Caspian-Sea-Agreement-2018
Current Affair Analysis

18th August 2018 Current Affairs Analysis -IASToppers

Caspian Sea Agreement; 18th edition of Asian Games; What are P-notes?International Conference on Recent Advances in Food Processing Technology (iCRAFPT); Caspian Sea; Indian Institute of Food Processing Technology (IIFPT); What is Prompt Corrective Action (PCA)?11th World Hindi Conference; Banks Board Bureau (BBB); EsowAlben; etc.
By IT's Current Affairs Analysis Team
August 27, 2018

Contents

Economy

  • International Conference on Recent Advances in Food Processing Technology (iCRAFPT)
  • Two firms hired to assist Banks Board Bureau (BBB)
  • Banking secy says PSU banks will be out of RBI’s prompt action watchlist by year-end
  • Investment in P-notes continues to decline; hits new low of Rs 80,341 crore

Bilateral & International Relations

  • Landmark Caspian Sea deal signed by five coastal nations

Art & Culture

  • 11th World Hindi Conference held in Mauritius

Key Facts for Prelims

  • 18th edition of Asian Games
  • EsowAlben

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Economy 

International Conference on Recent Advances in Food Processing Technology (iCRAFPT)

International Conference on Recent Advances in Food Processing Technology (iCRAFPT) was held at Indian Institute of Food Processing Technology (IFPT), Thanjavur in Tamil Nadu.

iCRAFPT-2018

  • The theme of conference was “Doubling farmers’ income through food processing”.

Significance of the conference:

  • The conference provided strong platform for knowledge sharing and meaningful delegation among industry, academia, researchers and farmers which will potentially impact the food sector growth to a newer height.
  • It featured eight technical sessions on diversified areas of food processing. It saw participation of over 9 overseas speakers, 77 Indian speakers, 18 food industry talks, 30 series lectures, 2 panel discussions etc.

About Indian Institute of Food Processing Technology (IIFPT):

  • It is premier national institute working under administrative control of Union Ministry of Food Processing Industries (MoFPI).
  • It is headquartered in Thanjavur, Tamil Nadu.
  • It delivers research and education in food processing.
  • It also incubates farmers, entrepreneurs and aspiring youth for prospective food business ventures.

Challenges faced by food processing industry in India:

  • Though the sector has immense opportunities, but it also has lots of domestic and international problems.
  • India just has 2.2% of exports out of total global exports in food processing.
  • Issues generated by economies are major reasons for not generating exports majorly by USA & EU, in terms of Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) barriers. They impact Indian export significantly.
  • Poor warehousing and storage capacity, upgrading agri infrastructure, and lack of facility by a dedicated agency to the farmers are the domestic problems in India.
  • Though Food Safety and Standards Authority of India (FSSAI) is there, but it facilitates post production. Hence, there is a lot of issues to be addressed for pre-harvest.
  • Lots of inorganic chemicals are also used in India for agricultural production which needs to be shifted to organic ones. There are approximately 67 pesticides found in Indian food processing products by SPS.
  • Gross capital investment in agriculture infrastructure is also very meagre.
  • Meat is also a product that has been affected much and lots of cattle mandies are getting deserted due to socio-political problems. This affects export of canned meat which is having vast opportunity for India in global markets.
  • The big companies will abide by laws and maintain international standards in terms of following the rules, affluent and waste management etc., but the small domestic players are not regulated.
  • Global food consumption pattern has also changed in India also.
  • Food processing industries are mostly confined to coastal areas rather than internal areas with good food produce.
  • Till recently, the food processing industry in India has not been able to take off because even small time snacks were imported from Australia, New Zealand and Dubai.

Solutions:

