DAILY CURRENT AFFAIRS- SEPTEMBER-4-2019

IMPORTANT TOPICS FOR TODAY

BY SUMIT BHARDWAJ 4th September 2019

1.India, Japan to hold 2+2 dialogue on Indo-Pacific cooperation(GS-1)

CONTEXT:India and Japan have decided to hold their first Foreign and Defence Ministerial Dialogue (2+2) ahead of the Japan-India annual summit this year for “advancing cooperation towards peace and prosperity of the Indo-Pacific region”. Accord on the meeting was reached by Defence Minister Rajnath Singh and his Japanese counterpart Takeshi Iwaya at the India-Japan annual defence ministerial dialogue, the Defence Ministry said on Tuesday.
The Ministry said that the two Ministers “shared their intention that Japanese Maritime Self Defence Force (JMSDF) and Indian Navy will make efforts towards participating in multilateral exercises including participation as observers.”
In this regard, the Ministers welcomed both the Japan-India-U.S. trilateral maritime exercise ‘Malabar 2019’, which would be held from late September to early October, and the second Japan-India-U.S. trilateral mine-countermeasures exercise (MINEX) that was held in July, and expressed their resolve “to continue the trilateral exercise in the same framework from next year onwards.”
The Armies and Air Forces of India and Japan held their first bilateral exercises, ‘Dharma Guardian’ and ‘Shinyuu Maitri’, in 2018. Last year, Japan also joined the India-US Air Force exercise ‘Cope India’ as an observer for the first time.
The two countries have made steady progress in Maritime Domain Awareness (MDA) based on implementing the arrangement for deeper cooperation between the two Navies, signed last year. The Ministers also noted the progress on the ongoing negotiations for the Acquisition and Cross-Servicing Agreement (ACSA), which commenced after the summit meeting in October last year.

The Concept of 'Indo Pacific'

First time, the term 'Indo Pacific' was used by the Japanese Prime Minister Shinzo Abe on Indian soil in 2007. Then, he said that there is a connect between the Indian Ocean and the Pacific Ocean.

After about ten years, the President of the United States used this term during his visit to East Asia. He repeatedly used this term instead of 'Asia Pacific'. The motive is to ensure that all the countries in the region are working in a direction to make it an open, free, inclusive, prosperous and rule based Indo Pacific system.

China is giving a tough competition to U.S in all sectors. In the trade war with China, U.S. wants to pump up as much as banding together of other nations as possible.

India considers two important aspects within the scope of this term:

One, centrality of the ASEAN (Association of Southeast Asian Nations), which is necessary to take forward the notion of Indo-Pacific.

Second, respect for international laws, especially the United Nations Convention on Law of the Sea, 1982 (UNCLOS) at the time of disputes, particularly over the South China Sea.

Significance of the Indo Pacific Region

It is a very rich region in terms of natural resources (fisheries, oil, gas) as well as mineral resources.

About 3.5 trillion dollars international trade flows through the South China Sea.

Trade of some of the major economies like China, Japan, Korea or the west coast of the United States goes through the South China Sea.

About 50% of India’s trade is conducted through the South China Sea.

India’s Role in the Indo Pacific Region

India has been one of the major players in the region. India conducts many naval exercises with the United States, countries of ASEAN, Japan, Korea and Vietnam.

Last time in 2015, with the United States, India issued a strategic vision for the Indian ocean and the Pacific, in which maintaining the security in the South China Sea, was also mentioned.

ONGC Videsh Ltd is prospecting for oil and gas in the exclusive economic zone of Vietnam. India imports 82% of its oil. It needs oil from wherever it can get. Therefore, explorations at the South China Sea is very important for it.

The international community including India wants freedom of navigation, freedom of over flights in the region, especially the South China Sea.

Claims Made by China in the South China Sea

The Chinese regime claims that it has historical ownership over nearly the entire region, which gives it the right to manufacture islands, declare defensive perimeters around its artificial islands, and to chase ships from other nations out of the South China Sea. The International Court of Arbitration rejected the claim in 2016.

