The First Forum – Edition 63

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 Third 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)

Politics

Kesavananda Bharati, Seer who stood for protecting Constitution, dies
Kesavananda Bharati Sripadagalvaru, the Kerala seer who stood for protecting the Constitution, has passed away. Bharati, whose property rights case in the Supreme Court in 1973 helped define basic rights under the Constitution, breathed his last at his ashram in Edaneer in Kasargod district of north Kerala this morning. He was 79. He is remembered as a man of great respect as he had filed a case challenging the Constitution (29th Amendment Act, 1972, questioning the Kerala government’s move to take over the mutt property. The timing of his move was significant as it came around the time when the Indira Gandhi-led government had made changes to the 24th, 25th, 26th and 29th amendments of the Constitution to get the court to rule in favour of the government in bank nationalisation and privy purses cases.Read More The case of Kesavananda Bharati vs State of Kerala continues to hold the top spot for the longest hearing ever to have taken place in the apex court. In 2018, Bharati was conferred the Justice VR Krishna Iyer award by the then Governor and Former CJI P Sathasivami. The then chief justice of India Sarv Mitra Sikri had formed a 13-judge panel,largest ever till date, to preside over the case. The Constitution bench ruled that Parliament canot alter the basic structure of the Constitution.

Donald Trump, US president gets nominated twice for Nobel Peace Prize 2021
United States President Donald Trump has been nominated for Nobel Peace Prize 2021 for his role in brokering a deal between Israel and United Arab Emirates, according to reports. The nomination was submitted by Christian Tybring-Gjedde, a Norwegian parliamentarian to the NATO Parliamentary Assembly. He has nominated Trump for his contribution for peace between Israel and the UAE. Earlier, Tybring-Gjedde nominated Trump for the award for his diplomatic efforts with North Korea. Read MoreThe second nomination occurred only days after he was nominated for the first time. US President Donald Trump received a second nomination for the 2021 Nobel Peace Prize for helping secure a deal to normalize economic relations between Serbia and Kosovo. Magnus Jacobsson, a member of the Swedish Parliament, submitted the nominations. Last year Trump said he deserved to be awarded the Peace Prize for his work on North Korea and Syria, but he complained he probably would never get the honour.

UK to quit Brexit if no deal by Oct 15
With the 11- month transition period after Brexit ending December 31, Britain will enter into an economic break with EU and the Prime Minister Boris Johnson has made some tough remarks which could end up bringing various trade restrictions on Britain. The PM says that Britain can opt for no-deal Brexit if the negotiators of EU do not adhere to their demands. Read MoreEU considers that negotiations are necessary to ensure a level- playing field for competition when it comes to the environment and workplace standards. Britain accuses that EU is forcing it to do things even when it has technically left it and thus, considers the option of no-deal Brexit and is confident of its prosperity in that case.

India and Japan enter into 10-year military pact to counter China
Amid the brewing tensions in the Indo-Pacific region and South China Sea due to the Chinese aggression, India and Japan has entered into a 10-year military pact that will facilitate the movement of essential supplies and services between the forces of respective countries. Read MoreThe framework for given deal was first proposed in 2018 and it has been inked by the Indian PM Narendra Modi and his Japanese counterpart Shinzo Abe who is set to leave his office next week due to health concerns. The agreement is viewed to enhance the depth of defence cooperation and contribute to peace and security in the Indo- Pacific region. The deal can also act as an important factor in boosting the case of Quad which is an informal alliance amongst India, Japan, Australia and USA aiming for freedom of navigation.

Trump ends federal Anti-Racism training
US President Donald Trump has directed the Office of Management and Budget to end federal agency training programs meant for supporting diversity and combating racism calling it “divisive, anti-American propaganda”. This came after the president learnt that millions of dollars were being spent by federal agencies in training employees. Read MoreHe called the training on “Critical Race Theory” a sickness that cannot be allowed to continue. The training aims at handling and ending the school of thought that race is a social construct for the benefits of white and that systemic racism exists in US institutions. “White Privilege” is a concept that says, whites benefit from this systemic racism in the US. While Trump supporters have lauded the decision and responded kindly, it comes at a time when America has witnessed one of its largest civil rights movement in the past months in response to the death of George Floyd. 