  • From grass root level, India has to develop agri infrastructure, enhance public investments in agriculture sector.
  • India is an agrarian economy with lots of laborious farmers and skilled entrepreneur that can leverage the benefit from the food processing industry.
  • Connect the farms with the mandis, linking them with good warehouses and increasing the storage capacities.
  • Productivity of the farm sector is also to be increased by using modern agricultural practices and technologies. These steps will increase India’s participation in global food market and be a major global hub in this sector.
  • There is a need of broad policy framework with regards to the exports of the processed vegetarian and non-vegetarian food from grass root level.
  • Food processing food park concept can be replicated across the country as it offers an alternative to farmers.
  • There is a need to get the big investments through big brands like nestle, pepsi, kargil etc.
  • The rules must be strictly enforced and must be abided by all the domestic and international companies and deliver the quality products.
  • There is a need to change the farm patterns and diversify the crops production.
  • There must be focus on 2nd green revolution that will focus on traditional and new food items and increase productivity.
  • There is a need of adopting the good practices from best producing states and from around the world also.
  • There should be more awareness towards the education of food processing and more institutes must be opened up.
  • New technologies can be brought in to be used which can also improve the skills of the students and entrepreneurs.
  • Food processing can be a new avenue for the students to get trained to be an entrepreneur in this sector.
  • There is also a need to strengthen the university industry linkage for food processing sector which will increase the awareness and productivity that will lead to better exports globally.
  • So, it has to be the combination of output, livestock and food processing facilities as it creates much bigger market and for that India should fit into global supply chain of food processing.
  • Food processing sector can help government’s mission to double the farmers income, but it cannot come just by giving them higher prices of their produce as it will lead to inflation.
  • If India wants to be a supply chain hub and attract investment, then a strong domestic market helps.
  • The Indian dishes have made its way abroad for instance national dish of Britain Chicken Tikka Masala is from India. Hence blending Indian skills with international technology can take India far away in this sector.
  • Now at the time when agriculture in India is about to take a big leap it is to be ensured that the farmers’ produce get the good market at fair price to keep up the agricultural productivity.
  • It is not only the consumption of main cereals that matters, the surplus has also to be converted in to snacks for consumption in India and abroad.
  • The system as a whole must encourage the Indian producers to better package and brand them.
  • There is a change in the life style of the people towards the ready food to consume but what matters is maintaining quality and hygiene and its strict enforcement.
  • Substituting the import scenario in this sector will provide lots of opportunities to entrepreneurs to manufacture and export to other markets.
[Ref: PIB]

 

Two firms hired to assist Banks Board Bureau (BBB)

Banks Board Bureau (BBB) has appointed two firms Egon Zehnder International Pvt. Ltd and Hay Consultants Pvt. Ltd to assist in developing strategies for top bank management.

Egon-Zehnder-International-Pvt.-Ltd-and-Hay-Consultants-Pvt

About the Banks Board Bureau:

  • With a view to improve the Governance of Public Sector Banks (PSBs), the Government had decided to set up an autonomous Banks Board Bureau in August 2015.
  • The bureau was announced as part of the seven-point Indradhanush plan to revamp PSBs.
  • BBB is an autonomous body.
  • The bureau will have three ex-officio members and three expert members, in addition to the Chairman. All the Members and Chairman will be part time.

Its functions:

  • The Bureau is mandated to play a critical role in reforming the troubled public sector banks by recommending appointments to leadership positions and boards in those banks and advise them on ways to raise funds and how to go ahead with mergers and acquisitions.
  • It will constantly engage with the boards of all 22 public sector banks to formulate appropriate strategies for their growth and development.
  • They will also constantly engage with the Board of Directors of all the public sector banks to formulate appropriate strategies for their growth and development.
  • The bureau will search and select heads of public sector banks and help them develop differentiated strategies of capital raising plans to innovative financial methods and instruments.
  • It would also be responsible for selection of non-executive chairman and non-official directors on the boards.
[Ref: Live Mint]

 

Banking secy says PSU banks will be out of RBI’s prompt action watchlist by year-end

Department of Financial Services Secretary Rajiv Kumar said that the the PSU banks are expected to come out of the Prompt Corrective Action (PCA) framework by the end of this year.

GettyImages-610495444-e1507128943534-770x433-Prompt-Corrective-Action-RBI

  • Currently, 11 out of a total of 21 state-owned banks are under the RBI’s Prompt Corrective Action (PCA) framework.
  • Notably, Dena Bank and Allahabad Bank are currently facing restrictions on granting fresh loans.

Background:

  • Various measures taken by the government including implementation of Insolvency and Bankruptcy Code (IBC) has yielded good results in terms of reining bad loans and increasing recovery.

What is Prompt Corrective Action (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.
  • Under PCA, the RBI can also supersede the bank’s board.

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 sanctions?

  • There are two types 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.

types-of-sanctions

What will a bank do if PCA is triggered?

  • Banks are not allowed to renew 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.
[Ref: The Hindu, Indian Express]

 

Investment in P-notes continues to decline; hits new low of Rs 80,341 crore

Investments through participatory notes (P-notes) into Indian capital markets- equity, debt, and derivatives have plunged to over nine-year low of Rs 80,341 crore till July 2018-end.

