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The First Forum

The First Forum – Edition 68

The First Forum is an initiative that focuses on covering the latest happenings in a brief format. This is in lieu of the importance of knowledge about current happenings in this fast-changing world.
In the Sixty Eighth – Edition of The First Forum we would be covering the following topics:
1. Politics
2. Science and Technology
3. Business
4. Economics
5. Finance

(By Gunika Vij, Ashika Deb and Shitij Goyal)

weekly analysis

The Weekly Analysis – Edition 31

There are two aspects to the news- knowing the headline and understanding the intricacies of it. We at The Connectere focus on both. While The First Forum edition gives a brief about the headlines, The Weekly Analysis Edition is meant to educate the reader on what do various news mean and what are their intricacies. This initiative is meant to educate the reader on how to understand the important news. In the Thirty First Edition we are covering the following news:

1.IRDAI Panel suggest reducing the entry-level capital requirement for micro-insurance companies?

2.The TRP Scam Case

3.RBI to conduct special OMO for state loans

4. Indian Start-up vs. Internet Global Giants

5.RBI’s targeted long-term liquidity measures to ease borrowing cost for NBFCs

IRDAI Panel suggest reducing the entry-level capital requirement for micro-insurance companies?

An Insurance Regulatory and Development Authority of India committee has suggested a reduction in an entry-level capital requirement for standalone micro-insurance companies to Rs 20 crore from the current Rs 100 crore with a view to accelerating expansion of this segment of the insurance market in the country. The committee set up by IRDAI to suggest steps to promote micro-insurance said that like other nations India too will need to attract multiple players if it wants to substantially increase insurance penetration.
It should be noted that for low-income families, calamities such as illnesses, accidents, death, or the loss of assets often have very grave financial consequences. Such events can push these families deeper into poverty as their meager resources get depleted. Many get drawn into debt traps as they borrow beyond their means, sell productive assets, take children out of school or put them to work, compromise on food, or leave sickness untreated.
A 2013 report, cited by the panel, noted that the Indian micro-insurance sector has only covered 9% of the overall population and 14.7% of the potential micro-insurance market size in the country. India, like other countries, will need to improve access for multiple players if it wants to substantially increase insurance penetration. After discussions with organizations that have been providing micro-insurance, national, and international experts, the committee has made several recommendations. One of them is that “entry-level capital requirement for standalone micro-insurance entities should be reduced to Rs 20 crore maximum from the current Rs 100 crore”. Also, the risk-based capital (RBC) approach should be adopted to enable the progressive growth of the micro-insurance business while maintaining the highest prudential standards. The report also suggested that IRDAI and/or the central government may establish a Microinsurance Development Fund to support and promote the growth of this business across the country.
IRDAI had constituted the committee in February 2020 consisting of members from NGOs, independent consultants, and other persons having experience of working in financial inclusion and regulatory fields, to study the concept of standalone micro-insurance companies. While we already know that there are majorly only some big insurance giants, it is equally important to understand that for insurance firms, a large amount of liquid funds is a necessary condition so there is a drastic level of ease and profit incentive required to invite more people to start investing in this. In the initial phase, firms will have to depend on the small customers as large firms take large plans which new entrants can’t easily afford to undertake.

The TRP Scam Case

The Mumbai police investigation into alleged rigging of TRPs (Television Rating Points) by some news channels including Republic TV, Box Cinema and India Today calls for an overhaul of the current audience measurement system. Besides cheating advertisers and securing a larger advertising pie, there are less obvious but equally serious consequences. Competitors are left dispirited and society is sent false signals on the kind and quality of content attracting viewership.
Let us see what is TRP and how do they work?
TRPs represent how many people, from which socio-economic categories, watched which channels for how much time during a particular period. So, TRP is a tool to judge which TV programmes are viewed the most, hence pointing to the popularity of a particular channel.
To calculate the TRPs, BARC (Broadcasting Foundation and the Advertising Agencies Association of India) an industry body comprising advertisers, ad agencies and broadcasting companies, carries out television ratings in India by installing ‘BAR-O-meters’ in over 45,000 households.  While watching a show, members of the household register their presence by pressing their viewer ID button thus capturing the duration for which the channel was watched.
How does the rigging take place?
If broadcasters can find the households where devices are installed, they can either bribe them to watch their channels, or ask cable operators or multi-system operators to ensure their channel is available as the “landing page” when the TV is switched on. For TRPs, it does not matter what the entire country is watching, but essentially what the 45,000-odd households supposed to represent TV viewership of the country have watched. What Effects can TRP rigging have? If one can claim that they are the most watched channel, advertisers automatically buy advertising time with them even at higher prices. The matter involves not only the Rs 27,000 crore of revenue that TV channels garner from advertisers and product sellers, it also affects the more critical phenomenon of agenda-based television controlling public tastes and views.
So, not only advertisers but the viewers are at the suffering end as well, as everything is being created and pushed on to the viewers, in the name of being the most watched and the number one channel in the country. To protect the community BARC must increase sample sizes for niche segments to prevent gaming by a few homes. It can be supplemented by DTH subscriber base, by using return path data technology in set top boxes with informed consent. Amid stiff competition through digital OTT platforms and social media, the TV industry must protect the interests of advertisers and consumers.

RBI to conduct special OMO for state loans

For the first time the Reserve Bank Of India(RBI) is conducting Open Market Operations(OMOs) of state loans as a special case during the current financial year. Recently, RBI governor Shaktikanta Das announced a slew of liquidity measures including the purchase of state development bonds through OMO for an aggregate sum of Rs.20,000 crore. This decision took after considering the current liquidity and market operations.
Let’s now have a look at how OMOs work.
Open Market Operations are conducted by the RBI in the form of sale and purchase of government securities (G-secs) to adjust liquidity in the market. If there is excess liquidity then RBI undertakes sales of G-secs and if there is a liquidity crunch, then RBI conducts purchase of G-secs. As now there is a liquidity crunch in the economy, the RBI will purchase the government securities. The objective behind this is to regulate the money supply in the economy. It is one of the quantitative tools that RBI uses to smoothen the liquidity conditions and minimises its impact on the interest rate and inflation rate levels. This policy tool is popularly known as ‘Operation Twist’ which was first used by the US Federal Reserve in 1961 when the US economy was recovering from recession post the Korean War.
RBI conducts OMOs of state loans to impart liquidity. While OMOs in central government securities are routine, this is the first time the RBI has announced OMOs for state government bonds. The central bank will maintain comfortable liquidity conditions and will conduct market operations in the form of outright and special open market operations. It has come at a time when the RBI is eager to ensure that financial conditions don’t tighten and derail early signs of a recovery in the COVID hit economy. The RBI’s support to state bonds also comes against the backdrop of an ongoing tussle over GST compensation between states and the centre.

