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)

Politics

Japan’s anti-submarine exercise in South China Sea raises concerns for China

Japan’s Maritime Self-defense Force conducted anti-submarine drills in the South China Sea on October 9th deploying 3 vessels the purpose of which was “to boost their tactical capability. Nearly all of the energy-rich waters of the South China Sea are claimed by China, which has established military outposts on artificial islands in the area and parts of the sea are claimed by Brunei, Malaysia, the Philippines, Taiwan and Vietnam. It is common knowledge that the United States has accused China of militarising the South China Sea and trying to intimidate Asian neighbours who might want to exploit the area’s extensive oil and gas reserves. Read MoreThe Chinese People’s Liberation Army has always been highly alert, defending China’s national sovereignty, security and development interests. China’s state-backed newspaper has said that the frequent conducting of military activities in the South China Sea is not conducive to the security and stability of the area and China firmly opposes this. The newspaper also said that Japanese warships had recently carried out activities in the South China Sea, with a helicopter aircraft carrier spotted on satellite. A Chinese military spokesperson said that the U.S. destroyer John McCain had entered waters around the disputed Paracel Islands in the South China Sea without China’s permission.

Delay of Pradhan Mantri Awas Yojana subsidy is the cause of suffering for thousands of beneficiaries

Of the 2.19 lakh homes sanctioned in Maharashtra under Beneficiary Led Construction (BLC) component of Prime Minister Narendra Modi’s flagship housing scheme, Pradhan Mantri Awas Yojana, only 22,000 have been completed. Most beneficiaries await the release of Rs 1.5 lakh central subsidy. The high demand for BLC, which has emerged as one the most popular programmes under the scheme, is because of the comparative flexibility it offers to beneficiaries to construct stand-alone houses on their own plot. Read MoreUnder BLC, the central government provides an assistance of Rs 1.5 lakh per beneficiary for construction of a new house and several states have also offered their own financial assistance to the scheme. However, now there is uncertainty and dismay because of the delay in the release of the promised central subsidy of Rs 1.5 lakh to the beneficiaries who have already started the work. As a result of the 2.19 lakh houses sanctioned between 2016 and 2019, only 22,000 houses have been completed.

India-UK defence logistics pact reflects policy shift in London

India and the UK are in the final stages of agreeing on a key defence logistics pact, reflecting a policy shift in London. Experts say the MoU is part of a new approach to India and Asia as the UK prepares for a future outside the European Union from January 1. The review, intended to take into account the current and projected domestic and global context in 2030, was commissioned by Boris Johnson. It is seen as London beginning to move beyond attempts to ‘balance’ relationships. It’s significant for multiple reasons – not only is its military strategic value high, especially in the Indian Ocean Rim but it also signals a foreign policy shift on London’s part on the China and Pakistan questions. Read MoreIndicating that India would emerge as a key theme in the UK’s post-Brexit worldview, Jan Thompson, acting high commissioner of the UK to India, said in a recent webinar that India will “come through as a very strong theme.” Among the key drivers of change over the next decade is a shift in the international order and a shift in the world’s economic centre of gravity towards Asia. While the UK would not want to jeopardise bilateral relations with Pakistan, London has begun looking at India from a security-strategic perspective, instead of a purely economic lens.

MHA’s advisory to states on dealing with crimes against women

Following the Hathras gang rape case, the Ministry of Home Affairs has asked the states to take strict action in cases of crimes against women and adhere strictly to guidelines for dealing with such cases, including mandatory registration of FIRs and completing probes in two months in cases of sexual assault. In its advisory, the MHA said that “any failure of police to adhere to these mandatory requirements may not augur well for the delivery of criminal justice in the country.” The MHA has asked states for “mandatory registration of FIRs, action against officers who refuse to register FIRs in cases of rape and certain other crimes against women, to treat the dying declaration of a victim as a matter of fact, collection of evidence for forensic examination and use of sexual assault evidence collection kit, completion of investigation in sexual assault cases in two months, use of the National Database on Sexual Offenders for identifying and tracking repeat sexual offenders”. Read MoreThe Ministry has also recently distributed sexual assault evidence collection kits among states for this purpose. Guidelines have been issued for the collection, preservation & transportation of forensic evidence in sexual assault cases for Investigation Officers and Medical Officers. The Bureau of Police Research and Development and LNJN National Institute of Criminology and Forensic Science (NICFS) have been regularly conducting Training and Training of Trainers programmes on procedure for collection, preservation and handling of forensic evidence for Police/Prosecutors and Medical Officers respectively.

