Daily Current Affairs 11th October -2021

Topics

Air India – Privatisation
The monetary policy review of RBI
Palk Bay Scheme –Marine Fisheries Bill
The Javan Gibbon
Nobel Peace Prize 2021

1. Air India — Privatisation

#GS3- Indian Economy & Related Issues Planning Mobilization of Resources

Context

The government recently declared its intention to sell all of its shares in Air India (AI), as well as Air India’s stakes in two other companies: Air India Express Ltd (AIXL) and Air India SATS Airport Services Pvt Ltd. (AISATS).

Disinvestment Reasons in Detail:

With AI entering the commercial sector, it is envisioned that operations and expenses will be reduced, on-board services will improve, and basic amenities such as wi-fi will be made available.
A strong international carrier in India will boost the huge airports being developed in Delhi, Hyderabad, Mumbai, and Bengaluru, which, in combination with AI, will be able to recoup some of the tourist revenues lost by Indians travelling overseas.
It is well known that aviation has a multiplier effect on the economy, therefore a successful recovery of Air India might also aid the Indian economy.
The government is under pressure to increase resources to help the economy recover and satisfy expectations for rising healthcare spending.

Disinvestment Problems

Regular Income Loss:
The sale of profitable and dividend-paying PSUs would result in the government losing regular revenue.
Reforms Are Being Ignored:
It has only become a means for the government to raise funds.
There is little emphasis on PSU reform.
Inefficiency Culture:
The government’s decision not to cut its holdings below 51 percent has had an impact on stock valuation.
With the government’s dominant ownership intact, the public firms will continue to function with the same inefficient culture as before.
Bureaucratic Control:
The disinvestment process is hampered by bureaucratic control. Almost all processes, from conception through bidder selection, are harmed as a result of it.
Furthermore, bureaucrats are hesitant to make timely decisions for fear of being prosecuted when they retire.
Disinvestment has an impact on the social security of the workforce.
Complete privatisation may result in public monopolies becoming private monopolies, which would then use their privileged position to raise prices for various services and boost profits.
It’s Unhealthy to Fund a Fiscal Deficit:
Using disinvestment funds to close the budget deficit is a risky and short-term strategy.
It is considered to be the equivalent of selling “family silver” to address immediate financial needs.

Why is the sale of Air India regarded as a watershed moment?

The process took nine months for officers in the Union Finance Ministry, who faced numerous challenges and had to overcome the normal bureaucratic “over-conservatism.”
This time, the government kept its options open in terms of bidding parameters, which explains why the circumstances changed so frequently throughout the process.
So yet, no one in the Opposition Congress or the Left, which has been a vocal opponent of privatisation, has reacted negatively.

Importance:

It will save taxpayers money by preventing them from having to pay for AI losses on a regular basis.
It will assist the administration in making other difficult decisions.
It may open up the possibility of flying one more low-cost carrier within the United States.

Conclusion

Given the tumultuous history of Indian private airlines, privatisation of Air India may not be a sure thing. However, this does not excuse the government operating a corporation or keeping a bleeding company alive indefinitely at the expense of the public purse. When the government’s resources and state capabilities are limited, it must allocate them carefully. Cases like Air India could result from a lack of such prioritisation.
Attempts to privatise Air India have been frequently derailed by an avalanche of political economy and red tape over the last two decades. If the arrangement succeeds, perhaps economic sanity will prevail this time.

In the case of Air India (AI)

? AI was founded in 1932 by the Tata Group, but after India got independence in 1947, the government purchased a 49 percent interest in the company.

? AI was nationalised after the government purchased the remaining stake in 1953.

? The national carrier dominated Indian skies for the following three decades.

2.The monetary policy review of RBI

#GS3- Indian Economy & Related Issues

Context

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has decided unanimously to preserve the status quo on the policy repo rate and a majority of 5 to 1 to maintain the accommodative policy stance.
It signalled a shift away from the accommodative policy as the economy begins to recover from the effects of the Covid-19 outbreak.
While staying supportive of the economic recovery, this process must be slow, measured, and non-disruptive.”

In depth information

Monetary Policy Committee (MPC) (MPC)

The Reserve Bank of India (RBI) established it under section 45ZB of the Reserve Bank of India (RBI) Act, 1934.
The Governor of the Reserve Bank of India (RBI) serves as the chairman.
Fixing the benchmark policy interest rate (repo rate) to keep inflation within a specific target range is the mission (2 percent to 6 percent ).
The MPC meets at least four times a year.
After each meeting, the monetary policy is published, with each member explaining his or her position.