Indian Start-up vs. Internet Global Giants

A few weeks earlier, Google removed Paytm from Google Play Store due to violations of its policies. Though it was reinstated later. But Paytm and several other Indian start-ups allege that Google is using its market dominance to arbitrarily enforce policies on the local players and target competitors. Hence, tech giants like Google have a near 100% dominance in the app marketplace in India while it has recently announced that it will start enforcing a 30% commission on all payments made for digital services in apps from its play store. Due to this reason, major Indian start-up founders come forward to lobby against global internet giants because this move comes against the backdrop of discontent among Indian start-ups against Google.
Due to this, the immediate decision for the meeting between Indian start-up founders had called in which more than 120 Indian start-ups joined hands to form indigenous App Developer Association. This association will be non-profit and independent from CII (Confederation of Indian Industry) and Internet and Mobile Association of India (IAMAI). This association will only be used to lobby the cause of app developers in India. To this, online payment company Paytm recently announced that it was building a “Mini App Store” which would empower and support Indian developers by reducing their reliance on tech giants like Google. And it also launched its Rs.10 crore Developer Fund, which will work as an incubator to support Indian app creators.
Moreover, the dominance of the tech giants must protect the uprising of Indian start-ups because India can’t afford too much reactive policymaking against the tech giants as it doesn’t signal well for attracting foreign investors. A strict policy environment encourages only local Indian innovation and tries to bar foreign competition which might not be the best possible approach from the consumer aspect. Hence the policy must both be able to attract foreign investment and also encourage Indian start-ups.

RBI’s targeted long-term liquidity measures to ease borrowing cost for NBFCs

The Reserve Bank’s decision to enhance liquidity into the system through long-term repo operations will ease the borrowing cost for NBFCs and relaxation in loan to value guideline will help revive the economy, the industry said on 9th October. The non-banking financial companies (NBFCs) said the decision to keep the key repo rate – at which the RBI lends short-term money to banks – unchanged was on expected lines and in consideration with keeping the inflation target while supporting growth. RBI Governor Shaktikanta Das, unveiling the bi-monthly monetary policy review, said the six-member Monetary Policy Committee (MPC) voted unanimously to retain repo at 4% while keeping its policy stance accommodative and suggested more measures going ahead to support the economy.
Under the targeted long-term repo operations (TLTROs) measures, the Reserve Bank of India will conduct on-tap TLTRO with tenors of up to three years for a total amount of up to Rs 1 lakh crore at a floating rate linked to the policy repo rate. The RBI Governor said the liquidity availed by banks under this facility has to be deployed in corporate bonds, commercial papers, and non-convertible debentures issued by entities in specific sectors over and above the outstanding level of their investments in such instruments as on September 30, 2020.
Besides, in order to give a fillip to the real estate sector, the RBI decided to rationalize the risk weights and link them to LTV (loan to value) ratios for all new housing loans sanctioned up to March 31, 2022, keeping in view the role of real estate sector in generating employment and economic activity. Rationalizing the risk weighting of all new home loans will see the risk of new loans to be linked only to the LTV ratio. Under the extant regulations, differential risk weights are applied to individual housing loans, based on the size of the loan as well as the loan-to-value ratio. The sectors like FMCG, agriculture, autos, and warehousing, among others, have been more resilient than others in Q2 and this augurs well for the transport industry that ensures last-mile connectivity.
The RBI’s policy measures will have a positive impact on those engaged in last-mile lending, as the rural and semi-urban economy is continuing to show strong recovery. The RBI also reviewed the co-origination model for banks and NBFCs by allowing all the non-banking financial companies, including the Housing Finance Companies (HFCs), for lending to the priority sector. The regulator said it will allow greater operational flexibility to the lending institutions. This co-lending model is expected to leverage the comparative advantages of banks and NBFCs in a collaborative effort and improve the flow of credit to the unserved and under-served sectors of the economy. After the much long COVID crisis, it can only be hoped that such measures could reduce the impact that is has had on the economy.







The First Forum

The First Forum – Edition 67

The First Forum is an initiative that focuses on covering the latest happenings in a brief format. This is in lieu of the importance of knowledge about current happenings in this fast-changing world.
In the Sixty Seventh – Edition of The First Forum we would be covering the following topics:
1. Politics
2. Science and Technology
3. Business
4. Economics
5. Finance

(By Gunika Vij, Ashika Deb and Shitij Goyal)

weekly analysis

The Weekly Analysis – Edition 30

There are two aspects to the news- knowing the headline and understanding the intricacies of it. We at The Connectere focus on both. While The First Forum edition gives a brief about the headlines, The Weekly Analysis Edition is meant to educate the reader on what do various news mean and what are their intricacies. This initiative is meant to educate the reader on how to understand the important news. In the Thirtieth Edition we are covering the following news:

  1. Kyrgyzstan’s Dance of Democracy
  2. Loan moratorium: Centre agrees to waive interest on interest on loans up to Rs 2 crore
  3. UP: Electricity Department Employees Protest Against Privatisation of Power Discom
  4. Why is a coordinated policy approach critical in the pandemic?
  5. Quad and the confusion about India’s alliances

