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DAILY CURRENT EVENTS CIVILS360

October 4, 2017

SC issues notice on donations to parties

  • The Supreme Court on Monday asked the Centre and the Election Commission to respond to a petition challenging the various amendments made through Finance Act 2017 and Finance Act 2016 in various statutes, saying these changes have opened the floodgates for unlimited corporate and foreign donations to political parties.
  • A Bench led by Chief Justice of India Dipak Misra issued notice on the petition filed by the Association for Democratic Reforms and Common Cause seeking to strike down the amendments made to the Companies Act, the Income Tax Act, the Representation of the People Act, the Reserve Bank of India Act and the Foreign Contribution Regulation Act.
  • The petitioners, represented by Prashant Bhushan and Neha Rathi, said the amendments, introduced as money Bills, legitimise electoral corruption, while ensuring complete non-transparency in political funding.

India set to ink $4.5-bn credit deal with Bangladesh

  • Union Finance Minister Arun Jaitley arrived here on Tuesday ahead of India and Bangladesh signing the third line of credit (LoC) agreement involving $4.5 billion to be spent on infrastructure and social sector development.
  • He said two agreements for the implementation of the third LoC and the ‘Joint Interpretative Notes on the Agreement between India and Bangladesh for the Promotion and Protection of Investments’ would also be signed in the presence of Mr. Jaitley and his Bangladesh counterpart A.M.A. Muhith.
  • “The two countries are also expected to enter into another deal on investment promotion and protection during the visit,” the spokesman said.
  • The two countries signed the first LoC in August 2010. The second one was inked in March, 2016.
  • According to the tour schedule, Mr. Jaitley would call on the Bangladesh premier and inaugurate, along with his counterpart, a new scheme for cashless transactions in visa services run by the State Bank of India on behalf of the Indian High Commission here.

Submarine Khanderi begins sea trials

  • Slowly but steadily, the Scorpene submarine programme is making progress. While the first submarine awaits commissioning, the second one has just begun sea trials, and Mazagon Docks Ltd. (MDL) is gearing up to launch the third vessel.
  • “After the monsoon, the second Scorpene Khanderi began sea trials last week. As per schedule, it is expected to be commissioned within this year. The third submarine, Karanj, is on track to be launched by the year-end,”
  • Khanderi, named after an island fort of Maratha ruler Chhatrapati Shivaji, was launched in January and had undergone some testing. Trials were held up by the rough sea.

Ministry of Health ranks first in Swachh Bharat initiative

  • The Ministry of Health and Family Welfare has been adjudged as the best department for its contribution during ‘Swachhta Pakhwada’, an inter-ministry initiative of the Swachh Bharat Mission. The Ministry observed the Swachhta Pakhwada from February 1-15. The award was presented on the third anniversary of the Mission on October 2. Health Secretary C. K. Mishra received the award on behalf of the Ministry.
  • “Swachhta Pakhwada was observed within the Ministry offices, in Central Government Hospitals, and in public health facilities in all the States/UTs,” noted a release issued by the Ministry.

‘India’s main challenge will be finding jobs amid automation’

  • While the global economy is in a “much better position” than it was before last year, India’s major challenge will be to find jobs for its working-age population which is forecast to increase from about 740 million to 1.3 billion by 2050, Lord Adair Turner, chairman of U.K.-based Institute for New Economic Thinking said in an interview.
  • Job creation is not expected to pick up in 2017 and 2018 and unemployment in India is projected to increase from 17.7 million in 2016 to 17.8 million in 2017 and 18 million next year, according to a UN Labour report released earlier this year. In percentage terms, unemployment rate will remain at 3.4% in 2017-18, according to the report.

2008 crisis

  • The former Chairman of the U.K.’s Financial Services Authority said that at least five decades before the financial crisis of 2008, there had been a surge in private debt. It went from 50% of global gross domestic product in 1950 to 170% in 2007, with most of that debt falling in the category of real estate — mortgage or commercial real estate, he said.
  • “That build-up of debt created a situation where more debt was created in real estate, which went up in value. This saw people borrow more money and banks said they can lend money as real estate is going up in value, so it is safe. It goes in this very powerful upward spiral and then it cracks.”
  • “The challenge we now have in this global economy is that the total amount of debt has not gone down. The total debt as a percentage of global GDP has gone up. You are sort of stuck.”
  • The existing debt levels are only sustainable if interest rates are very low, he said. “But very low interest rates encourage people to create more debt which may create more problems in the future. We will see the U.S. Federal Reserve now increasing interest rates and maybe the Bank of England a bit. I think, as we get into 2020, we will see interest rates in Japan are exactly where they are today. Zero.”

U.S., China

  • After 2008, the U.S. and some European countries saw a significant number of households and corporates having to deal with the situation and public debt in the U.S. and in China shot up, Mr. Turner said.
  • If India has a large concentration of bad debt then “you end up with a festering problem which the free market is not capable of solving.”
  • “The free market has a group of people both from the borrower and the lending side who have personal incentives to let the problem roll over for a month or a year. Indian banking system could be as bad or good as any other system which means it will create a real estate boom or bust. I don’t think India is uniquely good at avoiding that.”

‘Industrial class’

  • “In India, the problem has been lending for large industrial class. That is different from what we advanced economics face. It is incredibly important too.”
  • Mr. Turner said: “The global economy is moderately in a good position for the next two years. But a lot of fundamentals are not addressed. Debt overhang is fundamentally not addressed. Alongside that we are likely to see an increasing effect of information and communications technology on the automation of jobs.
  • “I think that is probably what lies behind the extraordinarily low level of wage inflation in developed economies…You don’t see any wage pressure. I think it has something to do with the capacity [building] towards maintaining information technology.”
  • “We have to think of universal basic income and what public sector has to do with health, education, infrastructure and cities which are liveable for people of all income levels,” he said.

China’s value-chain climb to help India, others: Fitch

  • China’s move up the value chain and the relocation of low-end manufacturing to lower-cost countries will continue to create opportunities and support strong economic growth in some of Asia’s “frontier” emerging markets including India, according to Fitch Ratings.
  • The countries best-placed to take advantage over the next few decades will be those offering workable business environments and relative macroeconomic and political stability to complement low wages, strong demographics and geographical advantages, it said in a report released on Tuesday.
  • The average Chinese manufacturing wage is now higher than in Asia’s other major emerging economies, including India, it said. Finding cheap labour in China is only likely to become harder, with urbanisation rates already high and the working-age population set to shrink by 0.4% a year on average over 2015-2035.
  • A significant drop in China’s low-end manufacturing over the coming decades would leave a large gap for lower-cost countries to exploit. China’s global share of exports of clothing, footwear and furniture is still almost 40%, up from 34% in 2010, and only peaked in 2014, according to UN Comtrade.
  • The decline now appears to be gathering momentum — China’s exports of these labour-intensive goods fell by 10% in U.S. dollar terms in 2016, Fitch said. Bangladesh and Vietnam already have strong footholds in these sectors — together they accounted for 8% of global clothing, footwear and furniture exports in 2015, up from 3% in 2010, it added.