The motivations for the relocation

The RBI will maintain its accommodative approach for as long as it is necessary to recover and sustain growth on a long-term basis, as well as to minimise the effects of Covid on the economy.
It will provide sufficient economic growth to reduce or prevent unemployment from rising.
It could be able to mitigate the negative effects of COVID-19 on the economy.

Points to Remember

Policy Rates Have Not Changed: Repo Rate is 4%.
35 percent is the reverse repo rate.
25 percent Marginal Standing Facility (MSF).
25 percent bank rate
The real Gross Domestic Product (GDP) growth forecast for 2021-22 has been kept at 9.5 percent.
Inflation: The RBI has reduced the Consumer Price Index (CPI) inflation forecast from 5.7 percent in August 2021 to 5.3 percent now.
The Government Bond Acquisition Programme (GSAP) has been suspended due to a cash overhang (Excess liquidity), increased liquidity as a result of government spending, and the lack of higher borrowing for GST compensation.
It’s part of the RBI’s Open Market Operations, where it commits to a certain amount of government securities Open Market Purchases.
In April 2021, the first purchase under G-SAP 1.0 was made for a value of Rs. 25,000 crore.
However, it has stated that it will continue to execute additional liquidity management operations, such as Operation Twist (OT) and regular Open Market Operations, in a flexible manner (OMOs).
OT occurs when the central bank utilises proceeds from the sale of short-term securities to purchase long-term government debt documents, resulting in a reduction in long-term interest rates.
It determined to maintain an accommodative approach for as long as it is required to stimulate and sustain growth on a long-term basis, as well as to continue to ameliorate the effects of Covid-19 on the economy, while ensuring that inflation stays within the goal moving ahead.
When a central bank takes an accommodating stance, it lowers interest rates to inject money into the financial system when it is needed.
VRRR (Variable Reverse Rate Repo):
The VRRR auction size has been increased to Rs 6 trillion by early December 2021, and the VRRR duration has been extended to 28 days if necessary.
The RBI announced conducting a VRRR program in August 2021 because it has higher yield prospects as compared to the fixed rate overnight reverse repo.

Problems and Obstacles

The recovery is still uneven and dependent on continuing governmental support. Output is still below pre-pandemic levels.
Even as the domestic economy appears to be improving, the global situation is becoming more unclear and complex, according to the RBI, with headwinds from slowing development in some key Asian and advanced economies.
Natural gas prices have risen sharply in recent weeks, raising concerns about the normalisation of monetary policy in certain major industrialised nations.

Conclusion and Next Steps

Domestic recovery must be cultivated aggressively through all policy channels.
Given the uncertainty surrounding the prospects for growth and inflation, the MPC will keep a close eye on the situation.
The rapid rate of vaccination, the ongoing reduction in new illnesses, and the approaching festival season should promote a comeback in pent-up demand for contact intensive services, enhance non-contact intensive service demand, and boost urban demand.
The Reserve Bank of India (RBI) would maintain ample liquidity to aid the recovery of the economy.
The Reserve Bank will continue to assist the market in ensuring that the Government’s borrowing programme is completed in a timely manner.

3.Palk Bay Scheme –Marine Fisheries Bill

#GS 2,GS 3–Welfare SchemesEnvironmental Pollution &DegradationGovernment Policies & Interventions

Context

To make the Palk Bay programme more appealing to fishermen, the Union Government is considering raising the unit cost of deep-sea fishing vessels from Rs 80 L to Rs 1.3 Cr.
During the Monsoon session, the Marine Fisheries Bill 2021 was introduced in Parliament.

In depth information

Palk Bay Scheme Information:

“Diversification Of Trawl Fishing Boats From Palk Straits Into Deep Sea Fishing Boats,” a Centrally Sponsored Scheme, was inaugurated in 2017.
It was introduced as part of the broader Blue Revolution Initiative.
The Blue Revolution is part of the government’s initiative to promote fishing as a complementary activity for farmers in order to quadruple their earnings.
It’s a Tamil Nadu-specific programme aiming at delivering 2,000 vessels to fishermen in the state in three years and encouraging them to stop bottom trawling.
Bottom trawling is an environmentally damaging activity that includes trawlers dragging weighted nets down the seafloor, depleting aquatic resources significantly.
Another goal of the project is to “decrease fishing pressure” near the International Maritime Boundary Line (IMBL) so that Tamil Nadu fishermen do not fish in Sri Lankan waters.
The system is funded 50 percent by the government, 20 percent by the state, ten percent by institutions, and twenty percent by the beneficiaries.
The Scheme is only open to vessels with a value of up to Rs. 80 lakh.
The programme does not fall under the Pradhan Mantri MatsyaSampada Yojana.