Science and Technology

World Solar Technology Summit
Recently, the first-ever World Solar Technology Summit (WSTS) was organized by the International Solar Alliance (ISA) and Federation of Indian Chambers of Commerce and Industry (FICCI). More than 26000 participants from 149 countries registered to join this virtual Summit. The ISA also launched the ISA Journal on Solar Energy (I JOSE) on the occasion that would help authors from across the globe to publish their articles on solar energy. There was also a CEO conclave where CEOs of top global corporations that have made path breaking progress in implementing and scaling up solar technologies took part.Read More Four technical sessions were also organized that were available in different languages including English, Spanish, French and Arabic. The sessions lead companies and research organizations from around the world to present their work and deliberate on latest trends in solar technologies. K Vijay Raghavan, principal scientific adviser to the Government of India, also grace the inaugural and set the context for the deliberations. Ministers from several ISA member countries were joined by senior officials, representatives of diplomatic missions, business and industry leaders, civil society leaders and others at the event.

India successfully test scramjet technology for hypersonic missiles
India on Monday successfully tested an indigenously-developed hypersonic technology demonstrator vehicle (HSTDV) powered by a scramjet engine, which will serve as a critical building block for next-generation hypersonic cruise missiles. The HSTDV test, conducted from the Dr Abdul Kalam Island off the Odisha coast at 11.03 am to demonstrate the autonomous flight of a scramjet integrated vehicle, propelled India right into an extremely exclusive hypersonic club consisting of the US, Russia and China as of now. The hypersonic cruise vehicle in its test sustained its scramjet-powered flight path at a velocity of six times the speed of sound (Mach 6, or nearly 2-km per second) for 22-24 seconds. Read MoreIt auto-ignited to fly on its own after separating from the `launch vehicle’, which took it to an altitude of 30-km. The launch vehicle, in turn, was powered by the proven solid-propellant rocket motor of an Agni ballistic missile. The next phase will be to develop long-range hypersonic cruise missiles, which DRDO scientists said would be possible in the next five to six years. The complex technology behind the HSTDV, the maiden launch of which had failed in June last year, also has civilian applications like low cost launching of small satellites.

SII halts trials for Oxford Covid vaccine
The Serum Institute of India has halted the process of vaccine trial for Oxford-AstraZeneca COVID-19 on receiving a notice for the same from DCGI. The move comes after the vaccine’s trials have been suspended in UK after a participant developed an unexplained illness after getting the vaccine. It is not clear, however, if the problem has arisen due to the given vaccine or any other medical sophistications. Read MoreBut in order to have a cautious approach, the drug trials have been suspended in many countries including USA, UK, Brazil and South Africa. The DGCI has also expressed its reservations about why SII didn’t stop the trials when such a casualty was reported in the first place. The company AstraZeneca has, although, assured that despite the halts, the vaccine will be available by the end of year. In a latest development, the university has said the trial has been deemed safe to continue. This pause is being seen as an important step as it shows that human safety is being ensured despite reports of some political pressures for a quick vaccine.

NASA Enlists Commercial Partners to Fly 10 Science and Technology Payloads to the Moon
Under the NASA’s Artemis Program, it has issued a request to its 14 Commercial Lunar Payload Services (CLPS) partners to bid for flying 10 NASA science investigations and technology demonstrations to a non- polar region of Moon by 2022. Read MoreThis project will help lay the foundation for human missions on the surface of Moon and can contribute significantly to the space missions by NASA. The payloads will weigh around 200 pounds in total and these will include various scientific components such as Regolith Adherence Characterization (RAC), Next Generation Lunar Retroreflectors (NGLR), Lunar Environment Heliospheric X-ray Imager (LEXI) and many more.

Huawei is set to launch Android-rival HarmonyOS next year
Huawei is planning to launch its own operating system next year. The Chinese company is doing this in order to reduce reliance on other providers like Google’s Android. The company will be trying to replace the Android operating system on Huawei devices. The company is also facing some serious accusations from the US government. The Harmony OS was first unveiled to the public in 2019 at a time when the company was facing flak in United States and Google was restricted to provide its services to the Chinese company. Read MoreHuawei’s proprietary HarmonyOS was pitched as a multi-device platform across watches, laptops and mobiles. The report also claims Huawei’s consumer business group CEO Richard Yu and Wang Chenglu, president of Huawei’s consumer business group’s software department gave an update on the company’s annual developer conference in the southern Chinese city of Dongguan. The company has also opened avenues to developers for a beta version of smart TVs, watches and car infotainment systems and make it available for customers from December this year.

