of Defence

Indo – Thailand Joint Exercise Maitree 2018

What

  • Exercise Maitree 2018, a two week long platoon level joint military exercise between Indian Army and Royal Thai Army culminated on 19 August 2018.

Enlighten about the exercise

  • The Exercise Maitree is an annual event designed to strengthen the partnership between Royal Thai Army and Indian Army and the exercise commenced on 06 August 2018 in Thailand.
  • The exercise began with a cross training period involving familiarization training between two armies to evolve drills and procedures involved in counter insurgency & counter terrorist operations in urban, rural and jungle terrain under UN mandate.
  • The second phase included practicing of various drills & tactical scenarios in counter insurgency environment, execution of tactical operations like search and destroy operation, house intervention and survival techniques.
  • The exercise culminated with a 72 hour joint exercise on planning and execution of series of tactical operations like raid, pursuit, establishing Military Check Post and cordon and search operations.

Ministry of Housing & Urban Affairs

Ease of Living Index of MOHUA

Whats the issue

  • There has been a debate in public domain related to the rankings of Mumbai and Delhi between the Ease of Living Index of the Ministry of Housing and Urban Affairs (MOHUA) released on13th August, 2018 and the Global Liveability Index released by The Economist Intelligence Unit (EIU), on 14 August, 2018.
  • The debate primarily centred around the fact that while Greater Mumbai (117) ranked below Delhi (112) in the Global Liveability Index of the EIU, the ranks of the two cities were in the reverse order at 3 and 65 respectively in the Ease of Living Index released by MoHUA.

Ranking Source

Greater Mumbai rank

Delhi rank

Ease of Living

3

65

Global Liveability Index*

117

112

COMPARATIVE ANNALYSIS

  • Ease of Living Index of MoHUA looks at Delhi as not only New Delhi but an urban agglomerationof around 1488 sq. kms. comprising the Municipal Corporations limits of East, South, North and NewDelhi.
  • Global Liveability Index looks at New Delhi only. Hence, the geographical areas and population covered for Delhi is different in both the indices and not comparable as such.

Disaster Management

‘Operation Karuna’ by IAF’s 24 choppers has transported aid and rescued thousands

  • The MI-17 B of the 109 Helicopter Unit, nicknamed ‘The Knights’, from Sulur in Tamil Nadu, is one of the 24 IAF choppers involved in the massive air relief and rescue campaign code-named ‘Operation Karuna’ that commenced on August 9.
  • The IAF’s C-17 Globe Master flew 11 sorties, bringing in disaster teams and amphibious troops.
  • The C-130s, AN-32s and IL-76s, the standard transport workhorses of the IAF, played a significant role in the operation, which has now shifted gear from rescue to relief.

International Organisations

BIMSTEC envoys bat for FTA

Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation

Present context

  • Called for the speedy conclusion of a Free Trade Agreement within the group comprising Bangladesh, Bhutan, India, Nepal, Sri Lanka, Myanmar and Thailand.

Upcoming summit

  • A summit of leaders from BIMSTEC countries in Kathmandu on August 30-31 and hold bilateral talks with most of them, including Bangladesh Prime Minister Sheikh Hasina and Nepal Prime Minister K.P. Oli.
  • At an event organised by business chamber FICCI just ahead of the summit, envoys of BIMSTEC countries said the FTA should be the top priority for them.

Regarding FTA issue

  • It is yet to finalise and conclude the FTA which was negotiated in 2004.
  • BIMSTEC FTA will boost the intra-regional trade from its present level of 7% to 21%
  • The visibility of BIMSTEC needs to be enhanced in a region where already a few other regional cooperation groups like ASEAN, SAARC, SASEC are in place
  • Even for the framework (2004) it took seven years. It is easy to negotiate an FTA between two countries. India and Sri Lanka have it. But when seven countries are involved maybe it is not so easy
  • At present the negotiations of the 16-nation Regional Comprehensive Economic Partnership (RCEP), due to be completed by the end of 2018, were taking precedence.

Enlighten about BIMSTEC

  • The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is an international organisation of seven nations of South Asia and South East Asia, housing 1.5 billion people and having a combined gross domestic product of $2.5 trillion (2014).
  • The BIMSTEC member states—Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan, and Nepal—are among the countries dependent on the Bay of Bengal.
  • Fourteen priority sectors of cooperation have been identified and several BIMSTEC centres have been established to focus on those sectors.
  • A BIMSTEC free trade agreement is under negotiation (c. 2018).
  • Leadership is rotated in alphabetical order of country names. The permanent secretariat is in Dhaka

Financial Inclusion

Southern States outshine rest of India in mobile banking Eastern, southern States lead in Internet banking financial transactions, says BCG

  • The theme of the report is “Providing financial services to SMEs in an increasingly digital ecosystem.”

What

  • Southern States are outshining the rest of India in mobile banking adoption in savings accounts, according to a report by The Boston Consulting Group (BCG).
  • The report was prepared in association with FICCI and Indian Banks’ Association.
  • Telangana tops the table with 10% of savings bank accounts having at least one mobile banking transaction in the last six months of FY18, according to the report.
  • This is followed by Andhra Pradesh (6.30%), Karnataka (5.50%), Puducherry (5.80%), Tamil Nadu (5%) and Kerala (4.70%). The all-India average is 3.40%.
  • The report had a sample size of more than 2,600 respondents and BCG factored in 34 banks across four segments — 15 medium PSU banks; six large PSU banks and five new private banks.
  • Mobile banking activation stood at 21% for private banks and 3% for PSU banks for FY18, the consulting firm said in the report.

Sources – The Hindu , Indian Express , PIB