Kyrgyzstan’s Dance of Democracy

Democracy has been made a game of all over the world it seems. Everyday there is one new nation, one new leader trying to rig the elections, trying to get absolute control and turning into a despot. The lust and avarice for power and control makes such leaders turn a blind towards the welfare of the most important stakeholders: the general public, the voting class. A similar incident took place in Kyrgyzstan.
Chaos broke in the nation when the public and members and groups of the opposition party took to the streets to express their grief over the rigging over the national elections. The opposition groups along with the protestors took control of the parliament and freed their members from the prison. Under pressure from the protestors the electoral board declared the elections invalid. Overnight, a small group of protesters broke away from the main body and tried to gain entry to the White House, the main government building that hosts the Parliament and the presidential administration. After police tried to disperse them, hundreds more joined in the assault and soon took control, according to photos and video footage from the scene. On Tuesday, the streets of Bishkek were littered with burned out cars and piles of stones. Inside the building, videos and photos showed broken glass and piles of debris, including government papers, with protesters wandering around the offices. In the city, residents began to form volunteer brigades to deter looters.
The end line is that this is not how democracies ought to function. The basic principle of a democracy is for the people, by the people and of the people. The public and not the leaders should be at the centre of the economy. the idea of a democracy fails the moment the leaders whether from the ruling party or the opposition start placing their own needs first. The contest of power should turn the nation into a madhouse, with one party stepping over the other. Similar instances can be seen in India too, where parties attempt and wait for the right moment to push their adversaries out of power.
If the ruling party goes out of control it is the opposition’s job to keep it in check, it is also the duty of the public to make a rational decision while choosing the representatives. But this does not however mean that the opposition oppose every decision taken by the government, it must support the right ones if it raises questions over the wrong ones.


Loan moratorium: Centre agrees to waive interest on interest on loans up to Rs 2 crore

The central government, in an affidavit filed in the Supreme Court, has supported waiving compound interest or ‘interest on interest’ for small ticket loans up to Rs 2 crore. The relief would be available to all borrowers, the government said in the affidavit but did not specify the manner in which relief would be provided to those who may not have availed the moratorium. The response came in the matter of Gajendra Sharma vs. Union of India being argued in the apex court. In its affidavit, the government said that it has decided to continue the tradition of “handholding” the small borrowers. “The government, therefore, has decided that the relief on waiver of compound interest during the six month moratorium period shall be limited to the most vulnerable category of borrowers.
This category of borrowers, in whose case, the compounding of interest will be waived, will be MSME loans and personal loans up to Rs 2 crore.”
The government, in its affidavit, does not make a distinction between borrowers who may have continued paying their dues and those who may have availed of the moratorium partially or fully. “The relief to all borrowers in respect of compounding of interest during the period of the moratorium would be admissible to the categories specified hereinafter irrespective of whether the borrower had availed of the moratorium or not,” it said. The government is proposing that interest on interest for loans in these categories be waived MSME loans up to Rs 2 crore, Education loans up to Rs 2 crore, Housing loans up to Rs 2 crore, Consumer durable loans up to Rs 2 crore, Credit card dues up to Rs 2 crore, Auto loans up to Rs 2 crore, Personal loans to professionals up to Rs 2 crore, Consumption loans up to Rs 2 crore.
In case the government wants to give the same relief to a borrower who has not availed the moratorium, a notional amount of compound interest for a six-month period can be reduced from the outstanding balance in the loan account.
Assuming not more than 30-40% of the overall loans of the banks and NBFCs will be eligible for relief, the cost to the government should not exceed Rs 5,000-7,000 crores. This is assuming all borrowers are given relief irrespective of they availing the moratorium or not, he said. The government, in its affidavit, specified that lenders would not be expected to bear this burden and the cost of the waiver would be borne by the government.
“It is submitted that it is impossible for banks to bear the burden resulting from waiver of compound interest without passing on the financial impact to the depositors or affecting their net worth adversely, which would not be in the larger national economic interest.”
The affidavit added that the only solution is for the government bear the burden resulting from waiver of compound interest. The government did not specify the exact cost it would incur on account of such a waiver. “Government will seek due authorisation from Parliament for making the appropriate grants in this regard,” the affidavit states.”
The government believes that help to small retail and SME borrowers is essential as they are a strong pillar of the economy. So while concerns around the eventual impact on customer behaviour are valid, the government would see this is as essential support to small borrowers,” said Pratip Chaudhuri, former chairman of State Bank of India. “The government also has to support banks in this situation because compounded interest is a part of their business. A bank can only pay compounded interest on deposits, if it receives compounded interest on loans. This is a balanced decision to help both segments.
The waiver of compound interest would provide relief to borrowers who were facing financial difficulties due to the Covid-19 pandemic, and at the same time protect banks’ balance sheet from any impact due to such small borrowers.

UP: Electricity Department Employees Protest Against Privatisation of Power Discom

The Electricity Department employees in Uttar Pradesh continued their protest against the proposed privatisation of the Varanasi electricity discom – Purvanchal Vidyut Vitran Nigam Limited (PVVNL) on Tuesday, October 6. In response to the call given by the UP Vidyut Karmachari Sanyukt Sangharsh Samiti (VKSSS), the employees including power engineers, sub-divisional officers, executive engineers and superintendent engineers began their work boycott.
The talks between the UP Power Corporation Ltd (UPPCL) management and the VKSSS leaders failed after the management rejected the proposal to introduce reforms without privatising the energy sector, as per reports. The chairman of UPPCL refused to sign the agreement that had been reached between Power Minister Shrikant Sharma and the VKSS. Following this, the employees said their boycott of work will continue.
“After the UPPCL management turned down our reform proposal, we have asked all the power personnel to begin the full day work boycott as per the pre-declared plan,” All-India Power Engineers Federation (AIPEF) chairman and Sangharsh Samiti leader, Shailendra Dubey told media.
He further claim that the 15 lakh power employees across the nation will also boycott work in solidarity with the protesting workers. He has issued an appeal to the Chief Minister for his discussion in the matter as he accused the management of misleading the government. They also said that the essential services like hospitals have been exempted from the work boycott of the staff.
The state government reportedly has issued warning against the protesters, saying that they will face strict action if they continue with their boycott disrupting power supply.
As per the ground report, Atul Kumar, an executive engineer who is protesting against privatisation in state capital, Lucknow, said, “All electricity transmission and supply employees including senior officials are opposing the move for privatisation as the power sector has worked as a social redress field. Once privatised, the farmers and the poor will be most affected along with employees’ own welfare and services. Therefore, there has been an ongoing statewide protest of Vidyut Karmachari under VKSS.”
But on the contrary, the BJP-led government has already initiated privatisation bids for Purvanchal Vidyut Vitran Nigam Ltd that caters to divisions of Varanasi, Azamgarh, Ghazipur, Chandauli, Jaunpur, Sant Rabidas Nagar (Bhadohi), Mirzapur, Sonbhadra, Mau, Ballia, Deoria, Kushi Nagar, Gorakhpur etc.
The protest leaders also are ready to go on a state-wide strike if their employees are arrested for protesting.


