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Daily News Analysis 08-12-2014

S.NO.

NEWS ITEM

SYLLUBUS

BACKGROUND

IMPORTANT POINTS

1.

 

India looks to Putins visit to lift sagging ties (Page 10)

a)     I.R

a)     India – Russia relations

b)     World Diamond Congress

c)     Kudankulam Nuclear Power Plant

d)     Free trade agreement

a)     India and Russia will look to trade to increase the falling ties between the two countries when Russian President Putin arrives here for a brief visit this week. 

b)     He and PM Modi are likely to reveal two vision documents on strategic, nuclear and economic issues and could possibly make a joint appearance at the World Diamond Congress being held here on Dec 11 and 12.

c)     His visit is part of the annual bilateral summits instituted by him during his earlier term as President in 2000. 

d)     He will not visit the Kudankulam Nuclear Power Plant, though Modi invited him when they met at the BRICS summit in Brazil in July.

e)     Since July, the relationship between the two countries has been strained over Indias growing defence procurement from the US even as Russia struggles with sanctions from the West.

f)     India is unhappy with Russias new defence cooperation agreement with Pakistan, which marks a significant shift from the past.

g)     In November, Russian Defence Minister signed the agreement during a first-ever visit to Pakistan and a Russian delegation took part for the first time in the Karachi Defence expo, which was held last week.

h)     At a time when Putin is being isolated by the US and its allies over operations in Ukraine, Indias surprise invitation to US President Obama to be the chief guest at the Republic Day parade in Jan has not gone unnoticed in Moscow.

i)     In the run-up to this visit, Putins point person for India and Deputy PM visited Delhi to discuss ways of increasing bilateral trade.

j)     With just $10 billion in bilateral trade in 2013, India and Russia are not expected to meet their target of $15 billion by 2015 but both sides are talking about a FTA with the Customs Union of Russia, Kazakhstan and Belarus as well as join energy exploration in Russian gas fields.

k)     Sources said the two sides were likely to announce a big partnership between Russian companies that were the biggest exporters of rough-cut diamonds and Indian diamond companies, the largest importers.

l)     India and Russia are like to sign nearly 15 agreements in defence, nuclear energy, customs, banking and energy.

2.

More water sent to Male (Page 11)

a)     I.R

a)     India – Maldives relations

b)     INS Deepak

c)     INS Sukanya

a)     Continuing its assistance to Male (which is facing a severe water crisis), India delivered about 1000 tonnes of fresh water to the Maldivian capital.

b)     INS Deepak, a large fleet tanker carrying 900 tonnes of water from Mumbai reached Male.

c)     Indian warships have the capability to produce drinking water using their desalination plants and INS Deepak is capable of producing 100 tonnes of water every day.

d)     INS Sukanya (an Offshore Patrol Vessel) which reached Male with 35 tonnes of fresh water, has the capability to produce 20 tonnes every day. 

e)     India was the first country to respond to the distress call from the Maldives.

3.

India to project green energy feats (Page 11)

a)     I.R

a)     Lima climate talks

b)     Climate change

c)     Indias renewable energy programme

d)     12th five year plan

a)     India is planning to create a buzz around its renewable energy programme during the climate talks here after the arrival of Minister of State for Environment for the high-level segment .

b)     India today has one of the most active renewable energy programmes in the world and these have brought about significant changes in the energy scenario.

c)     The countrys total renewable power installed capacity as on Oct 31 2014, has reached 33 gigawatt (GW). 

d)     Wind energy accounts for 70 percent of the installed capacity at 22.1 GW followed by biomass power (4.2 percent), small hydro power (3.9 GW) and solar power 2.8 GW.

e)     Renewable power is generating around 65 billion units per year corresponding to about 6.5 percent in the total electricity mix.

f)     The 12th five-year Plan has projected 33 percent installed capacity of power in 2030 from renewable energy sources.

g)     India has ambitious plans to scale up renewable energy.

4.

