CAO Weekly News Roundup- October WEEK -04

Ministries of Power & Textiles join hands under new initiative SAATHI {Energy}


In news

Ministries of Power  and Textiles have joined hands under a new initiative SAATHI (Sustainable and Accelerated Adoption of efficient Textile technologies to Help small Industries).

ObjectiveImage result for saathi initiative textiles

Under this initiative, Energy Efficiency Services Limited (EESL), a public sector entity under the administrative control of Ministry of Power, would procure energy efficient Powerlooms, motors and Rapier kits in bulk and provide them to the small and medium Powerloom units at no upfront cost.

Highlights

The initiative will be jointly implemented by EESL and the office of the Textile Commissioner.

The use of these efficient equipment would result in energy savings and cost savings to the unit owner and he would repay in installments to EESL over a 4 to 5 year period.

SATH (Sustainable Action for Transforming Human capital) programme

  • NITI will work in close collaboration with the State machinery by building three future ‘role-model’ States for health systems
  • NITI Aayog invited all States and Union Territories for the three-stage selection process out of which 16 responded. Five States were shortlisted post project presentation by 14 States. Subsequently, three States will be selected through further assessments.
  • SATH programme will be implemented by NITI Aayog along with global consultancy McKinsey & Company and IPE Global consortium in the three selected States after the signing of MoUs.

CVC to develop Integrity Index of 25 Organizations {National}


In newsImage result for CVC

Central Vigilance Commission has set to develop integrity index for public sector undertakings, public sector banks and financial institutions, Ministries and its departments.

Functions

  • CVC will calculate scores by linking the essential drivers of vigilance with long term efficiency, profitability and sustainability of public organizations.
  • It will help in creating an internal and external ecosystem that promotes working with Integrity in public organizations.
  • Initially 25 organizations have been selected for development of the index.

The main objectives for which the Integrity Index is to be established are

  • Define what constitutes Integrity of Public Organizations
  • Identify the different factors of Integrity and their inter-linkages
  • Create an objective and reliable tool that can measure the performance of organizations along these above factors
  • Validate the findings over a period of time to improve upon the robustness of the tool that measures Integrity
  • Create an internal and external ecosystem that promotes working with Integrity where public organizations lead the way.

Central Vigilance Commission (CVC)

CVC is apex body of Union Government formed to address governmental corruption. It was established in February 1964 on the recommendations of the K. Santhanam Committee on Prevention of Corruption. It has status of statutory autonomous body and free of control from any executive authority as per provisions of Central Vigilance Commission (CVC) Act, 2003. The CVC is headed by a Central Vigilance Commissioner and has two Vigilance Commissioners.


Iceland opens the world’s first ‘negative emissions’ power plant {Environment}


What are negative emissions?Image result for negative emissions

Models used to study future scenarios and emissions assume that the world would somehow make use of significant amounts of ‘negative emissions’.

‘Negative emissions’ are ways to remove carbon dioxide from the atmosphere, or even change the earth’s radiation balance through geoengineering.

Why it is required?

We produce 40 trillion kg of carbon dioxide each year, and we’re on track to cross a crucial emissions threshold that will cause global temperature rise to pass the dangerous 2°C limit set by the Paris climate agreement.

Approaches for ‘negative emissions’

Some of the approaches that could remove or absorb carbon dioxide in the atmosphere are:

  • Better agricultural practices that leave carbon in the ground
  • Use of biochar (charcoal that is used for agricultural purposes)
  • Undertaking afforestation and reforestation
  • Bioenergy for fuel in combination with carbon capture and storage (BECCS):
  • BECCS involves growing plant material, burning that material for energy, capturing the CO2emitted during combustion, and storing it underground.
  • However, due to competition for land for food and other purposes, and due to technological limitations, this approach is believed to be inappropriate for extensive use.

Other experimental methods

  • Other methods to suck carbon dioxide from the atmosphere and increase carbon dioxide absorption by the oceans are also being explored, but their long-term implications are not clear.
  • Some scientists have been discussing the possibility of injecting cooling aerosols at a large scale in the atmosphere, but these geoengineering technologies pose huge risks and are also not long-term solutions.

Centre to aid offshore e-commerce play {Indian Economy}


In news

The Union government is working on a new policy to expand the footprint of the Indian e-commerce sector to tap potential markets outside the country, including Africa and Southeast Asia.

Image result for e-commerceHighlights

  • The e-commerce economy is currently pegged at $30 billion, and the government expects it to grow at $150 billion by 2024-25
  • Digital economy in the country was forecast to generate employment for about 30 million people by 2024-25, “which is double than the current scenario.
  • There will be focus on expansion within India, and on global expansion.
  • A strategy to make India a hub for data analytics, cloud computing and financial technology, besides encouraging development of Internet of Things, to push the digital economy. “The national programme for developing 5 lakh resources for data analytics and AI [Artificial Intelligence] will be formulated and approved by the end of this year

INS Sukanya at Indonesia for Coordinated Patrol of IMBL {Defence}


In news

In pursuance with India’s ‘Act East Policy’, Indian Naval Ship Sukanya arrived at Belawan Indonesia this morning to participate in the 30th edition of CORPAT (Coordinated Patrol) and 3rd Bilateral exercise between the Indian Navy and the Indonesian Navy.Related image

The exercise is aimed to foster closer maritime ties with countries located on the rim of the Indian Ocean.

The upcoming bi-lateral exercise CORPAT scheduled from 24 Oct – 05 Nov 17 is a demonstration of India’s commitment to its ties with Indonesia and to the maritime security in the Indian Ocean Region.