Andhra CM’s letter to the CJI

In a letter to the Chief Justice of India S.A Bobde, the Chief Minister of Andhra Pradesh has alleged Justice N.V. Ramana of impropriety. Justice N.V. Ramana is next in line to become the chief justice of India and is a sitting judge of the Supreme Court. The Chief Minister claims that Justice Ramana has been influencing the sittings of the Andhra Pradesh High Court including the roster of a few judges of the court. Read MoreThe Chief Minister’s eight-page letter refers to Justice Ramana’s alleged “proximity” to TDP leader and former Chief Minister N Chandrababu Naidu, and an Anti-Corruption Bureau investigation into “questionable transactions of land” involving two daughters of Justice Ramana and others in Amaravati, before it was declared the site for the new capital of the state.

Science and Technology

Large-scale climate changes may originate in the Pacific

In a new study, researchers find that the pulses of rapid ice loss from what’s known as the western Cordilleran ice sheet contributed to, and perhaps triggered, the massive calving of the Laurentide ice sheet into the North Atlantic Ocean thousands of years ago and its collapse ultimately led to major disturbances in the global climate. So far the assumption was that hemispheric-scale changes in Earth’s climate originated in the North Atlantic but the new findings raise questions about that suggesting that the melting of Alaska’s remaining glaciers into the North Pacific could have far-ranging effects on global ocean circulation and the climate in coming centuries.  In 2013, scientists pulled sediment cores from the seafloor of the Gulf of Alaska in the hope of figuring out how the Cordilleran ice sheet had changed prior to the end of the last ice age. Read MoreThe team used radiocarbon dating to determine the chronology of events, finding that the Cordilleran’s ice purges “surprisingly” preceded the Laurentide’s periods of abrupt ice loss. Though scientists can now be sure of the chronology, the exact mechanism remains unclear. Several theories have been proposed for how Cordilleran ice loss ultimately translated to mass calving of ice along North America’s east coast.  Today, Alaska’s glaciers serve as the last remnants of the Cordilleran ice sheet and many are in a state of rapid retreat due to climate change. If the ice melt into the North Pacific follows the past, it could yield significant global climate events.

Elon Musk’s SpaceX wins Pentagon award for missile tracking satellites

Elon Musk’s SpaceX won a $149 million contract to build missile-tracking satellites for the Pentagon, the U.S. Space Development Agency (SDA) said on Monday, in the company’s first government contract to build satellites. SpaceX, known for its reusable rockets and astronaut capsules, is ramping up satellite production for Starlink, a growing constellation of hundreds of internet-beaming satellites that chief executive Elon Musk hopes will generate enough revenue to help fund SpaceX’s interplanetary goals. Under the SDA contract, SpaceX will use its Starlink assembly plant in Redmond, Washington, to build four satellites fitted with a wide-angle infrared missile-tracking sensor supplied by a subcontractor, an SDA official said. Technology company L3 Harris Technologies Inc., formerly Harris Corporation, received $193 million to build another four satellites. Read MoreBoth companies are expected to deliver the satellites for launch by fall 2022. The awards are part of the SDA’s first phase to procure satellites to detect and track missiles like intercontinental ballistic missiles (ICBMs), which can travel long distances and are challenging to track and intercept. SpaceX in 2019 received $28 million from the Air Force to use the fledgling Starlink satellite network to test encrypted internet services with a number of military planes, though the Air Force has not ordered any Starlink satellites of its own.