Why is a coordinated policy approach critical in the pandemic?

From the global perspective, the central bank cares more for price stability and the government for growth therefore giving the central bank independence will deliver price stability, thus allowing the government to focus sustainable growth which has led to India’s rules-based macroeconomic framework. However certain features of the Indian economy make monetary-fiscal coordination necessary for which rules need to be interpreted flexibly. Since India’s economic structure is more demand oriented, monetary policy affects demand more, while fiscal policy affects supply-side costs and, therefore, inflation. It turns out that each is more effective in achieving the other’s objective so total independence leads to a situation of non-cooperative strategic interaction.
The monetary authority keeps interest rates high since it believes the fiscal authority wouldn’t give priority to reducing inflation but then growth and revenues fall and the costs of servicing debt rise so the fiscal authority cuts back on activities that could reduce inflation.
But there are some ways around this to change incentives, making rules more flexible. For instance, if there’s delegation to a more pro-growth monetary authority, the changed preferences reduce pay-offs making coordination the outcome. Since the monetary authority knows that the fiscal authority will act on the supply side, it can lower interest rates. However, from the Indian point of view, a simple rule won’t be effective. Especially in times of covid, the output shocks have changed preferences of central bankers worldwide to give more importance to growth. This change enforces coordination.
In India, the government’s strategy of channelling aid through the financial sector doesn’t impact the fiscal deficit and market borrowing. Caution in expanding deficits allowed the RBI to take multiple measures. Government credit warranties reduced risk aversion and coordination reversed an excessive tightening of financial conditions. Thus financial stability was improved.
In our present situation it’s difficult to induce private spending so monetary policy is considered ineffective and private investment and consumption has been depressed due to various reasons during this period, so there are calls for more government spending. But the lockdown has created serious supply chain so a fiscal demand stimulus would have been less effective. The Fiscal Responsibility and Budget Management Act allows for monetary financing under a growth collapse. The government has space and can create more by asset and expenditure restructuring. Keeping medical aid, preventing hunger and protecting livelihoods as priorities, a moderate expansion in fiscal expenditure coinciding with the festive season and recovering supply chains could build private sector confidence and trigger spending.
Surplus liquidity aids government borrowing and also reduces financial sector tensions. This coordinated equilibrium strategy can work in the pandemic because there are no dangers of high inflation and financial instability for a temporary output spike.

Quad and the confusion about India’s alliances

On 6th October, the external affairs minister said that New Delhi remains committed to “rules-based world order, respect for territorial integrity and sovereignty and peaceful resolution of disputes”.
There is still doubt regarding the Quad’s future in India’s international relations, sustaining which is the proposition that India is abandoning its “sacred” tradition of non-alignment in favor of a military alliance with the US in order to counter the Chinese threat. This comes at a time when India is set to begin a two-year stint as a non-permanent member of the UN Security Council next year. It must be noted that all four members of the Quad, India, Japan, Australia, and the US, have serious differences with China.
India’s objective remains to advance the security and economic interests of all countries having legitimate and vital interests in the region which makes the Quad a critical element not only for India’s foreign and security policy but also important in the evolution of post-War Asian economic and security architectures.
With regard to joining alliances, although the external affairs minister has affirmed that India will not join any alliance, there’s still confusion about India’s impending alliance.
Although alliances have a negative connotation in our foreign policy discourse, they are very much part of statecraft and as old as war and peace. Even the Mahabharata, the Panchatantra, and the Arthashastra depict alliances as strategic forces. Indian domestic politics is always about making and unmaking alliances but if it’s international politics then it’s considered taboo. Why? As the Western powers that joined Soviet Russia to defeat fascist Germany turned against Moscow after World War II, a newly-independent India did not want to be tied down by alliances, so there lies a part of the problem – we cannot delete that picture from our heads.
The next question we need to ask is that does India forge alliances? India has experimented with alliances of different kinds. For instance, during World War I, some nationalists aligned with Imperial Germany to set up the first Indian government-in-exile in Kabul, then when the three Himalayan Kingdoms — Bhutan, Nepal, and Sikkim — turned to Delhi for protection amidst Maoist China’s advance into Tibet during 1949-50, Nehru signed security treaties with them and Nehru, who actively opposed US alliances in Asia, turned to the US for military support to cope with the Chinese aggression in 1962 and obviously if one goes down the rabbit hole online they can find many more examples. So it is safe to say that India does do alliances depending on the “when under what conditions and on what terms”.
On one hand, the US Deputy Secretary of State recently mused about the Quad turning into some kind of an alliance in the future but that does not set it in stone. In fact, the current political scenario in the US is hostile to alliance-making. Behind all this talk, neither is the US offering an alliance nor is India asking for one but both countries are interested in building issue-based coalitions in pursuit of shared interests. But we know well that Agreements for security cooperation are made in a specific context and against a particular threat and when those circumstances change, treaties lose their meaning.
No country is more instrumental in alliances as China. Having gained immensely from the partnership with the US over the last four decades, China is trying to push America out of Asia and establish its own regional primacy. Unlike China, India can’t brutally negotiate about its external partnerships but could certainly learn from the former in not letting the theological debates about alliances cloud its judgments. An India that puts its interests above the doctrine will find coalitions like the Quad critical for its international prospects.




