15
Current Affairs Analysis

15th June 2016 Current Affairs Analysis

‘Inflation Expectations Survey’; Solvency-II norms & Solvency Ratio; Anti-dumping duty; ‘Patent Term Extensions’ etc.
By IT's Current Affairs Analysis Team
June 15, 2016

Contents

Polity & Governance

  • Govt releases draft national wind-solar hybrid policy

Economy

  • RBI launches inflation expectations survey
  • Panel set up on risk-based capital norms in insurance
  • Financial stress in many industries will ease: study
  • Anti-dumping duty on chemical from 5 nations
  • If India signs RCEP, it will not be the ‘pharmacy of the world’: MSF

Environment & Ecology

  • Govt mulls Rs 10,000-cr bioenergy mission from FY18

Art & Culture

  • Ancient Urban Networks Around Angkor Wat Discovered

Science & Technology

  • Andhra Pradesh to start Internet-based phone service
  • Confirmation of four new elements completes seventh row of periodic table

Also in News

  • Indian navy ship with all women crew reaches Mauritius

 

Polity & Governance

Govt releases draft national wind-solar hybrid policy

With the aim of facilitating the setting up of 10,000 MW of hybrid wind-solar power plants by 2022, the Ministry of New & Renewable Energy (MNRE) has come out with the Draft National Wind-Solar Hybrid Policy.

  • The draft policy proposes to encourage new technologies, methods and way-outs involving combined operation of wind and solar PV plants.
  • Broadly, the draft policy proposes hybridisation of existing solar photovoltaic (PV) and wind power plants as well as providing a guideline towards setting up of new hybrid wind-solar PV power plants.
  • The draft policy proposes to provide fiscal and financial incentives for hybridisation of existing plants as well as setting up of new hybrid wind-solar PV plants.
  • Also, low cost financing for hybrid projects may be made available through IREDA and other financial institutions like multilateral banks.

Background:

  • India has set an ambitious target of reaching 175 GW of installed capacity from renewable energy sources including 100 GW from solar and 60 GW from wind by 2022.
  • Various policy initiatives have been taken to achieve this target. The country has already crossed a mark 26.8 GW of wind and 7.6 GW of solar power installed capacity during May 2016.

Significance:

Studies have revealed that solar and winds are almost complementary to each other and hybdridation of two technologies would help in minimising the variability apart from optimally utilising the infrastructure, including land and transmission system.

[Ref: Hindu]

 

Economy

RBI launches inflation expectations survey

Amid rise in both Consumer Price Index (CPI) and Wholesale Price Index-based inflation, the Reserve Bank of India on (RBI) has launched its June 2016 round of ‘Inflation Expectations Survey of Households’ across 18 cities, including Ahmedabad, Chandigarh, Patna and Thiruvananthapuram.

About the survey:

The RBI has been regularly conducting Inflation Expectations Survey of Households.

  • Mumbai-based Hansa Research Group has been engaged to conduct this round of the survey on behalf of the RBI.
  • For this purpose, the households will be approached by the agency and the selected households would be requested to provide their response.
  • The survey seeks qualitative responses from households on price changes (general prices as well as prices of specific product groups) in the next three months as well as in the next one year and quantitative responses on current, three- month ahead and one-year ahead inflation rates.
  • The RBI, which factors in inflation while arriving at monetary decision, said the results of the survey provide useful policy information.
  • Inflation expectations are subjective assessments of households covered in the survey and are based on households’ individual consumption baskets.
[Ref: BS]

 

Panel set up on risk-based capital norms in insurance

The Insurance Regulatory and Development Authority of India (Irdai) has set up a committee on norms on risk-based capital in insurance and on liability valuation.

  • The committee will look into the pros and cons of the current solvency regime and a risk-based capital one.
  • It will also review the recommendations on risk-based of a committee chaired by P A Balasubramanyam, and recommend a suitable approach.
  • It will recommend a broad time-frame for completion of the exercise.