Business

EPFO sets out two instalments for interest payments of 2019-20
The EPFO (Employee Provident Fund organization) will credit the promised interest rate of 8.5% for the year 2019-20 to its subscribers in a staggered manner in the wake of Covid 19. This promised rate is lowest among the interest rates offered since 2012. The payment will be made in two tranches. Read MoreThe first 8.15% will be credited immediately from the income earned from investments in debt. The remaining 0.35% will be paid from the capital gains arising from the sale of equity investments by 31st December 2020. The latter figure is somewhat uncertain probably due to the inability of EPFO to redeem its investments. It also has approved a significant amendment in the Employees Deposit Linked Insurance Scheme, 1976 to increase the maximum benefit to Rs 7 lakh from the present assurance amount of Rs 6 lakh.

IIP (Index of Industrial Production)
Due to the halt in industry activity due to nationwide lockdown since March, there has been a steep shrink in the industrial production by 10.4%. The non- operation of large number of industrial units has had a significant impact on the items produced by these establishments in the lockdown period. Although the index has improved if we compare the month of August to that of March and April, the comparison from last year gives big differences.Read More The manufacturing sector, which forms major chunk of IIP has declined by 11.1% as compared to the growth of 4.8% last year. The similar trend is seem in the sectors of mining and Power generation as well.

Auto sales rebound to positive territory after 9 months
Domestic wholesales of passenger vehicle rebounded in August after 9 months of consecutive decline due to pent-up demand. Rise of 14.16% was recorded on a YoY (year-on-year) basis. The number of units sold stood at 215916 units as against 189129 units in the same month previous year. According to SIAM President Kenichi Ayukawa, although growth brings back confidence in one of India’s most important industry, it has been achieved due to the low base of August 2019. Read MoreThe industry witnessed a 32% decline in passenger vehicle sales in 2019 over 2018 due to economic slowdown which in turn has led to current growth statistics. While passenger-car showed a 14.13% growth, utility vehicles and two-wheelers sales had 15.54% and 3% rise respectively. According to SIAM Director General Rajesh Menon, the festive season in the coming months has pushed sales and it will pave way for faster recovery despite the poor economic condition of the country.

 Vodafone Idea Rebrands as ‘Vi’ To Mark Merger Completion
Vodafone and Idea have integrated to transform into the new identity – ‘Vi’. The announcement was made by Ravinder Takkar, MD & CEO, Vodafone Idea. Vodafone Idea board on Friday had approved a plan to raise up to ₹25,000 crore through a combination of equity and debt instruments. The decision came days after the Supreme Court directed telecom operators to pay 10% of total adjusted gross revenue (AGR)-related dues this year, and rest of the payments in 10 instalments, starting next fiscal year. Vodafone Idea faces outstanding AGR dues of about ₹50,000 crore. Read MoreThe fund-raising plans are subject to shareholders’ nod and other statutory approvals. Fund-raising is critical for Vodafone Idea, the third largest operator in the fiercely-competitive Indian telecom market.The company, which now operates under ‘Vi’ brand name has also acquired the co-sponsorship rights of the live broadcast of T-20 premier league which will be held in Abu Dhabi, the UAE, and telecast on the Star Sports network, Vodafone Idea (VIL) said in a statement.

UK signs trade deal with Japan, first major deal post Brexit 

The UK struck its first major deal post Brexit with Japan on Friday. This is expected to boost trade by over £15.2 Billion between the two countries. According to Britain’s trade department, UK-Japan Comprehensive Economic Partnership Agreement will allow tariff-free trade on 99% exports and will benefit UK businesses extensively. While the supporters said that the deal brings new wins for tech, manufacturing and food industry, the critics argue that it will merely boost the UK GDP by 0.07%. Read MoreOn the other hand, experts forecast a 5% decline in GDP from leaving the single market and EU customs union. The deal is similar to the one EU has with Japan currently, however it has newer digital provisions like the ban on data localization. The deal still needs approval by the Japanese parliament which is expected to get passed by coming January. This deal opens the possibility of similar pacts with other nations in the coming future and is an important step towards TPP (Trans-Pacific Partnership).