China considers disputes in the South China Sea as territorial disputes and therefore considers that UNCLOS does not have a locus standi to pass the judgement over disputes.

What other littoral countries in the dispute are doing to counter China?

It was Phillipines only that took the case to the International Court of Arbitration in 2016. But it has been seen recently that it is ready to provide its islands to China provided China invests in its region.

None of the states in dispute is willing to or is capable of confronting China.

Economically, China is leading the region. Also, in general, China has a record of making countries fall into line with it either through warnings or by giving bribe in the form of investment.

Should India collaborate with US in the South China Sea?

To show its presence and to not allow China to do which is not as per the UNCLOS, it is necessary for India to have its ships in the South China Sea.

Participating in the exercises like Malabar that desist China from doing something unconventional.

The Malabar exercise started in 1992 as a bilateral one between the Indian Navy and the US Navy in the Indian Ocean. Japan became a permanent member of the Malabar exercise in 2015.

India shall not get sucked in with US, but rather have more and more naval exercise in other countries’ seas in their respective exclusive zones, close to the areas in the South China Sea which China claims.

India’s assets are not that large to be there permanently in the sea but in the name of maritime exercises, it can show its presence there to the world.

2.Four more States join ration card portability(GS-2)

CONTEXT:Ration card holders in Kerala and Karnataka, as well as in Rajasthan and Haryana, will be able to buy subsidised food from ration shops in the neighbouring State from next month, Food Minister Ram Vilas Paswan said on Tuesday.

With effect from October 1, these two new clusters will join the existing State pairs of Andhra Pradesh and Telengana, as well as Maharashtra and Gujarat as pioneers in inter-State portability of ration cards, he told a conference of Food Ministers and secretaries from across the country. Mr. Paswan was laying out the roadmap for the One Nation One Ration Card system of complete nationwide portability, which the Centre hopes to implement by June 2020.

One Ration Card system

Introduction:

‘One Nation One Ration Card’ scheme, which will allow portability of food security benefits, will be available across the country. This means poor migrant workers will be able to buy subsidised rice and wheat from any ration shop in the country. Currently Andhra Pradesh, Gujarat, Haryana, Jharkhand, Karnataka, Kerala, Maharashtra, Rajasthan, Telangana and Tripura are 10 states where 100% point of sale (POS) machine have been arranged and all PDS shops have been connected to the internet.

Ration Card:

Ration cards are an official document issued by state governments in India to households that are eligible to purchase subsidized food grain from the Public Distribution System (under the National Food Security Act). They also serve as a common form of identification for many Indians.

Under the National Food Security Act, all state governments in India have to identify households that are eligible for purchasing subsidized food grain from the Public Distribution System and provide them with ration cards. There are two types of ration cards under NFSA:

Priority ration card – priority ration cards are issued to households that meet the eligibility criteria set by their state government. Each priority household is entitled to 5 kilograms of food grain per member.

Antyodaya (AAY) ration cards are issued to “poorest of poor” households. Each AAY household is entitled to 35 kilograms of food grain.

Before the NFSA was enacted, there were three types of ration cards[3]:

Above Poverty Line (APL) ration cards that were issued to households living above the poverty line Planning Commission. These households received 15 kilogram of food grain (based on availability).

Below Poverty Line (BPL) ration cards that were issued to households living below the poverty line. These households received 25-35 kilograms of food grain.

Antyodaya (AAY) ration cards that were issued to “poorest of poor” households. These households received 35 kilograms of food grain

National Food Security Act (NFSA), 2013:

As passed by the Parliament, Government has notified the National Food Security Act, 2013 on 10th September, 2013.

The objective is to provide for food and nutritional security in human life cycle approach, by ensuring access to adequate quantity of quality food at affordable prices to people to live a life with dignity.

Key features:

The Act provides for coverage of upto 75% of the rural population and upto 50% of the urban population for receiving subsidized foodgrains under Targeted Public Distribution System (TPDS), thus covering about two-thirds of the population.

The eligible persons will be entitled to receive 5 Kgs of foodgrains per person per month at subsidised prices of Rs. 3/2/1 per Kg for rice/wheat/coarse grains.

