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Insights Daily Current Events, 25 March 2016

Insights Daily Current Events, 25 March 2016

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Paper 2 Topic: Important International institutions, agencies and fora, their structure, mandate.

Bill introduced in US Congress to help India join APEC

Few influential American lawmakers have introduced a legislation asking the Obama administration to help India join the APEC forum, saying an economically prosperous India benefits the US’ strategic goals in Asia.

What’s there in the legislation?

  • The legislation notes that US-India partnership is vital to the US strategic interests in the Asia-Pacific region and across the globe, and is an integral aspect to the Administration’s Rebalance to Asia.
  • Observing that India enjoys a location within the Asia- Pacific region which provides an avenue for continued trade and investment partnerships with APEC member states, the legislation also asks Secretary of State to develop a strategy to obtain membership status for India in APEC, including participation in related meetings, working groups, activities and mechanisms.
  • It even directs the Secretary of State to actively ask APEC member states to support such membership status for India and submit a report to the Congress within two months of the passage of this legislation.

Benefits for India:

  • Membership in APEC (Asia Pacific Economic Cooperation) would provide India a constructive forum to glean insight from other Asian countries that have already taken significant steps to advance their economies.
  • India is also striving for major economic reforms to open India’s markets, improve trade volume, and facilitate its growing population’s need for continued job growth. Hence, APEC can be the right platform.

APEC:

The Asia-Pacific Economic Cooperation (APEC) is a regional economic forum established in 1989 to leverage the growing interdependence of the Asia-Pacific. APEC has 21 members.

Aim: to create greater prosperity for the people of the region by promoting balanced, inclusive, sustainable, innovative and secure growth and by accelerating regional economic integration.

Functions:

  • APEC works to help all residents of the Asia-Pacific participate in the growing economy.
  • APEC projects provide digital skills training for rural communities and help indigenous women export their products abroad.
  • Recognizing the impacts of climate change, APEC members also implement initiatives to increase energy efficiency and promote sustainable management of forest and marine resources.
  • The forum adapts to allow members to deal with important new challenges to the region’s economic well-being. This includes ensuring disaster resilience, planning for pandemics, and addressing terrorism.

Members:

  • APEC’s 21 member economies are Australia; Brunei Darussalam; Canada; Chile; People’s Republic of China; Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; The Philippines; The Russian Federation; Singapore; Chinese Taipei; Thailand; United States of America; Viet Nam.
  • APEC Members account for approximately 40% of the world’s population, approximately 54% of the world’s gross domestic product and about 44% of world trade.

In APEC, all economies have an equal say and decision-making is reached by consensus. There are no binding commitments or treaty obligations. Commitments are undertaken on a voluntary basis and capacity building projects help members implement APEC initiatives. The APEC process is supported by a permanent secretariat based in Singapore.

Sources: the hindu.


 

Paper 2 Topic: Important International institutions, agencies and fora, their structure, mandate.

Nepal joins SCO grouping as dialogue partner

Nepal has become a dialogue partner of the Shanghai Cooperation Organisation (SCO).

  • As a dialogue partner, Nepal is able to participate in the multi-field cooperation of the SCO, which has an increasing presence in international affairs.
  • Besides, as Nepal joins the SCO, it will create new opportunities for the SCO’s mutually beneficial cooperation and benefit people living in the extensive region that the SCO covers.
  • Recently, Azerbaijan also officially became a SCO dialogue partner.

About Shanghai Cooperation Organisation (SCO):

It is a Eurasian political, economic and military organisation which was founded in 2001 in Shanghai by the leaders of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. These countries, except for Uzbekistan, had been members of the Shanghai Five, founded in 1996; after the inclusion of Uzbekistan in 2001, the members renamed the organisation.

  • The SCO is seen as a counter to the North Atlantic Treaty Organisation (NATO).
  • It has eight members: China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, India and Pakistan.
  • It also has Afghanistan, Iran, Mongolia and Belarus as observers.
  • The SCO has established relations with the United Nations, where it is an observer in the General Assembly, the European Union, Association of Southeast Asian Nations (ASEAN), the Commonwealth of Independent States and the Organisation of Islamic Cooperation.
  • Its headquarters is located in Beijing, China.

Sources: the hindu.


 

Paper 3 Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

New gen NBFCs to target smaller cities

New generation Non-Banking Finance Companies (NBFCs) are increasing their focus on tier-II and III cities to expand their businesses.

Why they are interested in these cities?

  • For NBFCs, tier-I cities are comfort zones. But due to compression in interest rates and increasing competition in tier-I cities, NBFCs are looking at tier-2 and 3 cities.
  • Also, the repayment capacity of professionals, such as doctors, in tier–II and -III cities is better, as there is less competition for their skill. Besides, lending to them is more beneficial as they can recommend more borrowers/customers.
  • NBFCs are also trying to expand their reach to smaller cities as they see business opportunities in the Micro, Small and Medium Enterprise (MSME) sector and plan to tap the needs of the self-employed professionals, manufacturers and traders to expand their business through secured loans i.e. loan against property (LAP).

The profitability estimate indicates that NBFCs in tier-II and III cities can break-even in 12 months compared to a time span of 18 months in tier I cities. Tier-I cities generally have high quantum of loans and low numbers of customer.

NBFCs:

What are they?

Non-bank financial companies (NBFCs) are financial institutions that provide banking services without meeting the legal definition of a bank, i.e. one that does not hold a banking license.

What they can’t do?

  • These institutions typically are restricted from taking deposits from the public depending on the jurisdiction. Nonetheless, operations of these institutions are often still covered under a country’s banking regulations.
  • NBFC cannot accept demand deposits.
  • NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself.
  • Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.

Who supervises them?

The Reserve Bank of India is entrusted with the responsibility of regulating and supervising the Non-Banking Financial Companies by virtue of powers vested under Reserve Bank of India Act, 1934.

NBFCs lend and make investments and hence their activities are akin to that of banks; however there are a few differences as given below:

  • NBFC cannot accept demand deposits.
  • NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself.
  • Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.

Sources: the hindu.


 

Facts for Prelims:

  1. Seeking to attract more foreign investment, the government has relaxed FDI norms for the insurance sector by permitting overseas companies to buy 49% stake in domestic insurers without prior approval. Currently, up to 26% FDI is permitted through the automatic approval route. For FDI up to 49%, the approval of the Foreign Investment Promotion Board is required.
  2. India Post recently released a commemorative stamp on Hindustan Aeronautics Ltd., which recently completed 75 years. The tagline on the stamp says ‘HAL: the force behind the Forces’. This is also the first customised ‘My Stamp’ to be released by India Post. The special logo depicts HAL’s first indigenous aircraft programme from HT-2 to the Light Combat Aircraft as also its capabilities related to helicopters.