Economics

Kamath Committee Sets Thresholds for Debt Restructuring Across 26 Sectors
A Reserve Bank of India appointed committee, headed by veteran banker KV Kamath, has recommended that the banking industry look at atleast five financial parameters before taking a decision on restructuring. The five-member committee has recommended minimum and maximum thresholds for these five parameters, which lenders must assess before approving a restructuring request. The committee has specified different thresholds across 26 sectors which may have been impacted by the Covid-19 pandemic. The committee suggested that lenders track the following parameters: Total outside liabilities /adjusted tangible net worth, Total, debt/Ebitda, Current ratio, Debt service, coverage ratio, Average debt service and coverage ratio. Read MoreIn August, the RBI had permitted one-time restructuring of corporate advances and personal loans amid concerns of a spike in bad loans due to the Covid-19 pandemic. The crisis could push up gross non-performing assets of Indian banks to a 20-year high of 12.5-14.7% of total loans in FY21, showed stress tests conducted by the RBI as part of its financial stability report. The restructuring window will prevent that immediate spike in bad loans. Indian banks could end up restructuring 7.7% of outstanding loan exposures, or nearly Rs 8.4 lakh crore, via the Reserve Bank of India’s restructuring window.

Finance Minister unveils EASE 2.0 Banking Index
Union Minister of Finance & Corporate Affairs Smt. Nirmala Sitharaman today inaugurated Doorstep Banking Services by PSBs and participated in the awards ceremony to felicitate best performing banks on EASE Banking Reforms Index. As part of the EASE Reforms, Doorstep Banking Services is envisaged to provide convenience of banking services to the customers at their door step through the universal touch points of Call Centre, Web Portal or Mobile App. Customers can also track their service request through these channels. The services shall be rendered by the Doorstep Banking Agents deployed by the selected Service Providers at 100 centres across the country. Read MoreUnder the EASE 2.0 Index PSBs have shown a healthy trajectory in their performance over four quarters since the launch of EASE 2.0 Reforms Agenda. The overall score of PSBs increased by 37% between March-2019 and March-2020, with the average EASE index score improving from 49.2 to 67.4 out of 100. Significant progress is seen across six themes of the Reforms Agenda, with the highest improvement seen in the themes of ‘Responsible Banking’, ‘Governance and HR’, ‘PSBs as Udyamimitra for MSMEs’, and ‘Credit off-take’. Bank of Baroda, State Bank of India, and erstwhile Oriental Bank of Commerce were felicitated for being the top three (in that order) in the ‘Top Performing Banks’ category according to the EASE 2.0 Index Results.

Goldman Sachs considers Indian economy worst hit, says GDP will shrink to 14.8% by financial year 2021
Gold man sachs, an American brokerage firm has revised its estimates that GDP of India will shrink to 14.8% due to the pandemic from the earlier estimate of 11.8% few days back. The greater estimate is the result of major halt of the economic activity owing to the two-month long lockdown which could not help in flattening the Covid case curve. Analysts say the GDP of India is worst hit among the major economies in the world. Read MoreThe estimates by other rating firms and banks may be somewhat different but all of them agree on the fact that the GDP is going to fall drastically for FY21. However, Goldman Sachs is of view that there will be a sharp rebound in the next year and GDP will rise significantly owing to low base provided by this year.

Fitch Ratings revises global GDP contraction to 4.4%
In its latest September update of Global Economic Outlook (GEO), Fitch Ratings has revised its global GDP fall due to coronavirus pandemic to 4.4% in 2020 as against a 4.6% decline expected in its June GEO. India’s growth projection has taken a major hit from an estimated 5% decline to a 10.5% decline after data release of official GDP contraction in the April-June quarter by 23.9%. Limited fiscal support, stringent lockdown, rise in virus cases and fragilities in the financial system is cited as the reason behind this revision. Read MoreFor emerging markets (excluding China), Fitch has forecasted a 5.7% decline as against 4.7% predicted earlier. China is the major gainer and is expected to have an estimated growth of 2.7% from 1.2% forecasted earlier despite anti-China sentiments. The USA has a revised estimate of 4.6% decline against 5.6% as unemployment has reduced faster than expectations. Despite a positive revision, this decline is still twice the decline observed during the great recession in 2009.

India at 105 in Global Economic Freedom Index, slips 26 places
According to Economic Freedom of the World: 2020 report, India slipped 26 places from 79 to 105 among 162 countries and territories in the Global Economic Freedom Index 2020. This report was published by Fraser Institute jointly with New-Delhi based Centre for Civil Society. This index analyses institutions and policies in a country to measure the ability of an individual to make their own economic decisions. Read MoreIt focuses on indicators like freedom for international trade, property rights, taxation, government spending, regulation and size of government.  India reported a decline from 8.22 to 7.16 in size of government, 5.17 to 5.96 in property rights, 6.08 to 5.71 in international trade and 6.63 to 6.53 in labour and business. China is behind India at 124th position while Hong Kong and Singapore are at the top. President of Centre for Civil Society, Partha J Shah, said that the ranking in the report is based on 2018 data where the impact of Covid-19, newer trade restrictions, deficits and tightening credit market is not reflected in India’s score. 