Saudis oppose gender equality reference (Page 11)

a)     International

a)     Gender equality

b)     Paris climate change conference 2015

c)     Subsidiary Body for Implementation (SBI)

d)     United Nations Framework Convention on Climate Change (UNFCCC)

 

a)     The Saudi Arabia delegation made a strong voice to exclude gender equality in the recommendations for the draft agreement for the Paris climate change conference in 2015.

b)     A delegate (who was part of the meeting of the SBI) said that it was only Mexico which fought till the end to retain gender in the implementation of climate change policy.

c)      The SBI is one of the two permanent subsidiary bodies to the UNFCCC and provides recommendations for the Conference of Parties.

d)      The delegate said that earlier the gender aspect was formed into the entire text but now a compromised language has been formulated and gender is only in the preamble.

e)     Saudi Arabia was against any language on gender equality in climate change policies.

5.

China launches major water project in Sri Lanka (Page 12)

a)     International

a)     China – Sri Lanka relations

b)     Chinese projects in Sri Lanka

c)     Maritime Silk Road (MSR)

d)     Hambantota Port

e)     Mediterranean

f)     Suez Canal.

 

a)     China has started a major water supply project in Sri Lanka, using soft power to deepen its relationship with Colombo.

b)     The Chinese company had earlier been involved in the construction of the $1.2-billion Lakvijaya coal fired power plant in Sri Lanka.

c)     Once completed, the project will produce clean drinking water for 600,000 people in 42 villages not far from Colombo.

d)     China sees Sri Lanka as one of the important elements of the MSR, which will connect its Fujian province with Europe.

e)     The MSR would transit through the Indian Ocean via India, Sri Lanka, Maldives, and Nairobi in Kenya. It would terminate in Venice after crossing into the Mediterranean via the Suez Canal.

f)     Analysts say New Delhi is carefully observing Chinas growing relationship with Sri Lanka and Maldives - two countries with which India has had a special relationship.

g)     China is also engaged in the expansion of Hambantota Port in southern Sri Lanka, with two loans of $600 million and one billion Yuan, the website of the Sri Lanka Ports authority said.

6.

Understanding inflation targeting (Page 8)

a)     National

b)     Economy

a)     Monetary policy

b)     Inflation

c)     Urjit Patel Committee

d)     Current Account Deficit

e)     Wholesale price index (WPI)

f)     Retail inflation

a)     The dominant objective of monetary policy is the maintenance of price stability. Inflation targeting gives clarity to the concept of price stability.

b)     The case of price stability as the major objective of economic policy rests on the assumption that tense in prices creates uncertainties in decision-making.

c)     Rising prices adversely affect savings while making speculative investments more attractive.

d)     Inflation adversely affects those who have no protection against it and this includes all poorer sections of the community. 

e)     A crucial question that arises in this context is whether the action of the objective of price stability by monetary authorities undermines the ability of the economy to attain other objectives such as growth. 

f)     By injecting greater demand and thereby generating higher inflation, higher growth may be achieved.

g)     To sustain this growth, the authorities may have to generate higher and higher inflation. 

h)     At very low levels of inflation, there may not be any adverse consequences on the economy.

i)     In the Indian context, it is best to work towards an average of 4 percent and take strong action if it touches 6 percent.

j)     This will amount to inflation targeting with a band, as recommended by the Urjit Patel Committee.

k)     What inflation targeting demands is that when inflation exceeds the threshold level, the primary focus of monetary policy must be to bring it back to the desired level.

l)     It is sometimes claimed that the financial crisis of 2008 in the US and western Europe sounded the death stroke for inflation targeting.

m)     There is continuing debate on whether the crisis was precipitated by monetary policy failure or regulatory failure.

n)     Countries like Canada and Australia (which were committed to inflation targeting) were not caught in the crisis.

o)     Apart from monetary policy, regulation of the financial system (particularly the banking system) is assigned to central banks in most countries.

p)     The low interest rate regime which succeed because of low inflation could have created an environment favourable for high risk-taking.

q)     Supply shocks are most common in countries like India where agricultural production is subject to the notions of nature.

r)     Even when inflation is triggered by food inflation, monetary policy and fiscal policy have a role to play.