Early steps taken by IRDAI:

  • Some early steps have already been taken by the regulator. For instance, in some business segments, it has already been proposed that risk-based pricing be followed.
  • Irdai has asked insurers to maintain higher solvency for segments like health and motor where incurred claims are high.

Background:

  • In 2013, IRDA had proposed a lower solvency margin for insurers, at 145% against 150% currently, including a risk charge.
  • Earlier, in a proposal on a risk-based solvency approach, the regulator had constituted a committee to suggest a roadmap to move to Solvency-II norms.

What is Solvency-II norms?

  • Solvency-II is a European Union (EU) legislative programme, to be implemented in all 28 member-states.
  • These are to insurers what Basel-III norms are to banks and introduces a harmonised and EU-wide insurance regulatory regime.
  • The objective is uniform policyholder protection across countries.
  • These new norms are made up of provisions related to the capital requirements of companies, regulatory assessment of a specific firm’s risk and the regulator’s broader supervision of the entire market.
  • Solvency-II has not yet come into force in the EU. Discussion is on regarding whether these should be implemented in many of the EU markets and the transition phase to be followed. Only after clarity emerges would the issue begin of enforcement in India.

India is not ready from an accounting perspective for these new norms. At present, India uses factor-based processes to arrive at the solvency margin.

What is Solvency Ratio?

Solvency Ratio means the ratio of the amount of ASM to the amount of Required Solvency Margin.

  • The higher the ratio, the more financially sound a company is considered.
  • The required ratio is 150%, a minimum to be maintained.
  • The Available Solvency Margin (ASM) is calculated as the excess of value of assets over liabilities.
[Ref: BS]

 

Financial stress in many industries will ease: study

According to a study, the financial stress levels for banks will subside to an extent across sectors due to increased consumer spending following normal monsoon and a healthy pace of infrastructure investment.

  • The study, covering banking assets in 20 focus sectors, was conducted by SMERA, a joint initiative of Small Industries Development Bank of India (SIDBI), Dun & Bradstreet Information Services India Private Limited (D&B) and leading Indian public and private sector banks.
  • The 20 sectors were chosen as they had the maximum influence over India’s growth.

Key points of the study:

  • The study revealed that of the 20 sectors reviewed, only textiles and hospitality would remain in the high stress zone against six now.
  • The other four high-risk sectors now are gems and jewellery, infrastructure, steel and sugar.
  • Auto OEM is the only sector which is expected to move from moderate stress level now to low stress level by next fiscal.
  • Presently over 50% of the 20 sectors covered are in moderate stress level and this proportion will increase to 75%.
  • Agri and allied products, which is in the moderate zone and sugar, which is in the high stress zone, are likely to see maximum improvement in the stress level score due to good monsoon.
[Ref: Hindu]

 

Anti-dumping duty on chemical from 5 nations

India may impose anti-dumping duty of up to $168.76 per tonne on imports of a chemical, mainly used in textile and packaging industry, from five countries including China and Iran to protect domestic players.

  • MCC PTA India Corp and Reliance Industries Ltd (RIL) have jointly filed an application seeking anti-dumping investigations.
  • In its final findings, the Directorate General of Anti-Dumping and Allied Duties (DGAD), under the commerce ministry, has found that ‘Purified Terephthalic Acid’ has been exported to India from China, Iran, Indonesia, Malaysia and Taiwan below its normal value which has resulted in dumping.
  • While DGAD recommends the duty, the Finance Ministry imposes it.

What is Anti-dumping duty?

An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.

  • Countries initiate anti-dumping probes to determine if the domestic industry has been hurt by a surge in below-cost imports. To counter it they impose duties under the multi-lateral WTO regime.
  • Anti-dumping steps are taken to ensure fair trade and provide a level-playing field to the domestic industry.
  • They are not a measure to restrict imports or cause an unjustified increase in cost of products.
  • According to a WTO report, India, US and Brazil were the leading initiators of anti-dumping investigations in 2015.
[Ref: Hindu]

 

If India signs RCEP, it will not be the ‘pharmacy of the world’: MSF

Humanitarian aid organisation Médecins Sans Frontières (MSF) has warned India that the country will not remain ‘pharmacy of the developing world’ if the proposals in the Regional Comprehensive Economic Partnership agreement (RCEP) are adopted.