The existing Antyodaya Anna Yojana (AAY) households, which constitute the poorest of the poor, will continue to receive 35 Kgs of foodgrains per household per month.

The Act also has a special focus on the nutritional support to women and children. Besides meal to pregnant women and lactating mothers during pregnancy and six months after the child birth, such women will also be entitled to receive maternity benefit of not less than Rs. 6,000.

Children upto 14 years of age will be entitled to nutritious meals as per the prescribed nutritional standards.

In case of non-supply of entitled foodgrains or meals, the beneficiaries will receive food security allowance.

The Act also contains provisions for setting up of grievance redressal mechanism at the District and State levels.

Separate provisions have also been made in the Act for ensuring transparency and accountability.

Why ensure food security?

The basic concept of food security globally is to ensure that all people, at all times, should get access to the basic food for their active and healthy life and is characterized by availability, access, utilization and stability of food. Though the Indian Constitution does not have any explicit provision regarding right to food, the fundamental right to life enshrined in Article 21 of the Constitution may be interpreted to include right to live with human dignity, which may include the right to food and other basic necessities.

One Nation One Ration Card

The scheme will ensure all beneficiaries especially migrants can access PDS across the nation from any PDS shop of their own choice.

Inter state portability of ration card.

Benefits:

No poor person is deprived of getting subsidised foodgrains under the food security scheme when they shift from one place to another. It also aims to remove the chance of anyone holding more than one ration card to avail benefits from different states.

Important for migrant workers.

Add to the nutrition value to the poor consumers.

Add to integration of the country.

Significance:

This will provide freedom to the beneficiaries as they will not be tied to any one PDS shop and reduce their dependence on shop owners and curtail instances of corruption.

Linking with Aadhaar removes possibility of corruption.

No additional cost actually because the scheme goes on the entitlements that are mandated in the National Food Security Act.

Challenges:

Prone to corruption: Every state has its own rules for Public Distribution System (PDS). If ‘One Nation, One Ration Card’ is implemented, it will further boost corruption in an already corrupted Public Distribution System. The explanation given to this is that with the help of technology govt is de-duplicating the ration cards.

The scheme will increase the woes of the common man and, the middlemen and corrupt PDS shop owners will exploit them.

Tamil Nadu has opposed the proposal of the Centre, saying it would result in undesirable consequences and is against federalism.

Within some states issue of intra state portability.

Different states have different rates and this mismatching rates will be a big challenge.

3.PM Modi expected to sign major LNG pact with Russia(GS-2)

CONTEXT: India looking to source oil from Russian Far East

Oil and energy prospects, including a major agreement to import LNG from Russia will mark Prime Minister Narendra Modi’s visit to Vladivostok beginning on Wednesday, in a trip being billed as the Russian version of India’s “Look east, Act east” policy.

“My visit to [the] Far East Region of Russia, the first by an Indian Prime Minister, underlines the desire on both sides to diversify and further strengthen the bonds of our robust bilateral relations,” Mr. Modi said in a departure statement issued in Delhi on Tuesday.

“The intent to develop greater ties in energy between India and Russia is going to be followed by actual action on the ground,” said Foreign Secretary Vijay Gokhale, who will accompany the Prime Minister, adding that India is actively seeking to “diversify oil & gas supplies beyond complete dependency in the Gulf.”

In particular, say officials, India’s worries over the U.S. sanctions on Iranian oil imports have forced the government to give up sourcing oil from Teheran in the short term.

What’s the difference between CNG, LNG, LPG and Hydrogen?(SOURCE:AFSGLOBAL)

The following is a brief summary highlighting the main differences of these fuels. Much more comprehensive details of the fuel properties and compositions is available from other web sources and online databases.

Compressed Natural Gas or CNG is stored on the vehicle in high-pressure tanks - 20 to 25 MPa (200 to 250 bar, or 3,000 to 3,600 psi). Natural gas consists mostly of methane and is drawn from gas wells or in conjunction with crude oil production. As delivered through the pipeline system, it also contains hydrocarbons such as ethane and propane as well as other gases such as nitrogen, helium, carbon dioxide, sulphur compounds, and water vapour. A sulphur-based odourant is normally added to CNG to facilitate leak detection. Natural gas is lighter than air and thus will normally dissipate in the case of a leak, giving it a significant safety advantage over gasoline or LPG.