Scientists discover two dozen planets which are suitable for life than the Earth

If we thought that Earth is just the perfect planet for human beings to thrive, then we might be wrong as scientists have discovered at least 24 planets that are habitable and perhaps support suitable conditions for the thriving of life forms. As per the research conducted by the team led by scientist Dirk Schulze-Makuch of Washington State University and published in the journal Astrobiology — researchers have rummaged for the planets which are older, slightly warmer and wetter than the Earth. Read MoreIn the process, scientists went through observing over 4,500 exoplanets and were able to find out 24 planets based on certain parameters that gave evidences of a conducive environment for life-supporting conditions although no life has yet been confirmed on those planets. Moreover, all these planets are 100 light-years away from the Earth located outside the Solar System. The scope of life on any planet significantly depends upon the star it orbits. Earth which is 4.5 billion years old, orbits around the Sun that has relatively shorter lifespan of less than 10 billion years while complex life appeared on the Earth only after 4 billion years.

Fundamental constants place a new speed limit on sound

Sound has a speed limit. Under normal circumstances, its waves can travel no faster than about 36 kilometers per second, physicists propose October 9 in Science Advances. Sound zips along at different rates in different materials — moving faster in water than in air for example. But under conditions found naturally on Earth, no material can host sound waves that outpace this ultimate limit, which is about 100 times the typical speed of sound traveling in air. The team’s reasoning rests on well-known equations of physics and mathematical relationships.  “Given the simplicity of the argument, it suggests that [the researchers] are putting their finger on something very deep,” says condensed matter physicist Kamran Behnia of École Supérieure de Physique et de Chimie Industrielles in Paris. The equation for the speed limit rests on fundamental constants, special numbers that rule the cosmos. One such number, the speed of light, sets the universe’s ultimate speed limit — nothing can go faster. Read MoreAnother, known as the fine-structure constant, determines the strength with which electrically charged particles push and pull one another. When combined in the right arrangement with another constant — the ratio of the masses of the proton and electron — these numbers yield sound’s speed limit. The role of the fundamental constants in sound’s maximum speed results from how the waves move through materials. Sound travels thanks to the electromagnetic interactions of neighbouring atoms’ electrons, which is where the fine-structure constant comes into play. And the proton-electron mass ratio is important because, although the electrons are interacting, the nuclei of the atoms move as a result.

Business

 US and AstraZeneca strike deal for new monoclonal antibody treatment for Covid-19

The US government has awarded $486 million to AstraZeneca Plc to develop and secure supplies of up to 100,000 doses of Covid-19 antibody treatment. The agreement falls under the Trump administration’s Operation Warp Speed. It’s for developing a monoclonal antibody cocktail, which is an antibody made by cloning a unique white blood cell, to prevent Covid-19, especially in high-risk population like those over 80 years old. Since Trump was treated with a similar class of drug last week, the treatment has come under the spotlight, with Trump himself talking about it on social media. Read MoreIn a call earlier on Friday, a top US health official said the government was expecting to provide more than 1 million free doses Covid-19 patients. AstraZeneca’s plan is to supply up to 100,000 doses starting toward the end of 2020. As a part of a separate agreement, the US government could acquire up to an additional one million doses in 2021.

Rise in Petrol Demand for the first time since February

India’s petrol consumption grew for the first time since February in September, with diesel demand also recovering month on month, according to data released by the government’s Petroleum Planning and Analysis Cell. The petrol consumption last month, at 2,450 thousand metric tonnes (TMT), was even higher than for the corresponding period in 2019 (2,372 TMT). However, while diesel consumption rose to 5,489 TMT, as much as 13.2% higher as compared to August, it was still 6% down as compared to September 2019. Read MoreFuel consumption in India collapsed after the government announced a nationwide lockdown on March 25 to combat the spread of the novel coronavirus. Demand initially recovered steadily following the lifting of the restrictions but stalled after June, when state and local government began imposing local-level lockdowns.