The First Forum

The First Forum – Edition 66

The First Forum is an initiative that focuses on covering the latest happenings in a brief format. This is in lieu of the importance of knowledge about current happenings in this fast-changing world.
In the Sixty Sixth Edition of The First Forum we would be covering the following topics:
1. Politics
2. Science and Technology
3. Business
4. Economics
5. Finance

(By Divyansh Gupta, Ayush Harlalka, Creamy Garg)

weekly analysis

The Weekly Analysis – Edition 29

There are two aspects to the news- knowing the headline and understanding the intricacies of it. We at The Connectere focus on both. While The First Forum edition gives a brief about the headlines, The Weekly Analysis Edition is meant to educate the reader on what do various news mean and what are their intricacies. This initiative is meant to educate the reader on how to understand the important news. In the Twenty-ninth Edition we are covering the following news:

  1. Indian economy to contract by 12.6% in Q2, need 1991 like reforms: NCAER
  2. PM takes swipe at China, questions UN role in pandemic
  3. Analysing the Biden v. Trump debate
  4. Political change in Kuwait following emir’s death
  5. Azerbaijan-Armenia conflict


Disposition Effect

Indian economy to contract by 12.6% in Q2, need 1991 like reforms: NCAER


The National Economic Research Council (NCAER) has indicated that the Indian economy will be contracted 12.6% for the current financial year, a sharp decline from the 1.2% growth rate estimated in June.
Economic growth will continue to deteriorate for the rest of the financial year, said the Quarterly Review of the Economy reports for the July and September quarters, released on Friday. The second quarter will see a contraction of nearly 12.7%, followed by a decrease of 8.6% in the third and a 6.2% decline in the fourth quarter, the report said.
Highlighting the uncertainty of long-term vision, it said, “The key question is how the economy will function afterwards. Indications for V-made recovery, etc., obfuscate more than what they reveal. ”
India’s GDP is unlikely until the end of 2022-23 to reach the high exit levels seen in the last financial year, it says, noting that this was below the “expectation” of 7% growth in FY22. “The most likely scenario is that after returning to the highest level of exports by 2022-23 the economy will return to pre-epidemic growth of 5.8%,” the NCAER said.
The report showed inflation for the second quarter by 6.6% and a slight decrease of 6.5% in the financial year, both across the Reserve Bank of India band of 2-6%. Combined with extreme economic downturns, this has made the traditional approach to monetary and fiscal policy inadequate to address the problem, it said.
On the financial side, it estimates a combined deficit of 13% of gross domestic product, as well as a total public sector loan demand of 14-15% of GDP. This will put pressure on the RBI, which must empower markets to embrace this huge demand for borrowing while avoiding rising bond yields. “It seems inevitable that at least half of these loans will have to be repaid in order to avoid overcrowding and overcrowding in the financial markets,” the report said.
This calls for a series of reforms that “wished to surpass the 1991 revolution”, the tank said. The government should focus on maintaining financial stability through strong monitoring of banks and financial institutions, it said.
It has called for the realization of non-performing assets through the creation of a bad bank, incomplete investments and management changes in public sector banks and incentives that work better to make loans for small, medium and micro-enterprises.

Galwan Valley

PM takes swipe at China, questions UN role in pandemic

At a time when relations with China have weakened as a result of the Ladakh crisis, Prime Minister Narendra Modi took a decision on Saturday on Beijing debt negotiations, saying India was strengthening its development cooperation without “mala fide intention” to make the partner country “dependent or hapless”.
He also questioned the UN’s role in the epidemic as he pushed for change in the organization and stressed India’s commitment to play a greater role in managing the global crisis.
Speaking in about China-Pakistan relations, the Prime Minister told the United Nations General Assembly that any act of Indian friendship in one country should not be directed at any third country.
This is a strange, strong public suspicion made by the Prime Minister over China’s outstanding debt debts with President Xi Jinping’s Belt and Road Initiative, especially in the Indian subcontinent.
In a carefully crafted 22-minute speech at UNGA, the Prime Minister, stated: “Any gesture of friendship by India towards one country is not directed against any third country. When India strengthens its development partnership, it is not with any mala fide intent of making the partner country dependent or hapless.”
He said India “always thought of the interests of all human beings and not of its own interests”. This philosophy, he said, has always been a driving force in India’s policies.
“From India’s Neighborhood First policy to our Act East Policy, and the concept of Security and Growth for All in the Region, or our ideas for the Indo-Pacific region, we have been working for the common good, and not for our own interests. India’s co-operation is always guided by this policy, ”he said.
While the world is watching China’s strong rise in the newly expanded world, Modi said, “While we are strong, we have never threatened the world, while we are weak, we have never been a burden to the world.”
As India was due to take up a permanent position in the United Nations Security Council from January 2021 for a period of two years, the Prime Minister confirmed, “India will always speak out in support of peace, security and prosperity.”
He reiterated New Delhi’s commitment to the fight against terrorism but placed it in a broader context. “India will not hesitate to raise its voice against the enemy of humanity, the human race and human values ​​- this includes terrorism, smuggling of illegal weapons, drugs and money laundering.”
He also mentioned the Covid-19 epidemic to make the point that changes to the UN are urgently needed.
He reaffirmed India’s commitment, determination and ability to share responsibility at the international level at a time like this.
“We have never hesitated to discuss our developmental experiences. Even in these critical times of the epidemic, the pharmaceutical industry in India has exported essential medicines to more than 150 countries, ”he said.
“As the world’s largest vaccine producer, I want to give further assurance to the international community today. Vaccine production and delivery of the drug will be used to help everyone in the fight against this scourge. In India and in the surrounding area, we are moving forward with the phase 3 clinical trial in India. India will also assist all countries in increasing their capacity to freeze and maintain the supply of vaccines, ”he said.
Seeking change at the UN, he said, “One could say that we have successfully avoided the Third World War. But we cannot deny that there have been many wars and many civil wars. Several terrorist attacks have rocked the earth, and rivers of blood have continued to flow. ”
“Today, the people of India are worried about whether this revolution will reach a logical conclusion. How long will India be kept outside the United Nations decision-making bodies? ”He asked.