P-notes-SEBI

  • This is the lowest level since April 2009 when the cumulative value of such investments stood at Rs 72,314 crore.

Background:

  • The decline comes amid stringent norms put in place by market watchdog Securitas Exchange Board of India (SEBI) to check misuse of these instruments.
  • In July 2017, Sebi had notified stricter norms stipulating fee of US $1,000 on each instrument to check any misuse for channelising black money. It had also prohibited FPIs from issuing such notes where underlying asset is derivative, except those which are used for hedging purposes.
  • Earlier in April 2017, SEBI also had barred resident Indians, NRIs and entities owned by them from making investment through P-notes.

What are P-notes?

P-notes, or Off-shore Derivatives Instruments (ODIs), allow foreign investors to take exposure to Indian stocks without registering with SEBI.

  • These instruments are issued by foreign portfolio investors (FPIs) registered with SEBI.
  • They allow foreign investors to buy stocks listed on Indian exchanges without being registered.
  • The instrument gained popularity as FIIs, to avoid the formalities of registering and to remain anonymous, started betting on stocks through this route.
  • Morgan Stanley, Goldman Sachs, JP Morgan and Credit Suisse are among the biggest P-note issuers on the Indian market.

Why are they popular?

  • These are a popular way to invest in Indian markets as not only do these save the investor from regulatory hassles of registration, but also allow the final beneficiary to remain anonymous.
  • Large hedge funds and high net worth individuals find this a hassle-free and simple way to get exposure to Indian markets.
  • Reports also suggest that P-notes may aid in movement of black money or unaccounted funds. Such funds leave the country through various routes and can easily re-enter via investments aided by P-notes, which won’t reveal the identity of the beneficiary.
  • Given that P-notes are issued outside India to overseas investors, they are not regulated and are open to misuse.

What are govt & regulator’s concerns?

  • The primary reason why P-Notes are worrying is because of the anonymous nature of the instrument as these investors could be beyond the reach of Indian regulators.
  • Further, there is a view that it is being used in money laundering with wealthy Indians, like the promoters of companies, using it to bring back unaccounted funds and to manipulate their stock prices.
[Ref: The Hindu]

 

Bilateral & International Relations

Landmark Caspian Sea deal signed by five coastal nations

The leaders of five countries — Russia, Iran, Kazakhstan, Azerbaijan and Turkmenistan — signed a landmark agreement on sharing the Caspian, raising the prospect of an end to 27 years of diplomatic wrangling.

Caspian-Sea-Agreement-2018

AboutCaspian Sea:

  • The Caspian Sea is the largest enclosed inland body of water on Earth by area, variously classed as the world’s largest lake or a full-fledged sea.
  • It is an endorheic basin (a basin without outflows) located between Europe and Asia.
  • It is bounded by Kazakhstan to the northeast, Russia to the northwest, Azerbaijan to the west, Iran to the south, and Turkmenistan to the southeast.

Caspian-Sea-map

Significance of Caspian Sea:

  • The Caspian Sea is a geopolitically strategic body of water, both in terms of its location and its resources.
  • Situated in a transcontinental zone between Europe and Asia, it has historically been a key trade and transit corridor between eastern and western powers.
  • The Caspian Sea became even more important in the modern era after the discovery of significant energy resources, including over 50 billion barrels of oil and 9 trillion cubic meters of natural gas in proven or probable reserves.

 

What is the issue?

  • Naturally, the countries surrounding the Caspian Sea make use of its strategic qualities. Russia and Iran are among the world’s largest energy producers and exporters, while Kazakhstan, Turkmenistan and Azerbaijan produce significant amounts as well.
  • The Treaty of Turkmenchay in 1828 gave Russia undisputed mastery of the sea, but the break-up of the Soviet Union in 1991 left a fragmented pattern of influence, with five countries claiming rights over its waters.
  • Since the 1991 collapse of the Soviet Union established Azerbaijan, Kazakhstan and Turkmenistan as independent states and competitors in the region, ongoing disputes about how to draw boundaries in the Caspian have limited all the surrounding countries’ ability to exploit its resources.
  • The primary issue has been whether to legally classify the Caspian as a sea or a lake. The former would require the division of the Caspian based on the shorelines of each littoral state, while the latter would divide the Caspian’s resources equally among all five states, regardless of the length of their coasts.
  • Until now, the dispute has not stopped the Caspian states from accessing energy resources close to their shorelines, but it has prevented energy exploitation from taking place deeper offshore. Moreover, it has stalled the progress of any pipeline projects that would go across the seabed itself.

caspian-sea-agreement-w

What was settled at the summit?