Oil Ministry’s Recommendations to PSUs

The Oil Ministry has asked PSUs such as the Indian Oil Corporation to build over 50,000 houses for migrant workers as part of the government’s effort to provide access to affordable housing to the labourers that fled the cities during the lockdown. Read MoreThe ministry wants IOC and other public sector undertakings (PSUs) under its administrative control such as Hindustan Petroleum Corp Ltd (HPCL), Bharat Petroleum Corp Ltd(BPCL), GAIL India Ltd and Oil and Natural Gas Corp (ONGC) to build the housing units on the land they have, three officials who attended a meeting on the subject said. The meeting, they said, was chaired by Oil Minister Dharmendra Pradhan who asked the PSUs to come up with plans to build the housing units at the earliest.

Vedanta delisting fails; company to return all the shares tendered

Billionaire Anil Agarwal’s Vedanta Resources said that they have failed to garner the required number of shares to delist Indian subsidiary Vedanta. The total number of shares validly tendered by the public shareholders in the delisting offer is 125.47 crore, which is less than the minimum number of shares required to be accepted by the acquirers in order for the delisting offer to be successful, the company said in an exchange filings. Indian delisting rules require all companies to offer to buy shares from public shareholders at a `discovered’ price through a reverse book building process. Read MoreThe process requires 90% acceptance from all shareholders. The discovered price refers to the bid price of the shares which help the process cross the threshold or acceptance level. The promoters will not acquire any shares tendered by the public shareholders in the delisting offer and all the shares tendered will be returned to the respective public shareholders, it said. Bankers and promoters on Friday approached market regulator Sebi to grant an extension of one day but Sebi did not grant any extension, according to sources

Economics

Owing to the pandemic, 150 million people set to fall into ‘extreme poverty’

The World Bank has warned that 150 million people could fall into “extreme poverty” by the end of 2021 due to the pandemic which brought along with it global recession. The level of global poverty is set to rise for the first time in 20 years. In a new Poverty and Shared Prosperity Report, World Bank has said that between 9.1% and 9.4% would be affected by extreme poverty, which is defined by the group as living on under $1.90 a day. In order to reverse this serious setback, countries will need to prepare for a different economy post-COVID, by allowing capital, labour, skills, and innovation. Read MoreAround a quarter of the global population live on less than $3.20 a day, and over 40% live on a daily rate of $5.50.Besides COVID-19, the World Bank cites military conflict and climate change as two significant factors behind the recent reversal. Extreme poverty is usually most keenly felt in rural areas, but now it’s spreading to urban hubs as well. Around 82% of the number falling into the “extreme poverty” category will be in middle income countries. This comes at a time when countries around the world, including those who dealt with the spread of coronavirus relatively well at the beginning of the pandemic, brace for a “second wave.”

Consumer Confidence at an all time low in September

Consumer confidence remained at an all-time low level in September with the general economic situation worsening during the month, according to a survey by the Reserve Bank of India. The survey claims that the situation is set to improve in the next 12 months. The consumer confidence index declined to 49.9 in September, as against 53.8 in July. However, the index has improved from 105.4 to 115.9 on a one-year ahead expectations basis, indicating a recovery in the consumer confidence level over the next 12 months. Read MoreAccording to the RBI’s consumer confidence survey, the current situation index (CSI) recorded its third successive all-time low, as the respondents perceived further worsening in general economic situation and employment scenario during the last one year. Households were, however, more confident for the year ahead: The future expectations index (FEI) improved for the second successive survey round, the survey said. The survey was conducted during August 29 –September 10, 2020 in 13 major cities. Perceptions and expectations on general economic situation, employment scenario, overall price situation and own income and spending were obtained from 5,364 households across these cities, it said.