What are recapitalisation bonds and their impact on market {Economic Policy}


Recent news regarding recapitalisation

 Public Sector bank recapitalisation

The Union government has unveiled an ambitious plan to infuse Rs. 2.11 lakh crore capital, over the next two years into public sector banks (PSBs).

Rs 1.35 lakh crore of this would come in the form of recapitalisation bonds. The rest would come from the budget and markets.

What is bank recapitalisation?

  • Bank recapitalisation, as the name suggests, means recapitalising banks with new capital to improve their balance sheet.
  •  The government, using different instruments, infuses capital into banks undergoing credit crunch. Capital is the money invested by shareholders in the business.
  • Since the government is the biggest shareholder in public sector banks, the responsibility of infusing capital majorly lies with the government.

Why do banks need to recapitalise?

 It’s like this. Banks create money. They can create money at will really. If I lend you money, and you put it back in a deposit in my own bank, I have created money. You think of it as “I put the money into the bank, and it gave me a loan.” (Replace “me” by “him” in the second part if you like, but effectively it’s all the same).

But actually it gave you the loan, and then you put money into the bank. So the order does not necessarily matter for the banking system. Now, what constrains banks? Their capital. For every loan I make, I need to have 10% of it as my capital. So if I have Rs 100, I can give out  Rs 1000 in loans.

How government plans to recapitalise public sector banks?

  • The government is currently focused on maintaining its fiscal deficit at 3.2%.
  • This means that the government cannot take out all the needed capital from state coffers and give it to banks.

Hence, the government bifurcated the entire Rs 2.11 lakh crore amount in two parts:

  1. Through budgetary allocation
  2. By issuing recapitalisation bonds
  • The government plans to infuse Rs 76,000 lakh crore capital by giving it space in budgetary allocation and through markets, and rest 1.35 lakh crore by issuing recapitalisation bonds.

What are recapitalisation bonds?

A government bond is an instrument to raise money from the market with a promise to repay the face value of the maturity date and a periodic interest.

A bond issued for the purpose of recapitalisation is called recapitalisation bonds.

How will recapitalisation bonds work?

  • The government will issue recapitalisation bonds, which banks will subscribe and enter it as an investment in their books.
  • The banks will give to the government by subscribing the bonds (like anyone does while subscribing to bonds).
  • This money raised by the government through these bonds will go back to banks as capital. (This way government is infusing capital by borrowing on its bonds, and not from the budget. This will mean that government will hold the liability of bonds to be repaid later, while banks get bonds as assets without any liability.)
  • This will immediately strengthen the balance-sheet of the banks and show capital-adequacy.
  • Since the government is always solvent, the money lent to the government for subscribing recap bonds is free from becoming a bad loan.

Impact on fiscal deficit

  • Impact of the fiscal deficit, as well as G-sec rates is likely to be minimal.
  • In many accounting conventions (like by IMF), recap bonds do not add to deficits.
  • And since they reduce risk, markets will take it positively.

Slow credit growth

  • Over the last few years, asset recognition was imposed on banks without a proper resolution regime and without recapitalization. (Earlier, NPAs were hidden before the exercise was taken over last few years.)
  •  This only reduced credit growth, made factories idle, and increased NPAs.

Reviving demand

  • The resumption of lending by the banks is vital for the economy.
  •  But banks at present are unable to find credit-worthy borrowers.
  • Reviving demand is also essential.
  •  The big infrastructure push announced would aid this, and help crowd in private investment.
  • Revival of global growth should help export growth.
  • Domestic consumption is recovering after policy shocks.

 Need interest rate cuts to go along

  • Since there is not much fiscal space (raising expenditure while maintaining low fiscal deficit), it is vital that the Monetary Policy Committee supports the effort.
  • Inflation has been below the RBI’s 4 per cent target since October 2016, but real interest rates are very high and there is space to reduce.
  • Since Indian macroeconomic policy is now constrained by rules, there is no need to fear large slippages—they cannot happen.
  • Monetary and fiscal policy should coordinate towards appropriately stabilizing the domestic cycle.

 Help for MSMEs and informal sector

  •  MSMEs and the informal sector were hurt most by both demonetization and the imposition of GST.
  • Hence, it is good that refinance is being tied to increased financing of small firms by banks.
  • This, and infrastructure spend and boosting labour-intensive sectors such as textiles, will help employment growth.
  • Big data and fin tech can be used to reduce lending lags to MSMEs and risk from such lending.

Supreme Court bans use of Pet Coke, in Delhi-NCR {Environment}


In news

 The Supreme Court on Tuesday directed the governments of Uttar Pradesh, Haryana and Rajasthan to ban the use of pet coke and furnace oil in the industries and made it clear that their failure to do so would force it to ban these materials from 1 November.

It also fined the Environment Ministry Rs 2 lakh for not finalising emission norms for industries that use the fuels.

 Petroleum coke is a by-product of the oil refining process.

Petcoke is a byproduct created when bitumen found in tar sands, like those in Alberta, Canada, is refined into crude oil. Bitumen contains a higher number of carbon atoms than regular oil and it’s these atoms, extracted from large hydrocarbon molecules using heat, that go on to form petcoke.

High grade petcoke which is low in sulphur and heavy metals can be used to make electrodes for the steel and aluminum industry. But the majority of petcoke manufactured globally, approximately 75-80%, is of a much lower grade, containing higher levels of sulphur and heavy metals and is used solely as fuel. The majority of petcoke produced in the U.S. is exported to China – the world’s largest consumer of coal – to feed its many coal-fired power stations.

Extremely stable fuel which means there is little risk of combustion during transportation, but due to its high carbon content when it does combust it releases up to 10% more CO2 per unit of energy that normal col.

That’s higher than almost any other energy source in existence and makes petcoke a huge contributor to the creation of greenhouse gases


 

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