Insights Daily Current Events, 13 June 2016
Paper 3 Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
BSE unveils online system for Sovereign gold bond
BSE has unveiled an online bidding platform for sovereign gold bonds and begun conducting mock bidding sessions on the system. BSE has received Reserve Bank’s approval to start an online bidding platform for sovereign gold bond (SGB) scheme. So far, three tranches of the bonds have been issued amounting to about Rs.1,322 crore.
About Sovereign Gold Bond Scheme:
Under the scheme, gold bonds are issued in denominations of 5 grams, 10 grams, 50 grams and 100 grams for a term of 5-7 years with a rate of interest to be calculated on the value of the metal at the time of investment. The scheme has an annual cap of 500 grams per person.
- The bonds will be sold through banks, Stock Holding Corporation of India Limited and designated post offices.
- As per the scheme, the gold bonds will be sold only to resident Indian entities including individuals, Hindu undivided families, trusts, universities, and charitable institutions.
- The bond tenure will be eight years with exit option beginning the fifth year onwards. They will also be tradable in the bourses.
- Bonds can also be used as collateral for loans.
Sources: the hindu.
Paper 2 Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
‘Flat fee optimal for spectrum use’
The Telecom Regulatory Authority of India (TRAI) has drilled holes in a formula government uses to calculate annual spectrum charges payable by mobile phone operators and suggested using value generated by use of the airwaves to be included in the basis for computing levies.
- It has said that formula in practice may have a significant impact on the revenue payable to the government. TRAI has also identified complications in adopting flat spectrum rate recommended it earlier.
The Telecom Regulatory Authority of India (Trai) has suggested adding another element — the final bid value for a spectrum band won in an auction — to the weighted-average formula proposed by the telecom department (DoT), saying the change would reflect potential revenue from the airwaves that had been acquired, and thus was a better way of calculating SUC. If the proposal is accepted, telcos will need to pay more to the government.
The Cabinet last month approved spectrum auction rules except spectrum usage charges (SUC) recommended by the inter-ministerial panel Telecom Commission. The Cabinet asked telecom ministry to seek Trai’s view on SUC before it approves the rule.
- Currently, telcos are charged different rates based on the complicated weighted-average formula, which takes into account non-auctioned or auctioned spectrum, quantum of airwaves bought, and the specific SUC applicable to the auction from which airwaves were bought. The 4G spectrum bought in 2010 is kept out of this formula and is charged at a flat 1% of annual revenue.
- The DoT’s latest formula includes the 2010 4G airwaves for calculating SUC. In 2013, Trai had proposed a flat 3% SUC across all bands of spectrum— auctioned or not—which could be gradually brought down to 1%, as it was difficult to distinguish revenue accruing from different bands of airwaves.
- All operators that currently pay SUC as per weighted-average formula had been in favour of flat SUC of 3%, citing problem with revenue segregation, especially with 4G services being offered using different airwaves. This, they felt, could lead to revenue arbitrage.
- Currently, telecom operators pay in the range of 3% to 8% of their adjusted gross revenue as SUC for spectrum bands expect 2300 MHz, for which the charge is 1 per cent of AGR. This arbitrage may be exploited by operators as it is not possible for the government to segregate revenue accrued from different bands of spectrum.
Sources: the hindu.
Paper 2 Topic: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.
Tribunal rejects Beijing’s claims on South China Sea
The Permanent Court of Arbitration (PCA) in The Hague, Netherlands, has ruled that China’s claims of historical rights over South China Sea (SCS) has no legal basis. China has boycotted the hearings at the Permanent Court of Arbitration, saying it does not have jurisdiction to decide on the matter.
The case against China was initiated by the Philippines. The Philippines formally lodged its arbitration case under the United Nations’ 1982 Convention of the Law of the Sea, known as UNCLOS, in January 2013.
What did the arbitration panel rule?
The Hague-based PCA ruled that China has no legal basis to claim historical rights to islands in the SCS, and has violated Philippines’ sovereign rights. It said Beijing “had no historic rights to resources in the waters of the South China Sea” and that “such rights were extinguished to the extent they were incompatible with the exclusive economic zones provided for in the Convention.”
Why is South China Sea considered so important?
The SCS is a busy international waterway, being one of the main arteries of the global economy and trade. More than $5 trillion of world trade ships pass through the SCS every year. The SCS is also resource rich, with numerous offshore oil and gas blocks.
So what is the dispute about?
There are a few hundred small islands in the SCS, a part of the Pacific Ocean. Some of the main ones are Spratly Islands, Paracel Islands and Scarborough Shoal — the bone of contention between China and the Philippines. China claims most of these islands as its own. Vietnam, Malaysia, Brunei, the Philippines and Taiwan have rival claims. China has said it will not permit other nations to infringe on what it considers its sovereign rights in the strategically vital area.
Implications of this ruling:
The ruling stands to further ramp up tensions in the region, where China’s increased military assertiveness has spread concern among its smaller neighbours and is a point of confrontation with the United States. This victory for the Philippines could spur Taiwan, Vietnam, Malaysia and Brunei, which also have overlapping claims, to file similar cases.
Sources: the hindu.
Facts for Prelims:
- India is planning to seek greater market access in the Japanese market for its farm products such as sesame seeds as well as for its services professionals including nurses, during the upcoming joint committee meeting. The focus on sesame seeds is because Japan is the world’s second largest importer of the item (after China). Following the detection of pesticides and insecticides such as DDT and malathion in some sesame seeds consignments from India over two decades ago, Japan has been reluctant to import the commodity from India. India is the world’s largest sesame seed producer with an annual production of around 7 lakh tonnes. India is also the world’s largest exporter of the item.
- In a bid to expand its customer base and gain access to loan portfolios that enjoy priority sector status, IDFC Bank has decided to acquire micro-lender Grama Vidiyal in an all-cash deal. IDFC Bank, a former infrastructure financier, converted itself to a bank in October last year. Headquartered in Tiruchirapalli in Tamil Nadu, Grama Vidiyal Micro Finance, which started operations in 1997, has a loan book of about Rs.1,502 crore and 1.2 million customers primarily in its home State, Puducherry and Kerala and in parts of Karnataka and Maharashtra. While the assets of Grama Vidiyal will be transferred to IDFC Bank books, the former will retain its existence as a subsidiary of IDFC Bank, which will act as a business correspondent.
- The Navy’s dedicated base for its Special Operation Forces – MARCOS – INS Karna was recently commissioned in Visakhapatnam. The establishment of the first base for Indian Navy’s elite force with capability to operate in all three dimensions of warfare – air, land and sea – in the home port of the Navy on the Eastern Seaboard marks another milestone in Indian Navy bonding with the city of Visakhapatnam.