Analysing the Biden v. Trump debate

As the world waits with bated breath for November’s US Presidential elections, this Tuesday gave us a slight glimpse into what the competition could turn into. President Donald Trump decided to bring his chaotic and confrontational style directly to the debate stage at his first face-off with Democrat Joe Biden, which can be considered one of the low points in U.S. presidential debate history. On the other hand, Democratic candidate Joe Biden was alert, cogent and largely efficient against his challenging opponent.
US President Donald Trump repeatedly interrupted Joe Biden but Biden made a point of keeping his focus on the voters. Trump, by contrast, kept things focused squarely on himself. Biden did manage to land a few blows on his opponent, calling Trump a “clown,” “the worst president in US history,” and “Putin’s puppy”, something that he is not accustomed to.
Trump had a decent argument to make about Biden having spent 47 years in politics without leaving a distinct mark, but to pull this off, Trump needed a clear grasp of the Biden record in office and apparently that was some research work he wasn’t willing to do. Instead, Trump’s performance was all about filling the gaps in his knowledge with insults, taunts, and empty promises. He even declined to explicitly disavow White supremacists, which was probably his biggest miscue of the night given the present scenario in all of America. Biden offered some of his best answers of the night on issues like voting rights and the president’s tax returns and an emotional tribute to his son, Beau.
Investors who are already concerned that the election might not be easily settled and that lawmakers in Washington will remain too divided to pass another stimulus deal will now need to interpret a historically chaotic night. Assets ranging from currencies and gold to stocks and interest rates were already reflecting an unusual potential for sharp moves around and after Election Day.
Polls have shown that the president can’t win re-election with his base alone, that is, he needs to win the favour of college-educated, suburban, and female voters who are already dismayed by the controversies of his first term and this debate didn’t help any of it. For viewers at home, there’s only one word for the unnerving display – chaotic.

Political change in Kuwait following emir’s death

Kuwait’s Emir Sheikh Sabah al-Ahmad al-Sabah passed away at 91, plunging his country into mourning for a leader regarded by many Gulf Arabs as a savvy diplomatic operator and a humanitarian champion.  He had ruled the wealthy oil producer since 2006, and steered its foreign policy for more than 50 years. Even Prime Minister Narendra Modi termed him a “beloved leader” of the Arab world, a “close friend” of India and a “great statesman” of the world.
He had endeavoured to balance relations with Kuwait’s bigger neighbours, forging close ties with Saudi Arabia, rebuilding links with former occupier Iraq, keeping an open dialogue with Iran and kept strong ties with the United States.
Under Kuwait’s constitution, the crown prince, his half-brother, Prince Sheikh Nawaf al-Ahmad al-Sabah will automatically become the emir. His succession is not expected to affect oil policy or foreign investment strategy through the Kuwait Investment Authority, one of the world’s biggest sovereign wealth funds. However, this political change comes at a time when the country faces a financial crisis worsened by internal political bickering. He had been serving as acting head of state since July.
Presently, Kuwait is facing the highest budget deficit in its history, brought on by the drop in oil prices and the coronavirus pandemic. A potential solution to its brewing liquidity crisis has been blocked by parliamentary opposition to a law that would allow the government to borrow, as other Gulf nations have done in response to the dual crisis.
A major possibility under this new leadership is a domestic political landscape change, particularly if Sheikh Nawaf makes a bid for national reconciliation. This could help restore some balance among the different branches of the ruling family.
Although Kuwait is the only country in the Gulf where nationals get to voice their opinions on how they’re governed, the political paralysis means it’s been left behind by less democratic neighbours like the UAE. Since political parties are banned there’s no coherent opposition. He recently received proposals for political and economic reforms from two opposition politicians. The opposition has boycotted parliamentary polls since December 2012 which followed one of the biggest opposition rallies in the nation’s history as the government was called to share more power with the elected leaders.

Azerbaijan-Armenia conflict

The cold war ended in 1991 with the fall of the Berlin Wall and the dissolution of the Soviet Union. However, remnants of the Cold War still remain and resurface now and again, the most recent one being the Armenia-Azerbaijan conflict, both former Soviet states that clashed over Nagorno-Karabakh internationally recognized as a part of Azerbaijan. The conflict over the American controlled enclave has been going on for three decades now.
The recent conflict started with Armenia claiming that Azerbaijan opened air and artillery attacks on Nagorno-Karabakh, whereas Azerbaijan claimed it is a counteroffensive in response to military actions. The number of civilians that have been killed is on the rise, with both sides reporting casualties. The important point, however, is that the conflict has the potential to attract NATO allies such as Turkey and Russia which might upscale the conflict. Turkey has long been a staunch supporter of Azerbaijan: Ankara and Baku share close cultural ties, given their shared Turkic heritage. Meanwhile, Turkey and Armenia have a long history of tensions, exacerbated by Ankara’s refusal to recognize the 1915 Armenian genocide as well as the Nagorno-Karabakh conflict. The latter prompted Turkey to seal its border with Armenia in 1993, which has remained shut ever since. The two countries do not have diplomatic relations. Russia plays a more ambiguous role in the region, maintaining close economic ties with Armenia and Azerbaijan and supplying weapons to both. Its relationship with Yerevan is deeper, however — Armenia hosts a Russian military base and is part of the Moscow-led Eurasian Economic Union.
Then there’s the region’s role in the global energy trade: The pipelines connecting Azerbaijan with Turkey are crucial for the European Union’s oil and natural gas supply — and pass close to Nagorno-Karabakh.
Let us go back to what started the conflict? Even though Armenia is majority Christian and Azerbaijan is majority Muslim, this conflict is not based on religion, rather we can give credits for this one to former Soviet leader Joseph Stalin. He placed the majority Armenian region of Nagorno-Karabakh into Azerbaijan. Post the disintegration of the Soviet Union, Nagorno-Karabakh became the bone of contention between Armenia and Azerbaijan, with the ethnic Armenians declaring independence in 1991 leading to a war between the two nations. These days, the United Nations still recognizes Nagorno-Karabakh as part of Azerbaijan’s territory; no country considers the enclave an independent country — not even Armenia, which also hasn’t formally annexed it but supports the region financially and militarily. Since then, the two countries have hunkered down on either side of a line of control marked by landmines and snipers.
It’s too early to say how long the fighting will continue or whether it could escalate into a full-blown war. Both the 2016 clashes and the skirmishes in July lasted only a few days. The picture would change significantly if a major power were to enter the conflict — yet even Turkey has so far limited its involvement to rhetoric. Armenia has claimed Ankara has redeployed fighters from northern Syria to Azerbaijan, but Baku issued a swift denial.