What are the Deep Sea Fishing Plan’s obligations to beneficiaries?

The Deep Sea fishing strategy seeks to remove as many trawl vessels as possible from Palk Bay.
The deep sea fishing project’s potential beneficiaries must have a registered, seaworthy trawl vessel above 12 metres in length that must be dismantled or disposed of outside of Palk Bay.
Physical verification of the discarded vessel was also required.
Moreover, new replacement tuna long liner boats are unable to trawl or operate in Palk Bay.
Beneficiaries are not allowed to sell their boats within five years of obtaining them.

The Marine Fisheries Bill proposesthat licences to fish in the Exclusive Economic Zone be granted solely to vessels registered under the Merchant Shipping Act of 1958. (EEZ).

It also proposes penalties for fishermen who violate the EEZ without a licence, ignore Indian Coast Guard (ICG) instructions, or obstruct ICG officers.
The bill bans foreign fishing vessels from fishing in our EEZ, effectively nationalising it.
It advocates for the preservation of lives at sea during extreme weather occurrences and provides social security for fish workers.

4.The Javan Gibbon

#GS3- Species in News

Context

Officials and researchers in Indonesia are striving to protect a small patch of woodland on the densely populated island of Java that serves as the home of the Javan gibbon.

In depth information

The Javan Gibbon, sometimes known as the silvery gibbon, is a monkey found only in central and western Java, where it disperses seeds to help regenerate forest flora.
Their silvery-grey fur is exceptionally dense and lengthy, giving them a fluffy appearance.
They have long forelimbs, lengthy fingers, and short thumbs, allowing them to be excellent brachiators (use their arms to swing between branches).
Javan Gibbons are omnivores who eat a variety of fruits, leaves, nectar, and grubs.
They live in family groups in the wild, consisting of a male and female, as well as up to three young offspring. Patrols, physical confrontation, and loud calling are used to keep the territory in check, just as they are for other gibbons.
The number of Javan gibbons left is estimated to be around 4,000, according to Conservation International. On the Red List of Threatened Species of the International Union for Conservation of Nature, they are classified as endangered.

5.Nobel Peace Prize 2021

#GS1and GS2

Context

Journalists Maria Ressa of the Philippines (left image) and Dmitry Muratov of Russia (right image)were recently awarded the Nobel Peace Prize for their efforts to protect freedom of expression, which is a precondition for democracy and sustainable peace.
The World Food Programme (WFP), a United Nations (UN) agency, received the prize in 2020.
The Nobel Prizes in Literature, Chemistry, Physics, and Medicine for the year 2021 have already been announced.

In depth information

Maria Ressa is an investigative journalist who co-founded and leads Rappler, a digital media platform for investigative journalism, in 2012.
Rappler has criticised President Rodrigo Duterte’s administration’s controversial and lethal anti-drug campaign.
The Philippines was placed 138th out of 180 countries in the World Press Freedom Index for 2021. (India was ranked lower, at 142).
Seeds of Terror: An Eyewitness Account of Al-Newest Qaeda’s Center and From Bin Laden to Facebook: 10 Days of Abduction, 10 Years of Terrorism are two other books she has written.

Dmitry Muratov:

Muratov has fought for freedom of speech in Russia for decades, despite increasingly difficult circumstances”.
In the World Freedom Index for 2021, Russia is placed 150th.
He was one of the founding members of Novaya Gazeta (Newspaper), which he co-founded with about 50 colleagues in 1993. Since 1995, he has been the editor-in-chief of the publication.
Muratov was honoured as one of the International Press Freedom winners in 2007 by the Committee to Protect Journalists, a non-profit headquartered in the United States.
Six of Muratov’s coworkers have been murdered since the publication of the newspaper, which has been subjected to harassment, threats, assault, and murder by its detractors.
Despite the killings and threats, editor-in-chief Muratov has refused to abandon the newspaper’s independent policy.

Importance:

Free, independent, and fact-based journalism protects citizens against authority abuse, lies, and war propaganda.
Without freedom of expression and the press, promoting international brotherhood, disarmament, and a better world order will be difficult to achieve in our time.