Liquefied Natural Gas or LNG is natural gas stored as a super-cooled (cryogenic) liquid. The temperature required to condense natural gas depends on its precise composition, but it is typically between -120 and -170°C (-184 and –274°F). The advantage of LNG is that it offers an energy density comparable to petrol and diesel fuels, extending range and reducing refuelling frequency.

The disadvantage, however, is the high cost of cryogenic storage on vehicles and the major infrastructure requirement of LNG dispensing stations, production plants and transportation facilities. LNG has begun to find its place in heavy-duty applications in places like the US, Japan, the UK and some countries in Europe. For many developing nations, this is currently not a practical option.

Liquefied Petroleum Gas or LPG (also called Autogas) consists mainly of propane, propylene, butane, and butylene in various mixtures. It is produced as a by-product of natural gas processing and petroleum refining. The components of LPG are gases at normal temperatures and pressures. One challenge with LPG is that it can vary widely in composition, leading to variable engine performance and cold starting performance. At normal temperatures and pressures, LPG will evaporate. Because of this, LPG is stored in pressurised steel bottles. Unlike natural gas, LPG is heavier than air, and thus will flow along floors and tend to settle in low spots, such as basements. Such accumulations can cause explosion hazards, and are the reason that LPG fuelled vehicles are prohibited from indoor parkades in many jurisdictions.

Hydrogen or H2 gas is highly flammable and will burn at concentrations as low as 4% H2 in air. For automotive applications, hydrogen is generally used in two forms: internal combustion or fuel cell conversion. In combustion, it is essentially burned as conventional gaseous fuels are, whereas a fuel cell uses the hydrogen to generate electricity that in turn is used to power electric motors on the vehicle. Hydrogen gas must be produced and is therefore is an energy storage medium, not an energy source. The energy used to produce it usually comes from a more conventional source. Hydrogen holds the promise of very low vehicle emissions and flexible energy storage; however, many believe the technical challenges required to realize these benefits may delay hydrogen’s widespread implementation for several decades.

Hydrogen can be obtained through various thermochemical methods utilizing methane (natural gas), coal, liquified petroleum gas, or biomass (biomass gasification), from electrolysis of water, or by a process called thermolysis. Each of these methods poses its own challenges.

4.India, Russia want to diversify, strengthen bilateral relations: PM Modi(GS-2)

CONTEXT:Prime Minister Narendra Modi on September 3 said he looks forward to discussing regional and international issues of mutual interest with Russian President Vladimir Putin during his visit to Vladivostok to attend the Eastern Economic Forum (EEF).

He also said his visit underlines the desire of the two countries to diversity and further strengthen bilateral relations.

Mr. Modi’s visit to the Russian Far East Region is the first by an Indian Prime Minister.

In Vladivostok, Mr. Modi will participate as the chief guest at the 5th Eastern Economic Forum at the invitation of President Putin.

He will also hold the 20th India-Russia Annual Summit with Mr. Putin.

About the Eastern Economic Forum:

The Eastern Economic Forum was established by Decree of the President of the Russian Federation Vladimir Putin in 2015.

In accordance with the Decree, the Eastern Economic Forum takes place each year in Vladivostok.

Every year, the Eastern Economic Forum serves as a platform for the discussion of key issues in the world economy, regional integration, and the development of new industrial and technological sectors, as well as of the global challenges facing Russia and other nations.

Events at the Forum traditionally take place in the form of panel sessions, roundtables, televised debates, business breakfasts, and business dialogues devoted to Russia’s relationships with various countries.

The Forum business programme includes a number of business dialogues with leading partner countries in the Asia-Pacific region, and with ASEAN, a key integration organization of dynamically developing nations in Southeast Asia

ABOUT THE FAR EAST:

The Far East is the easternmost part of Russia. The macro-region borders two oceans, the Pacific and the Arctic, and five countries (China, Japan, Mongolia, the United States and the DPRK).