The First Forum

The First Forum – Edition 65

The First Forum is an initiative that focuses on covering the latest happenings in a brief format. This is in lieu of the importance of knowledge about current happenings in this fast-changing world.
In the Sixty Fifth Edition of The First Forum we would be covering the following topics:
1. Politics
2. Science and Technology
3. Business
4. Economics
5. Finance

(By Divyansh Gupta, Ayush Harlalka, Creamy Garg)

weekly analysis

The Weekly Analysis – Edition 28

There are two aspects to the news- knowing the headline and understanding the intricacies of it. We at The Connectere focus on both. While The First Forum edition gives a brief about the headlines, The Weekly Analysis Edition is meant to educate the reader on what do various news mean and what are their intricacies. This initiative is meant to educate the reader on how to understand the important news. In the Twenty-Eighth Edition we are covering the following news:

  1. China attacked Indian satellite communications: US Report
  2. Saudi Arabia suspends flights to and from India
  3. SBI’s retail loan recast scheme
  4. Why is this year’s US presidential election so significant?
  5. Labour Law Reforms

Galwan Valley

China attacked Indian satellite communications: US Report

“Computer network attack against Indian satellite communications in 2017” is one among a few of counter-space activities carried out by China since 2007, listed in a new report by US-based China Aerospace Studies Institute(CASI), which provides China’s space narrative among other things.
Isro, whil conceding that cyber-attacks are a constant threat, maintains that its systems has not been compromised so far.
The 142-page report notes that between 2012 and 2018, China carried out multiple cyber-attacks, but elaborates on the result on the result only in one case.
In 2012, a Chinese network based computer attack on the Jet Propulsion Laboratory(JPL), report points out, “allowed’full functional control’ over JPL networks.” The report quotes multiple sources while listing out some of these attacks.
India, as part of its counter-space capabilities, demonstrated Anti-Satellite(A-Sat) missile technology on March 27,2019, which equipped India with a ‘kinetic kill’ option to destroy enemy satellites. But the CASI report points to how China has multiple other counter-space technologies that are intended to threaten adversary space systems from ground to geosynchronous orbit(GEO). These include direct-ascent kinetic-kill vehicles(anti-satellite missiles), co-orbital satellites, directed energy weapons, jammers and cyber capabilities.
CASI, a think tank, supports the secretary, chief of staff of the US Air Force, the US chief of space operations, and other senior air and space leaders. It provides expert research and analysis supporting decisions and policymakers in the US Department of Defense and across the US government.
CASI supplements findings of a recent US Pentagon report which had said that the PLA continues to acquire and develop technologies that China could use to “blind and deafen the enemy”.
“China has investments in developing ground, air and space-based radio frequency jammers that target uplinks, downlinks, and crosslinks involved in either control of space systems or data transmission,” the report reads.
ISRO, multiple insiders said, hasn’t been able to pinpoint sources of cyber-attacks over the years. “Cyber threats are a given but it cannot be ascertained who are behind such attacks. We’ve systems in place to alert us and I don’t think we’ve ever been compromised,” a senior scientist said.



Saudi Arabia suspends flights to and from India


The General Authority of Civil Aviation (GACA) of the Kingdom of Saudi Arabia has suspended all flights to and from India in wake of the increasing number of Covid-19 cases here. Besides India, air travel to and from Brazil and Argentina has also been suspended by Saudi Arabia.

In an official statement, GACA said: “Saudi Arabia has suspended travel to and from India, Brazil, and Argentina; including any person who has been there 14 days prior to their proposed arrival in Saudi.” However, passengers who have official government invitations have been excluded from this suspension. Saudi Arabia and the UAE host a significant Indian migrant population. Five days back, Air India Express had said the Dubai Civil Aviation Authority (DCAA) suspended its flights for 24 hours for bringing two passengers with Covid-positive certificates on August 28 and September 4. According to rules of the UAE government, every passenger travelling from India is required to bring an original Covid-negative certificate of an RT-PCR test done within 96 hours prior to the journey.

Hong Kong also banned Air India flights from Sunday till October 3 after a few passengers on its flight tested positive for Covid-19 post arrival, a senior government official said.

The number of Covid-19 cases in India reached 56,46,010, and the death toll climbed to 90,020 with 1,085 people succumbing to the disease in the past 24 hours, the health ministry’s data updated at 8 am on Wednesday showed.
Special Purpose Vehicle

SBI’s retail loan recast scheme

SBI led banks are offering a 2 years’ moratorium to retail investors who have taken home, education, auto or personal loans under the loan restructuring policy approved by the Reserve Bank of India with usual applicable interest and an additional interest of 0.35% per annum for this period to offset the partial cost of additional provisions required to be made by the bank.

Although SBI was the first to take this step, other public sector banks are gearing up to offer similar products in the coming days.

Under this scheme, the relaxations include moratorium of up to a maximum of 24 months, rescheduling of instalments, and extension of tenure by a period equivalent to the moratorium granted subject to a maximum of 2 years. During this period, borrowers don’t have to pay EMIs on the loan but if the borrowers have surplus cash during the moratorium, they can pay EMIs. This will help in reducing the interest amount. The tenure of the loan will be extended by the period of the moratorium and the EMI payable after the moratorium will be recalculated and advised to the customers.

