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My Notes- 08JAN2016 08-01-2016

China currency devaluation

Reasons

1)      Falling exports

It mean the value of investments in Chinese economy will erode fast.

Impact

1) Fears of competitive devaluation of currency plagued the market.

2) Markets fear that Chinas economic slowdown could be worse than anticipated.

3) Commodities prices can fall further as china is an important market for them. Brent crude came below the $33 mark. As Gold man sachs predicted, fall below $20/barrel by 2020 appears certain now.

4) Investors are moving to the risk off mood and shifting to the USA and other stable markets in the west. (Flight of capital from emerging economies)

Fall in crude prices

1)      Fears of slowdown in Chinese economy.

2)      Peak production and massive stockpiles of crude and refined products.

DBT – Direct Benefits transfer

The two major issues with subsidies in India are – Targeting and leakages

1)      Mis targeting refers to benefits slipping away from the poor to the high income groups.

2)      Leakages make the benefits not reaching the intended beneficiaries due to corruption, pilferage etc.

JAM trinity – Jandhan yojna, Aadhar, Mobil number can collectively address the issue.

Examples

DBT directly transfers the cash to the accounts of the beneficiaries, it decreases the role of middlemen. The advantage is clearly visible in MGNREGA.

Kerosene subsidies suffered huge leakages and now the issue is addressed through DBT.

Ford foundation – Add on to civil society

Ford foundation was brought under prior permission category on the allegations of supporting anti India activities and citing national security. It mean MHA clearance is necessary for any transfer to any bank account in India by the foundation.

Now, Ford foundation agreed to register under FEMA act,1999 facilitating the Government to ease restrictions on the agency.

Iran Saudi Arabia

Iran accuses Saudi Arabia of bombing its embassy in Yemen capital, Sanaa. It banned imports from Saudi Arabia and prohibited its citizens from visiting Makkah further worsening the diplomatic crisis.

Death of Mufti Mohammed Sayeed

Chief Minister of J&K passed away leaving behind a legacy of peace, stability to the region. Today, Kashmir is again at cross roads with rise in militancy, natural disasters.

His achievements and failures as chief minister

1st tenure – 2002-05

1)      Prime minister Vajpayee’s Insaniyat doctrine was accompanied by Sayeed’s healing touch policy.

(It refers to a three pronged initiative – Talks with Pakistan and Hurriyat separately, ceasefire negotiations with militant groups, humanitarian political approach to the valley and pandits – Actions included were – inviting pandits to resettle in the valley, reduction of military and para military forces in the valley, improving health care and education, Rehabilitation to militants who left the arms etc)

2)      Decentralization of powers to Leh – Ladakh and Kargil hill councils are established

3)      Opening of roads and trade across LOC

2nd Tenure – 2014-till death

1)      Rise in youth unrest

2)      Mismanagement of disaster

3)      Release of hardliners such as masrath alam increased tensions in the valley.

4)      Islamic State and its salafist ideology is penetrating in the valley

5)      Revival of Hurriyat

North Korea – Nuclear challenge

North Korea recent testing of Hydrogen bomb (as claimed by it) has created disturbance to the peace and stability in East Asia. USA described it as a serious national security challenge, South Korea called it as an unpardonable provocation and Japan as a serious threat to its National security. Close ally if North Korea, China also condemned the tests.

What can be the reasons?

1)      Kim Jong un could be tightening his grip on the state

2)      North Korea might be looking for an Iran like deal

3)      He might be sending a message to south Korea about the military preparedness

Above all, it shows the failure of Nuclear diplomacy and six party talks with North Korea. The Khan network of Pakistan and its nuclear sales are throwing their challenge now.

The present challenge is there is no other channel to engage Kim Jong un other than China. Even, china appears to be losing its influence on him as he wants to shun the china ally tag. Added to this, fears where tentacles of Khan nuclear business is spread still looms large. Saudi Arabia is also high on the radar.

 

Reforms – Amartya Sen – pointers for the exam. Useful to quote in support of our answer.

1)      A successful market economy is necessary for fast growth and development

2)      Market economy does well for industries and agriculture with few exceptions, it does not do well for education and health care.

3)      India has lot of asymmetric information in the operation of markets

4)      India is the only country which is trying to achieve universal health care and education through private sector.

5)      Across the world, political right or left have an important role for the state in education and health care.

6)      Development is not only a matter of financial investment, it is also about the building of human capabilities. These capabilities can be built only through Education and health care.

Syria peace plan

USA also took a common ground with Russia in protection of state Institutions in Syria and to give a smooth transition to the Nation.

It is feared that recent escalation of tensions between Iran and Saudi Arabia can derail the peace process.

International Syria support group – both Iran and Saudi Arabia are the members said that, they believe it’s important to move forward is a welcome sign.

 

Question of the day

Development is not just a matter of financial investment, it is also about the building of human capabilities. Explain with examples and recent initiatives of Government to rise the human capabilities.

 

 

 

 

 

 

 

 

 

 

 

 

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