The Far Eastern Federal District covers more than a third of the country’s territory.

RESOURCES: The Far East is rich in natural resources like diamonds, stannary, borax materials, 50 gold, tungsten, and fish and seafood. About 1/3 of all coal reserves and hydro-engineering resources of the country are here. Forests of the region comprise about 30% of the total forest area of Russia.

20th India-Russia Annual Summit with Mr. Putin.(SOURCE:PTI)

India and Russia are expected to firm up a five-year roadmap for deeper cooperation in the oil and gas sector apart from sealing a raft of agreements in several key areas during Prime Minister Narendra Modi’s two-day visit to the Russian city of Vladivostok beginning Wednesday.

Foreign Secretary Vijay Gokhale, briefing reporters on Modi’s visit, said the possibility of opening a maritime route, connecting Chennai with Vladivostok, will also be explored as it could link Europe as well through the arctic route.

Gokhale, explaining new areas of cooperation, said India is also looking at cooperation in the farming sector besides exploring the possibility of sending skilled manpower to Russia.

Replying to a question, the foreign secretary said Russia fully supports India on the Kashmir issue and on its concerns over cross-border terrorism.

In Vladivostok, Modi and Russian President Vladimir Putin will hold the 20th India-Russia annual summit on September 4.

The prime minister and the Russian president will make a joint visit to one of Russia’s major ship-building yards.

On September 5, Modi will attend the Eastern Economic Forum in as the chief guest and hold bilateral talks with several leaders on the sidelines of the event. He and Putin will visit an international judo championship in Vladivostok in which a six-member Indian team is participating, Gokhale said.

He said a number of agreements, including in the coal mining and power sectors, are expected to be firmed up during Modi’s around 36-hour visit.

Gokhale said expanding cooperation in the hydrocarbons sector will be a major focus area during the prime minister’s visit to Vladivostok.

“The prime minister has said it on a number of times that we need to bring the relationship with Russia beyond civil nuclear and defence cooperation into other areas of the economy,” he said.

The foreign secretary said both sides are expected to firm up a five-year roadmap 2019-2024 laying out possibilities of cooperation in oil and gas sector, in terms of exploration and exploitation, and purchase.

At present, India relies heavily on the Gulf region for its energy requirement. Gokhale said India is looking at Russia as a major source of hydrocarbons so as to end its complete dependency on the Gulf region.

He said some letters of intent will also be signed between Indian public sector companies and Russian entities for development of oil and gas fields in Russia.

Gokhale said India may announce investment in new oil fields in Russia and something concrete may come up on import of LNG from Russia.

He said the possibility of oil and gas supply from the Arctic will also be explored during the prime minister’s visit.

In the summit talks, the two leaders are expected to discuss a number of key regional issues, including the Afghan peace process and situation in the Gulf region.

They are also expected to explore ways to enhance cooperation while working in multilateral organisations like Shanghai Cooperation Organisation, BRICS (Brazil-Russia-India-China and South Africa).

5.INDIAN EXPRESS ARTICLE ON APACHE HELICOPTERS...

6.India pledges $200,000 for health emergency fund(GS-2,3)
CONTEXT:India will contribute $2,00,000 towards implementation of the preparedness stream under the South-East Asia Health Emergency Response Fund (SEARHEF), said Union Health Minister Harsh Vardhan on Tuesday.
He made the announcement during the ministerial round-table on emergency preparedness on the second day of the ‘72nd Session of the World Health Organization (WHO) regional committee for South-East Asia’.
The Health Ministers of the South-East Asia Region of WHO also signed the Delhi Declaration on Emergency Preparedness.
The Regional Committee for South-East Asia is the World Health Organization’s governing body in the South-East Asia Region, with representatives from all 11
Member States of the Region. It meets in September every year to review progress in health development in the Region, formulate resolutions on health issues for
the Member States, as well as to consider the regional implications of World Health
Assembly resolutions, among others.This report summarizes the discussions of the Seventieth Session of the WHO
Regional Committee for South-East Asia.