  • The convention signed at the recent summit has confirmed that the surface of the Caspian Sea would be legally classified as a sea, meaning each country would control 15 nautical miles of water from its shoreline for mineral exploration and 25 natural miles of shoreline for fishing.
  • All other parts of the Caspian Sea would be considered neutral waters for common use. The summit also produced important security decisions, including an agreement that military vessels from non-Caspian states would be prohibited from entering the sea.

Implications of this agreement:

  • This is a boon for both Russia and Iran, who have long had concerns about a U.S. or NATO military presence increasing Western influence, particularly over Azerbaijan.
  • The agreement does not prevent the shipment of military cargo through the Caspian, though, since both Azerbaijan and Kazakhstan have played logistical supply roles for U.S. and NATO forces in Afghanistan.

What’s next?

  • The legal convention signed at the Caspian Sea summit in Aktau is far from the final word on the division of the strategic sea and its abundant energy resources. It does indicate progress in certain areas such as security, but Russia and Iran will likely try to delay any finalized protocol for managing the body of water in order to protect their strategic energy interests.
  • However, many issues remain unsettled. For example, the delimitation of the seabed itself, where most energy resources are located, was left pending, meaning the Caspian countries will need to negotiate bilateral agreements.
[Ref: The Hindu, BBC]

 

Art & Culture

11th World Hindi Conference held in Mauritius

11th World Hindi Conference was held in Mauritius in its capital city Port Lois.

act

Key facts:

  • The theme of the Conference is “Vaishvik Hindi AurBharatiySanskriti”.
  • It was be organised by Ministry of External Affairs, Government of India in association with Government of Mauritius.
  • The event, held once in three years, is dedicated to Hindi language.
  • The conference provides common platform to several Hindi scholars, writers and laureates from different parts of the world to contribute the language.

Other Key facts:

  • The decision to organize the 11th edition of the Conference in Mauritius was taken at the 10th World Hindi Conference held in Bhopal, India in September 2015.
  • The first World Hindi Conference was held in 1975 in Nagpur, India. Since then, ten such Conferences have been held in different parts of the world.To commemorate this event, every year 10th January is being observed as World Hindi Day.
  • The MEA has also set up the World Hindi Secretariat in Mauritius. The main objective of the WHS is to promote Hindi as an international language and further its cause for recognition at the United Nations as an Official Language.
[Ref: The Hindu, Indian Express]

 

Key Facts for Prelims

18th edition of Asian Games

The 18th edition of Asian Games is being held in Jakarta, Indonesia.

18th-edition-of-Asian-Games

Key facts:

  • It is second time Indonesia hosting Asian Games. For first, it was held in Jakarta in 1962.
  • This will be the first time that the Asian Games will be held in two cities – Jakarta and Palembang.
  • For the first time, eSports, a form of competition using video games, and canoe polo will be contested as demonstration sports.
  • India won four bronze medals in Wushu sporting event. Wushu is Chinese Kung-fu. It is martial art form that deals with exhibition and full-contact sport derived from traditional Chinese martial arts.

Wushu-asian-games-2018

  • India won maidenbronze medal in Men’s Sepak Takraw event. Sepak takraw is traditional sport of countries Southeast Asia. It has similarities like Volleyball which is played with hand but sepak takraw is played with the feet, knee, head and chest.

sepak-takraw-asian-games

About Asian Games:

  • The Asian Games, also known as Asiad, is a continental multi-sport event held every four years between athletes from all over Asia.
  • Since 1982, the Games have been organised by the Olympic Council of Asia (OCA). Prior to that, the Games were regulated by the Asian Games Federation (AGF).
  • The Games are the second largest multi-sport event after the Olympic Games.
  • The last edition of the Games was hosted by Incheon, South Korea in October 2014.
  • So far, India has hosted Asian Games two times i.e. in 1951 (First edition of Asian Games) and in 1982.
[Ref: The Hindu]

 

 EsowAlben

Esow-Alben

  • Recently, he created history on August 16, 2018, by winning India’s first junior cycling World Cup silver medal in the men’s kerin event of the UCI Junior Track Cycling World Championships held in Aigle, Switzerland.

 

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  • Jahir Ansari

    Why are you not updating news? You have started in July after 2 months gaps. Even after that you are not able to maintain punctuality. What kind of dedication you have in your work? We hope you will provide at least daily current affairs on regular basis. Sorry for harsh word. It is connected with our career….Please do it

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