s)     In a situation of supply shocks, it may take longer for monetary policy to bring down inflation. The recent experience with inflation in our country is a good example of this. 

t)     The appropriate institutional framework for implementing the inflation mandate also raises certain questions. The first issue is on who should determine the acceptable level of inflation.

u)     The second issue relates to an appropriate price index which should be used to monitor inflation.

v)     In India, we have monitored inflation by mostly looking at the WPI.

w)     Since the objective of inflation targeting is to minimise the impact of price rise on people, the appropriate index will be retail inflation.

x)     The third issue relates to institutional arrangements within the monetary authority to take policy decisions consistent with an inflation mandate.

y)     While constituting the central board of the RBI, this aspect of the work of the bank must also be kept in view.

z)     Inflation targeting re-emphasises the primacy of price stability as the objective of monetary policy. Given the rigidities in the economy and the lags in policy impact, it must be operated with flexibility.

7.

Limiting job scheme to poorest districts will not help, finds survey (Page 11)

a)     National

b)     Social issue

 

a)     Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)

b)     India Human Development Survey (IHDS)

c)     National Council for Applied Economic Research (NCAER)

 

a)     In early October, reports surfaced that the Union govt was considering restricting the MGNREGS to Indias 200 poorest districts to reduce its financial burden. 

b)     Now, new yet-to-be-published data from the 2011-12 IHDS conducted by the NCAER and the University of Maryland shows that when it comes to key indicators of marginalisation, there is not a lot to separate these districts from Indias other 476.

c)     Indias largest non-governmental household study (IHDS) is a nationally representative dataset.

d)     The IHDS found that in all, nearly 70 percent of Indias poor live in better-off districts.

e)     Both sets of districts currently use the MGNREGS; 28 percent of rural households in the poorest districts and 23 percent of the other districts have participated in the scheme.

f)     Among the households which participated, a slightly larger proportion of their income comes from MGNREGS in Indias better-off districts than in the poorest.

g)     Results from the IHDS suggest that targeting districts is likely to be ineffective and that it may be better to target households.

h)     Reducing the number of districts would run against a fundamental premise of the Act - gainful employment that affords basic economic security is a human right.

8.

Growth prospects brighten (Page 15)

a)     Economy

a)     GDP

b)     Central Statistical Office (CSO)

c)     Inflation

d)     WPI

e)     Retail inflation

f)      IIP

g)     Fiscal deficit

a)     A scheduled data release on economic growth and an RBIs bi-monthly monetary review are not particularly upbeat on their implications for the macroeconomy.

b)     A 5.5 percent growth in the first half of the current year clearly indicates that the days of a sub-5 percent annual growth are finally getting over.

c)     Although the RBI did not cut policy rates, it has indicated that there could be one even ahead of the next (Feb 2015) policy statement.

d)     The CSO released the GDP growth data for the second quarter of the current year just days before the RBIs scheduled fifth bi-monthly monetary policy statement on Dec 2.

e)     The significance of the second quarter data release is further increased because along with the GDP figures for the first quarter already available it is possible to get a clearer idea of the economys growth trajectory during the current year.

f)     According to the CSO, the economy grew by 5.3 percent during the second quarter.

g)     With the first quarter growth having been estimated at 5.7 percent, the half yearly GDP growth rate has come at 5.5 percent.

h)     As RBI Governor reiterated, sustained growth is possible only when policymakers have acquired a stronger grip over inflation.

i)     Despite the sharp fall in inflation (retail and wholesale), the time is not right for a rate cut.

j)     Over the past two years, economic growth was below 5 percent.

k)     It is now almost certain that the growth rate during this year will be well above 5 percent, closer perhaps to 5 .5 percent than to 6 percent.

l)     Agriculture (3.2 percent) and community, social and administrative services (9.6 percent) were the main growth drivers during the second quarter. 

m)     It is not clear from the data whether the impact of insufficient monsoons has been factored in.

n)     Community, social and administrative services capture govt spending and has relevance for calculating the fiscal deficit.

o)     The biggest negative has been manufacturing (a small 0.1 percent increase), not at all surprising in the light of the monthly IIP numbers.

p)     The fall in manufacturing has been cited in support of an immediate rate to ease interest rates on loans to industry.

q)     The central bank has stuck to its earlier 5.5 percent GDP forecast for the current year.

r)      In line with its inflation forecasts, the RBIs pronouncements are more upbeat than in the recent past.

s)     For both inflation and growth, 2015-16 ought to be even better.

