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Insights Daily Current Events, 01 October 2015

Insights Daily Current Events, 01 October 2015

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Paper 2 Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

India to hold G20 Chair in 2018, Delhi may play host

India is set to be the G20 Chair in 2018, and New Delhi could host the prestigious annual G20 summit.

  • This decision was taken by G20 member nations recently.

G20:

The Group of Twenty is an international forum for the governments and central bank governors from 20 major economies. The members include 19 individual countries and the European Union (EU).

  • The G20 started in 1999 as a meeting of Finance Ministers and Central Bank Governors in the aftermath of the Asian financial crisis.
  • Collectively, the G-20 economies account for around 85% of the gross world product (GWP), 80% of world trade, and two-thirds of the world population.
  • The G20 is supported by international organisations, including the Financial Stability Board, the International Labour Organisation, the International Monetary Fund, the Organisation for Economic Co-operation and Development, the United Nations, the World Bank and the World Trade Organization.

Notable points:

  • The G20 operates as a forum and not as an organisation. Therefore, it does not have any permanent secretariat or management and administrative structure.
  • One of the G20 countries is selected to hold the Chair in rotation, also known as ‘G20 presidency’. The presidency establishes a temporary secretariat for the duration it holds the Chair. The secretariat coordinates all work and organises G20 meetings.
  • The immediate past, present and next Chair constitute a ‘troika’ and ensure continuity in the G20 work. In the current year (2015), the presidency is held by Turkey. The Chair was handed over to it by Australia. Turkey will hand over the Chair for the next year (2016) to China. After China, Germany will hold it in 2017.
  • For selecting presidency, a system has been in place since 2010, when South Korea held the Chair. Under it, 19 countries have been categorised into five regional groupings of a maximum of four nations each.

Sources: The Hindu, g20.

 

Paper 2 Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Natural gas price cut in line with new policy

The government has cut the price of natural gas by 18% to $3.81 per million British thermal unit (mmBtu) on a gross calorific value basis from the current $4.66 per mmBtu.

  • The new price will be in place for six months. This is in line with the policy adopted by the government in October 2014.
  • This price cut is likely to help fertiliser and power firms.

In accordance with the New Domestic Natural Gas Pricing Guidelines, 2014, issued by the Ministry of Petroleum and Natural Gas, the price of natural gas is to be revised every six months on the basis of a weighted average of rates in countries such as the U.S., Mexico, Canada and Russia, all gas-surplus economies.

Salient features of the Domestic Natural Gas Pricing Guidelines, 2014:

  • These guidelines will be applicable to all natural gas produced domestically, irrespective of the source, whether conventional, shale, CBM etc.
  • The prices determined under these guidelines will be applicable to all consuming sectors uniformly.
  • These guidelines will also be applicable for natural gas produced by ONGC/OIL from their nominated fields.

Natural Gas:

  • It is by product of crude oil and is considered to be a clean fuel.
  • India imports 25% of its natural gas requirement. India has significant natural gas reserves in offshore block.

Sources: The Hindu, PIB.

 

Paper 2 Topic: Inclusive growth and issues arising from it.

Maharashtra imposes tax to tackle drought

In a bid to raise funds to tackle the drought situation, the Maharashtra government has decided to impose ‘drought tax.’

  • This is the first time since 1973 that a state government has decided to take such a drastic step.
  • This tax is meant to help farmers who have been hit by one of the worst droughts in recent times.
  • This arrangement will be in place for the next five months and will be reviewed during the next budget session.
  • The State government is expected to raise Rs. 1600 crore through this.

Drought tax includes:

  • Tax on petrol and diesel, VAT on liquor, cigarettes and beverages, and surcharge on VAT for gold and diamond jewelleries.
  • A tax of Rs. 2 per litre would be charged on petrol and diesel, while Value Added Tax (VAT) on liquor, cigarettes and beverages has been raised by 5%. Also, the surcharge on VAT for gold and diamond jewelleries has been raised from 1 to 1.20 %.

The State government will also hold a special Cabinet meeting next month to discuss other means to increase the inflow of money and cut expenditure. According to the data provided by the government, it has spent around Rs. 3,332.57 crore on various schemes and packages meant to support drought-hit farmers.

Sources: The Hindu.

 

Paper 2 Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

India climbs 16 places in WEF’s Global Competitiveness Index

After five years of decline, India has moved up 16 positions to 55th place on a global index of world’s most competitive economies for the year 2015-16.

  • Global Competitiveness Report is released annually by the World Economic Forum (WEF).

Performance of various countries:

  • Globally, Switzerland has retained its top position as the world’s most competitive economy for seventh year in a row and is followed by Singapore, the US, Germany and the Netherlands in the top-five.
  • These are followed by Japan, Hong Kong, Finland, Sweden and the UK in the top-ten.
  • South Africa has re-entered the top 50, progressing seven places to 49th.
  • China, holding steady at 28, remains by far the most competitive among large emerging economies, although its lack of progress moving up the ranking shows the challenges it faces in transitioning its economy.

Performance of India:

  • In the last year’s report, India stood at the 71st position.
  • In terms of competitiveness of its institutions, India is ranked 60th (out of total 140 countries and up 10 positions from last year), while for infrastructure it has gained six places to 81st.
  • For macroeconomic environment, India is ranked 91st, helped by a reduction in commodity prices and improvement in the government’s budget deficit.

Observations made by the WEF:

  • It says, the most problematic factors for doing business in India include corruption, policy instability, inflation and access to finance.
  • The areas where India ranks better were investor protection, gross national savings, quality of education system, venture capital availability, hiring and firing practices, GDP and domestic market size, public trust in politicians and burden of government regulation.
  • Even though infrastructure in India has improved (81st, up six places), it remains a major growth bottleneck, electricity in particular.
  • India’s performance in the macroeconomic stability pillar has improved, although the situation remains worrisome (91st, up 10 places). The inflation also eased to 6% in 2014, due to lower commodity prices, down from near double-digit levels the previous year.
  • The government budget deficit has gradually dropped since its 2008 peak, although it still amounted to 7% of GDP in 2014, one of the highest in the world (131st).
  • Fewer than one in five Indians access the Internet on a regular basis, and fewer than two in five are estimated to own even a basic cell phone.

Sources: The hindu, toi.

 

Trivia:

  • For the first time in the history of Indian judiciary, the 150-year-old Madras High Court recently allowed live telecast of contempt proceeding against two Madurai advocates.
  • Meghalaya Governor V. Shanmuganathan was recently sworn in as the 17th Governor of Manipur.