  • MSF Access Campaign along with other civil society organisations are pushing for the removal of harmful intellectual property provisions that could potentially increase drug costs by creating new monopolies and delaying the entry of affordable generics in the market.

Key concerns:

  • Japan and South Korea have made several “alarming” proposals to include intellectual property rules that go beyond what international trade rules – agreed under World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) require.
  • Two of the most worrying proposals in the trade deal is the demand for ‘Data Exclusivity’ and ‘Patent Term Extensions’– both intellectual property obligations that Least Developing Countries (LDCs) were completely exempted from until 2033 according to the WTO TRIPS agreement.
  • For India, agreeing to data exclusivity will mean amending the Drugs & Cosmetic Act (FDA law) so that the Indian Drug Regulatory Authority (DRA) is prohibited from registering a more affordable version of a medicine as long as the exclusivity lasts over the clinical trial data.

What is Data exclusivity?

Data exclusivity provides protection to the technical data generated by innovator companies to prove the usefulness of their products.

  • In pharmaceutical sector, drug companies generate the data through expensive global clinical trials to prove the efficacy and safety of their new medicine. Switzerland has huge interest in this sector.
  • By gaining exclusive rights over this data, innovator companies can prevent their competitors from obtaining marketing licence for low-cost versions during the tenure of this exclusivity.

What is ‘Patent Term Extensions’?

Patent term extensions are intellectual property obligations given to compensate the company for delays in processing patent applications.

  • A company gets a 20-year patent monopoly on a drug from the date that the application is filed.
  • Sometimes processing these applications takes time and the companies get only 13 years instead of 20.
  • A patent term extension will give another five-year monopoly to the innovator company, again delaying the entry of generic drugs in the market.

About RCEP:

The RCEP agreement (FTA) is proposed between the ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, Vietnam) and the six states with which ASEAN has existing FTAs (Australia, China, India, Japan, South Korea and New Zealand).

  • RCEP negotiations were formally launched in November 2012 at the ASEAN Summit in Cambodia.
  • The Regional Comprehensive Economic Partnership (RCEP) is among the proposed three mega FTAs in the world so far. The other two are:
  1. The TPP (Trans Pacific Partnership, led by the US) and
  2. The TTIP (Trans-Atlantic Trade and Investment Partnership between the US and the EU).
  • RCEP is viewed as an alternative to the TPP trade agreement, which includes the United States but excludes China.
[Ref: Hindu]

 

Environment & Ecology

Govt mulls Rs 10,000-cr bioenergy mission from FY18

The ministry of new and renewable energy is working on an integrated bioenergy mission with an outlay of Rs 10,000 crore from the next financial year to enhance use of bio-fuels like ethanol and biogas for reducing consumption of fossil fuels.

Details:

  • The objective of the mission would be to reduce greenhouse gases emissions as agreed in the Nationally Determined Contributions at COP21.
  • The Centre wants to achieve this objective by progressive blending or substitution of fossil fuels such as coal, petrol, diesel, natural gas and LPG with biomass pellets, bio-ethanol, bio-diesel, bio-methane, and similar green fuels, both for electrical and non-electrical uses.
  • The National Institute of Bio-Energy, at Kapurthala, is likely to be upgraded and developed into a world-class institution to support the mission.

Key fact:

  • Ethanol blending is the practice of mixing petrol with ethanol. At present, it is compulsory to blend 5% ethanol with petrol.
[Ref: BS]

 

Art & Culture

Ancient Urban Networks Around Angkor Wat Discovered

An Australian archaeologist claims to have found evidence of previously undiscovered medieval urban and agricultural networks surrounding the ancient city of Angkor Wat in Cambodia.