GST Council: Borrowing Policy may not be Uniform Across States

As the Centre and the states look to resolve the deadlock over the compensation shortfall issue under the Goods and Services Tax (GST) regime, the upcoming meeting of GST Council on Monday is likely to see a range of factors influencing a final decision on the contentious issue of resorting to borrowings to tide over the shortfall. While there’s a divided house over putting the issue to vote, with non-BJP-ruled states likely to push for it even as the Centre is expected to oppose any move towards going for a vote, underscoring that the issue of borrowings are outside the jurisdiction of Council. Read MoreThere is also an emerging view ahead of the meeting that any policy decision taken by individual states on this issue of borrowings need not be uniform for all states across the country, unlike other GST-related decisions. There need not be a uniform policy for this borrowing, unlike GST-related issues where uniformity across the country is required. So one state’s opinion need not be imposed on the other, every state can take the decision independently. This would be outside the ambit of Article 279A of the Constitution (provision for GST Council and its mandate) since borrowings are governed by Article 293 (provision for state borrowings).

With Key Rates Unchanged, GDP to Contract 9.5% this Fiscal

The RBI kept it’s key rates unchanged on Friday and signalled that inflation is likely to ease closer to the target of 4 per cent by the fourth quarter of 2020-21. Governor Shaktikanta Das, after a meeting of RBI’s monetary policy committee (MPC), said there were some encouraging signs of a business turnaround, and that economic activity could return to growth in the January-March quarter — even as real GDP is projected to contract by 9.5 per cent for the full fiscal year. The economy is likely to witness a three-speed recovery, and the MPC has decided to address the more urgent need to revive growth, Das said while unveiling the bi-monthly monetary policy. Read MoreThe central bank announced a series of measures to provide more liquidity and keep bond yields under control at a time when central and state governments and corporates are looking to tap the bond market for funds in a big way. These steps include on-tap Targeted Long Term Repo Operations (TLTRO) of Rs 1,00,000 crore for the revival of specific sectors, and open market operations (OMOs) for state development loans (SDLs) for the first time. To boost the flow of funds to the real estate and retail segments, the RBI has relaxed the risk weights – the capital required to be set aside – on individual home loans, and raised the loan limit for retail and small business borrowers.

Finance

RBI opposes loan moratorium extension

RBI has told the Supreme Court that continuation of the loan moratorium period beyond the six months may affect overall credit discipline, urging to lift its interim order staying declaration of accounts as non-performing assets (NPAs), saying this will have “huge implications for the banking system.” Expanding the moratorium beyond the original six months can also impact credit behaviour of borrowers and increase the risks of delinquencies post resumption of scheduled payments, which may result in spoiling the overall credit discipline adversely impacting the process of credit creation in the economy. The small borrowers may end up bearing the brunt of the impact. RBI said that a solution is provided by the Resolution Framework for Covid-19 related Stress, announced by it on August 6, which “enables the lenders to implement a resolution plan in respect of personal loans as well as other exposures affected due to Covid-19, subject to the prescribed conditions, without asset classification downgrade.” Read MoreSectors such as power and real estate were already stressed even before the pandemic and it has been argued that the banking regulations of RBI cannot substitute the addressal of structural problems of the real sector but the government has taken several measures to address some of the sectoral problems, including creation of a Special Window for Completion of Affordable and Mid-Income Housing to provide priority debt financing for the completion of stalled housing projects.

Commercial mining:Coal blocks’ auction may generate Rs 20,000 crore revenue per year