9.

Kudankulam reactor back on stream (Page 11)

a)     National

b)     S&T

a)     Kudankulam reactor

b)     Atomic Energy Regulatory Board (AERB)

a)     The first unit of Kudankulam Nuclear Power Project began power generation again.

b)     The reactor (that attained its maximum capacity of 1000 MWe on June 7 last) was stopped for tests on July 16 before it was taken to the commercial power generation phase.

c)     The unit was commissioned again on Aug 31 after the AERB gave its permission for commercial power generation but generation was stopped on Sept 13 after a technical malfunction.

10.

GSAT-16 on course (Page 10)

a)     S&T

a)     GSAT-16

b)     Geosynchronous Transfer Orbit (GTO)

c)     DIRECTTV-14 spacecraft

d)     GSAT-8

e)     IRNSS-1A

f)     IRNSS-1B

a)     Communication satellite GSAT-16 was successfully launched on board an Arianespace rocket from Kourou in French Guiana after a delay of two days due to bad weather.

b)     The satellite with 48 transponders (the largest ever carried by a communication spacecraft built by ISRO) was injected into the intended GTO.

c)     It was a dual satellite launch with GSAT-16 with a lift-off mass of 3181 kg ejected into space four minutes after its co-passenger DIRECTTV-14 spacecraft (designed to provide direct-to-home TV broadcasts across the US) was placed in orbit

d)     ISRO said the first orbit raising operation is scheduled as part of exercises to place the satellite finally in its designated spot at 55 deg East longitude in the geostationary orbit before being co-located with GSAT-8, IRNSS-1A and IRNSS-1B satellites.

e)     GSAT-16 has 24 C-band, 12 Ku-band and 12 Upper Extended C-band transponders that will increase public and private TV and radio services, largescale Internet and telephone operations.

11.

NASA probe wakes up for Pluto encounter (Page 7)

a)     S&T

a)     NASA probe on Pluto

b)     New Horizons probe

c)     Hibernation

d)     Dwarf planets 

e)     Infrared and ultraviolet spectrometers

a)     A NASA probe launched eight years ago to explore Pluto has woken up from its last hibernation in deep space and is now preparing to take first detailed images of the dwarf planets surface and its moons in July 2015.

b)     Launched in Jan 2006, New Horizons probe has travelled nearly 4.6 billion km on its way to study Pluto, its largest moon Charon and a few smaller moons.

c)     During its journey, New Horizons passed three to four times close to Jupiter using the planets gravity to increase its speed and reduce journey times to Pluto by three years.

d)     While the probe is now out of its hibernation phase, it will still take seven months to reach its closet point to Pluto, passing within 12,500 km of the planets surface in July 2015.

e)     The probe sends a weekly signal back to Earth and is woken up every six to 10 months to ensure that it is still operational.

f)     The probe carries seven instruments including infrared and ultraviolet spectrometers.

12.

First green diesel-powered flight (Page 7)

a)     S&T

a)     Green Diesel

b)     Hydro-Processed Esters and fatty Acids (HEFA)

c)     Bio diesel

a)     A Boeing aircraft has completed the worlds first flight using green diesel - a sustainable biofuel made from vegetable oils, waste cooking oil and animal fats.

b)     Green diesel offers a tremendous opportunity to make sustainable aviation biofuel more available and more affordable for our customers.

c)     Sustainable green diesel is widely available and used in ground transportation.

d)     Boeing previously found that this fuel is chemically similar to HEFA aviation biofuel approved in 2011.

e)     Green diesel is chemically distinct and a different fuel product than biodiesel, which also is used in ground transportation.

f)     With production capacity of 800 million gallons (three billion litres) in the US, Europe and Asia, green diesel could rapidly supply as much as one percent of global jet fuel demand.    

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