7.Cabinet gives approval for RS4,557 crore one-time infusion into IDBI Bank(GS-3)

CONTEXT:It may help bank to raise further capital on its own and exit the PCA framework

The Cabinet on Tuesday approved a one-time capital infusion of RS4,557 crore into IDBI Bank in a bid to help the bank return to profitability, the government said.

The Life Insurance Corporation of India, which owns a 51% stake in the bank, will infuse another RS4,743 crore in IDBI. “It will help in completing the process of IDBI Bank’s turnaround and enable it to return to profitability and normal lending, and giving the government the option of recovering its investment at an opportune time,” it said in a release.

“IDBI Bank needs a one-time infusion of capital to complete the exercise of dealing with its legacy book,” it added. “It has already substantially cleaned up [its books], reducing net NPA from a peak of 18.8% in June 2018 to 8% in June 2019. The capital for this has to come from its shareholders.”

IDBI BANK:

Background:

IDBI (Industrial Development Bank of India) Bank was established in 1964 by an Act of Parliament as a wholly owned subsidiary of the Reserve Bank of India (RBI).

It was established as a specialised development financial institution (DFI) – on the lines of NABARD, NHB and SIDBI – to provide credit and other financial facilities for the development of Indian industry.

In 1976, the ownership of IDBI was transferred to the Government of India.

In 2004 it was converted into a commercial bank when RBI incorporated IDBI as a 'scheduled bank' under the RBI Act, 1934.

Recent deal: Timeline

The IDBI Bank’s financial health has been deteriorating. Its gross Non-Performing Assets (NPAs) at the end of March 2018 was 28% of advances.

August 2018: the cabinet had approved the acquisition of controlling stake by LIC as a promoter in the bank through a combination of preferential allotment and open offer of equity.

September 2018: following the transfer of controlling 51 % to LIC from the government of India, the government holding came down to 46.46 % from nearly 86 %, while LIC stake increased from about 8 % to 51 %.

January 2019: LIC completed the acquisition of 51 % controlling stake in IDBI Bank, marking the entry of the LIC into the banking space.

March 2019: RBI changed the categorisation of IDBI Bank to a private sector lender from public sector lender following acquisition of majority stake by LIC

PCA framework:

What is PCA?

PCA norms allow the regulator to place certain restrictions such as halting branch expansion and stopping dividend payment. It can even cap a bank’s lending limit to one entity or sector. Other corrective action that can be imposed on banks include special audit, restructuring operations and activation of recovery plan. Banks’ promoters can be asked to bring in new management, too. The RBI can also supersede the bank’s board, under PCA.

When is PCA invoked?

The PCA is invoked when certain risk thresholds are breached. There are three risk thresholds which are based on certain levels of asset quality, profitability, capital and the like. The third such threshold, which is maximum tolerance limit, sets net NPA at over 12% and negative return on assets for four consecutive years.

What are the types of restrictions?

There are two type of restrictions, mandatory and discretionary. Restrictions on dividend, branch expansion, directors compensation, are mandatory while discretionary restrictions could include curbs on lending and deposit. In the cases of two banks where PCA was invoked after the revised guidelines were issued — IDBI Bank and UCO Bank — only mandatory restrictions were imposed. Both the banks breached risk threshold 2.

What will a bank do if PCA is triggered?

Banks are not allowed to re new or access costly deposits or take steps to increase their fee-based income. Banks will also have to launch a special drive to reduce the stock of NPAs and contain generation of fresh NPAs. They will also not be allowed to enter into new lines of business. RBI will also impose restrictions on the bank on borrowings from interbank market.

Impact:

Small and medium enterprises will have to bear the brunt due to this move by RBI. Since the PCA framework restricts the amount of loans banks can extend, this will definitely put pressure on credit being made available to companies especially the MSMEs.

Large companies have access to the corporate bond market so they may not be impacted immediately. It has been predicted that if more state-owned banks are brought under PCA, it will impact the credit availability for the MSME segment.

TODAYS SOURCES:RSTV,THE HINDU,INDIAN EXPRESS,GOOGLE