Finance

Cannabis Medicine Project: First Foreign Investment project in J&K
India’s first international collaboration on cannabis medicinal project will produce and export quality medicinal drug for pain relief in cancer, diabetic and neuropathy at the facility being developed in J&K. The CSIR-Indian Institute of Integrative Medicine (IIIM), Jammu, signed an agreement on cannabis research with IndusCann, a Canadian company, here in the presence of the Union minister and R R Bhatnagar, the adviser to Jammu and Kashmir Lt Governor G C Murmu. Read MoreThis is the first-of-its-kind project in India and a historic moment for Jammu and Kashmir. Till now, we only have the misuse and abuse of this ancient plant having lot of medicinal values and with the signing of this agreement, we are reintroducing this ancient product with all good properties. Knowledge and IPR generated through collaboration will be shared between the institute and the company. The Minister of State in the Prime Minister’s Office shared the efforts made by IIIM Director Ram Vishwakarma over the past two years to get a nod from the government for the project.

Capital India Finance gets forex business licence from RBI
Capital India Finance Ltd (CIFL) has received Authorised Dealer Category II licence from RBI for conducting forex business. CIFL is the first listed NBFC in India to receive this licence and is now authorised to build and do forex business under the brand name ‘RapiMoney’. Last year, RBI permitted systemically important non-deposit taking NBFCs to obtain Authorised Dealer Category-II licence from it. Read MoreIn forex business, CIFL under the brand name ‘RapiMoney’ will provide outward remittances, forex travel cards, and forex solutions for students travelling to other countries for higher studies. Foreign exchange market is the largest financial market with a daily turnover of over $60 billion of which outward remittance is approximately $15 billion before Covid-19 impact.

Borrowings by States soar 51% to 2.97 lakh crore
The cash starved states of India are grappling with the rising expenses due to the pandemic. Accompanied by fall in revenues, states are getting heavily burdened with the debt which is nearly 51% higher compared to last year. The cumulative borrowings of all states stand at Rs 2.97 lakh crore in comparison to the Rs 1.97 lakh crore last year. Read MoreThe three states of Karnataka, Maharashtra and Tamil Nadu, which account for majority of Covid cases, contributed nearly 38% to the total rise in borrowings. The rise in borrowings indicate the vulnerability of states who also suffered a major setback when the Centre refused to pay GST compensation dues for this year and instead, has asked the states to take loan for the same. Because of that decision, the states are further going to be obligated for greater debt.

Reliance cap hits $200 Billion after reports of potential Amazon investment
Mukesh Ambani led Reliance Industries Limited (RIL) became the first Indian company to cross the US$ 200 Billion mark after news of a likely Reliance-Amazon deal worth US$ 20 Billion. The stock prices jumped over 7% on the 10th of September to settle at Rs. 2314 apiece and reached the historic mark. According to a Bloomberg report, Reliance is offering a stake sale worth US$ 20 Billion to Amazon in its retail arm, Reliance Retail. Read MoreIf successful, this will turn out to be the biggest ever deal in India. Earlier, US private equity firm Silver Lake Partners has announced to buy 1.75% stake in Reliance Retail for Rs 7500 crore. Amazon, however, didn’t verify the news on Reuters request for comment. Many experts believe that Reliance Retail might end up with a series of funding from stake sell similar to that of Jio Platforms in the past few months.

 Tata Motors to sell stake in 2 units for its debt-free plan
Tata Motors is willing to sell stakes in Tata Technologies and Tata Hitachi Construction Machinery to move forward in its ambitious plan to turn debt-free and generate free cash flows within 3 years. As of 31 July 2020, Tata Motors has a consolidated debt of Rs. 68000 crore, a sharp rise from Rs. 48000 crore as of 31 March 2020. This comes due to excessive cash burn from the coronavirus pandemic.Read More It led to a 64% fall in vehicle sales in the June quarter on a YoY basis which contributed to a 48% decline in revenue. According to unidentified sources, the intent is to monetize the non-core assets which will begin from above two companies. The company is also open to equity infusion by promoters to reduce its overall debt. Tata Motors was in an unsuccessful talk with Warburg Pincus to sell stake in Tata Technologies three years ago.