  • The findings could further our understanding of Khmer culture and throw into question traditional assumptions about the 15th-century decline of the empire.
  • A laser technology known as lidar was used to create precise maps of ancient networks that left only vague traces — invisible to the naked eye — in the landscape surrounding the temples.

About Angkor Wat:

  • Angkor Wat is a temple complex in Cambodia and the largest religious monument in the world.
  • It was originally constructed as a Hindu temple for the Khmer Empire, gradually transforming into a Buddhist temple toward the end of the 12th century.
  • It was built by the Khmer King Suryavarman II in the early 12th century in Yaśodharapura, the capital of the Khmer Empire, as his state temple and eventual mausoleum.
  • Angkor Wat is a UNESCO World Heritage site
[Ref: Hindu, Wiki]

 

Science & Technology

Andhra Pradesh to start Internet-based phone service

Andhra Pradesh is perhaps the first State to have obtained a telecom licence and it can issue phone numbers starting with the ‘797’ series from August this year.

Details:

  • Andhra Pradesh obtained permission from the Telecom Ministry for starting its own IPTV — Internet Protocol based Television network — as part of its Fibre Grid project.
  • With this, it indirectly got the opportunity to start an internet based telephone service ‘without requiring any further registration’.
  • Although it primarily aims at providing affordable net connectivity in every corner of the State, “the government can provide free telephone services within the region through internet which means you can also skype and have video calls.
[Ref: Hindu]

 

Confirmation of four new elements completes seventh row of periodic table

The International Union for Pure and Applied Chemistry (IUPAC) announced the official names of four new elements. Their inclusion completes the seventh row of the Periodic Table of elements.

  • IUPAC will wait for five months (until November 2016) to allow for any appeals or opposition before officially confirming them.

Key facts:

  • These new elements have 113, 115, 117, and 118 protons respectively. 
  • The four new elements are:
  1. Nihonium (Nh), element 113, named after Japan (Nippon is a Japanese word for Japan).
  2. Moscovium (Mc), element 115, named after the Russian capital city.
  3. Tennessine (Ts), element 117, named after the state of Tennessee. (“Tennessine is in recognition of the contribution of the Tennessee region, including Oak Ridge National Laboratory, Vanderbilt University, and the University of Tennessee at Knoxville, to superheavy element research.)
  4. Oganesson (Og), element 118, which bears the name of Russian physicist Yuri Oganessian, who led several elemental discoveries. Nature reports this is only the second time an element has been named for a living scientist.
  • All four elements are not found in nature, and were synthetically created in laboratories.
  • They are super-heavy elements.

How elements can be named?

The IUPAC has some rules for how elements can be named:

  • A mythological concept or character
  • A mineral or similar substance
  • A place or geographical region
  • A property of the element
  • A scientist

About IUPAC:

The International Union of Pure and Applied Chemistry (IUPAC) is an international federation of National Adhering Organizations that represents chemists in individual countries.

  • It is a member of the International Council for Science (ICSU).
  • The international headquarters of IUPAC is in Zürich, Switzerland.
  • IUPAC was established in 1919 as the successor of the International Congress of Applied Chemistry for the advancement of chemistry.
  • IUPAC is best known for its works standardizing nomenclature in chemistry and other fields of science, but IUPAC has publications in many fields including chemistry, biology and physics.
  • IUPAC’s Inter-Divisional Committee on Nomenclature and Symbols (IUPAC nomenclature) is the recognized world authority in developing standards for the naming of the chemical elements and compounds.
[Ref: Hindu, Wiki]

 

Also in News

Indian navy ship with all women crew reaches Mauritius

Creating Indian maritime history, Indian Navy sailing ship INSV Mhadei, with a six-women crew, travelled through the stormy monsoon build-up in the Indian Ocean to reach Port Louis, Mauritius.

  • This historic open ocean voyage by the all-women crew is designed to help them get used to the conditions they will face during their mission.
[Ref: Hindu]

 

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