However, there are strict conditions for considering a retail borrower as affected by the Covid-19 pandemic which includes the borrower’s salary getting reduced in August as compared to February of 2020, or reduction in pension, or loss of job and closure of the business.

The maximum age up to which the tenor of the loan can be extended is product specific but in any case, the maximum extension can be granted only up to 24 months under this framework.

The retail loan restructuring is on liberal terms when compared to the corporate loan recast plan recommended by the KV Kamath Committee. The RBI has broadly accepted the Committee’s recommendation to take into account five specific financial ratios and sector-specific thresholds for each ratio in respect of 26 sectors while finalising the resolution plans but the process is complicated.

Why is this year’s US presidential election so significant?

With the upcoming US presidential election in November, a global audience is practically hanging at the edge of its seat as it awaits the outcome because of its existential importance. The echoes of ‘Black Lives Matter’ and protests have been felt across every continent.

US being a major super power in the world, its elections are always of importance to the rest of the world but to understand why this November’s one is of such international significance let’s go back to 2016, when President Donald Trump’s election heralded a populist revolution. This election’s outcome will indicate whether that populist revolution, global in its scope even if it’s anti-globalist in its intent, has run its course or not. Even before Trump’s election there were problems with the liberal consensus. For instance, market driven societies were slowly evolving into oligarchies, where rich corporations simply bought up their competitors and barely paid any taxes; and the capitalist system failed to prevent the 2008 global financial crash.
Those problems burst out in the open with the re-emergence of pre-World War II style nationalism and many seeking to emulate the Chinese hyper-nationalist model.
Populist nationalism model knows very well what it’s against and is capable of coming up with compelling diagnoses of what ails the liberal order but its solutions are simplistic like banning immigrants, not importing goods from other countries or treating independent institutions and media as enemies of the people. These cures are not workable solutions; in fact, they give rise to more problems. For example, in response to the problem of illegal immigrants in India the solution was to institute an NRC that will compel every Indian citizen to prove citizenship all over again to the satisfaction of some petty bureaucrat. The advent of social media has amplified the chaos which often blurs the distinction between news, hate speech and conspiracy theories.
Today, social media often reinforces confirmation bias, seeking out only that information which reinforced already existing beliefs. Joe Biden, in his, nomination acceptance speech, had said that this election stands apart from the rest because “science and democracy are themselves on the ballot”. There is an open letter by 81 Nobel laureates in science endorsing Biden for president, citing his “willingness to listen to experts” and his appreciation for “the value of science in formulating public policy”.
As far as India is concerned, a Biden victory will work far better. Trump heading the US would strengthen the hands of the Chinese Communist Party, regardless of what Trump’s accusations against China because the powerful nations always trample the weaker ones and in the long run, China might even overpower US as it is China has already shown that it handled the COVID-19 crisis much better than Trump-led US.  There is also the issue of Trump’s questionable response to racial discrimination in the country and him trying to deny proper healthcare to the LGBTQ+ community and ignoring the climate change crisis. Trump’s re-election could not only worsen America’s internal crisis but also delay action on the climate change crisis for the next four years thereby endangering the planet.

Winner's Curse

Labour Law Reforms

What are the two most important things you need to run a business? Capital and labour. Any sort of business requires these two elements possibly in varying quantities and/or degrees. Hence, labour and capital become to central to any economy. The Rajya Sabha, the upper house of the Parliament, recently approved 3 labour codes subsuming 25 labour laws, putting in force a major reform that had been on the table for 17 years now.
What are the trivial details of these labour codes and how do they really help, is what we try to find out in this piece. The three codes on — social security, industrial relations and occupational safety – already cleared by the Lok Sabha, will now offer industries flexibility in doing business, hiring and firing, make industrial strikes difficult while promoting fixed term employment, reducing influence of trade unions and expanding social security net for informal sector workers. Along with the Wage Code, passed in August 2019, the National Democratic Alliance (NDA) government has now merged 29 central laws into four codes reducing compliance hassles, and streamlining laws – which have been the demands of industries for decades. After the assent of the President, India will have four labour codes henceforth.
Some of the existing laws date back to pre-independence. Some of central laws which have merged with these codes are the Factories Act, the Industrial Disputes Act, the Trade Union Act, the Mines Act, the EPF Act, the Employees State Insurance Corporation Act, and Maternity Benefit Act, among others.
In the Industrial Relations Code Bill, 2020, the government has proposed to introduce more conditions restricting the rights of workers to strike, alongside an increase in the threshold relating to layoffs and retrenchment in industrial establishments having 300 workers from 100 workers or more at present — steps that are likely to provide more flexibility to employers for hiring and firing workers without government permission. The Industrial Relations Code has raised the threshold for requirement of a standing order — rules of conduct for workmen employed in industrial establishments — to over 300 workers. This implies industrial establishments with up to 300 workers will not be required to furnish a standing order, a move which experts say would enable companies to introduce arbitrary service conditions for workers.
Now that we get a gist of what the reforms really mean and do, let us have a closer look at some of the apprehensions that have arisen in the minds of experts and whether it is a good thing or a bad. Analysts say the increase in the threshold for standing orders will water down the labour rights for workers in small establishments having less than 300 workers.
The Industrial Relations Code also introduces new conditions for carrying out a legal strike. The time period for arbitration proceedings has been included in the conditions for workers before going on a legal strike as against only the time for conciliation at present. For instance, the IR Code proposes that no person employed in any industrial establishment shall go on strike without a 60-day notice and during the pendency of proceedings before a Tribunal or a National Industrial Tribunal and sixty days after the conclusion of such proceedings. Thus, elongating the legally permissible time frame before the workers can go on a legal strike, making a legal strike well-nigh impossible. The IR code has expanded to cover all industrial establishments for the required notice period and other conditions for a legal strike. The Standing Committee on Labour had recommended against the expansion of the required notice period for strike beyond the public utility services like water, electricity, natural gas, telephone and other essential services. At present, a person employed in a public utility service cannot go on strike unless he gives notice for a strike within six weeks before going on strike or within fourteen days of giving such notice, which the IR Code now proposes to apply for all the industrial establishments.




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