Total revenue generation of around Rs 20,000 crore per year can be done by the auction of coal blocks for commercial mining , a coal ministry official said. The procedure for auction of 38 coal blocks for commercial mining is underway. “The total revenue for one year is expected to be around Rs 20,000 crore and capital investment is around Rs 33,000 crore,” the official said. “One year revenue (for 41 coal mines with 225.53 peak rated capacity) is approximated and comprises revenue share at four per cent i.e the floor price, royalty, NMET, DMF etc. calculated at peak rated capacity (PRC) considering representative price of average grade of the coal mine,” he said. Capital investment is calculated at Rs 150 crore per million tonnes per annum (MTPA) for PRC, including evacuation. Read MoreOn the government’s claim made earlier that the auction of blocks will also lead to job creation for more than 2.8 lakh people, the official said employment generation is calculated considering output per employee “to be 5,000 tonne/annum, 30 per cent leaves.” Vedanta, JSPL, Adani Enterprises, Hindalco Industries, JSW Steel and Nalco are among the 42 companies that have submitted bids for 23 coal blocks that were put up for auction under commercial mining. The highest number of bids(seven) were submitted by Adani Enterprises, followed by Hindalco Industries and JMS Mining (five each).

DGGI busts exporter companies for availing fraudulent ITC of Rs 61 crore

The intelligence arm of GST, DGGI has busted fraudulent availment of Input tax credit (ITC) and cash refund of about Rs 61 crore by certain exporter companies, an official statement said on Friday. The Directorate General of GST Intelligence (DGGI) had inputs that few exporter companies are engaged in the fraudulent availment of Input Tax Credit (ITC) on the invoices of non-existing and fictitious firms or such firms, which apparently do not have any purchases themselves. Read MoreThe Input Tax Credit (ITC) so availed was utilized to pay IGST on the export goods, which was thereafter claimed as cash refund. Thus, the government exchequer was put at double loss – on one hand ITC was obtained on goods where no tax was paid, and on the other hand IGST paid from such fraudulently availed ITC was obtained as cash refund. DGGI, Headquarter, searched the exporter companies and residence of their owners as well as premises of various supplier companies on March 6, 2020. These supplier companies were found to have supplied only bills to these exporters, without the supply of goods.

India becomes the leader in real-time transactions with 41 million payments per day: Report

India has become the global leader in real-time financial transactions with 41 million transactions per day, thanks to the pandemic, which is more than double that of the last year, says an international report. The COVID-19 pandemic has seen India doubling its every day real-time transactions at 41 million, says the latest report from FIS, which is a leading provider of technology solutions for merchants, banks and capital markets firms globally. According to the report released, six other countries also saw more than doubling of their real-time payment transactions year-over-year, while four saw at least a twofold increase in transaction value. But in terms of the growth rate, the list is topped by Bahrain with 657 per cent growth, followed by Ghana clipping at 488 per cent, the Philippines growing at 309 per cent, Australia at 214 per cent, and Poland at 208 per cent. India’s growth was 213 per cent, handling 41 million transactions a day. “Read MoreIndia leads global real-time payments, processing 41 million real-time transactions per day, more than any other country in the world,” says the report, adding the country continues to innovate with the launch of extensive business services on the real-time rails including IPO subscriptions, mandate management as the craze for retail investors in stock market is all time high and invoice-in-the-box also.  “The current pandemic has highlighted the critical importance of instantly getting funds, whether for individuals or businesses” said Raja Gopalakrishnan, the head of global real-time payments at FIS.

Banks, NBFCs to witness increased polarisation,’ says HDFC Securities.

Despite an uptrend in real economic activity and fresh disbursals, there has been a slower year-on-year credit growth. “Disclosures by select lenders and trends in non-food credit growth suggest the same. We expect banks/NBFCs with our coverage to report credit growth of 7.3/5.8% YoY vs. 8.2/7.1% in Q1-FY21,” says a report by HDFC Securities. The broker’s report on banks and NBFCs state that the deposit growth is likely to have exceeded credit growth for their coverage banks, and they expect large private banks to have fared particularly well on this front. HDFC Securities expect the space to witness increased polarisation in the space. Read More“Consequently, larger banks with sufficient capital, strong granular liability franchises, and a good asset quality track record are expected to emerge stronger,” says the report by HDFC Securities. ICICI Bank (SoTP of ₹496), Axis Bank (SoTP of ₹619), and City Union Bank (TP of ₹196) are HDFC Securities top picks among the banks. CIFC (TP of ₹289) is their top pick in the NBFC space.