bharat ias - RBI allows multilateral FIs to invest in masala bonds

RBI allows multilateral FIs to invest in masala bonds

RBI allows multilateral FIs to invest in masala bonds  Issue: ·       The Reserve Bank of India (RBI) has permitted multilateral and regional financial institutions (FIs) to invest in ‘masala bonds’, rupee denominated bonds issued by Indian entities. ·        This decision will allow multilateral agencies like Asian Development Bank (ADB) and BRICS led New Development Bank (NDB) to invest in these bonds ·        It also provides more choices of investors to Indian entities issuing rupee-denominated bonds abroad.  What are Masala bonds ·       The Masala bonds refer to rupee-denominated bonds through which Indian entities can raise money from foreign markets in rupee, and not in foreign currency. ·       Basically, they are debt instruments that are typically used by corporates to raise money from investors. ·        The issuance of rupee denominated bonds, Indian entity is protected against the risk of currency fluctuation, typically associated with borrowing in foreign currency ·        Masala bonds also help in internationalization of the rupee and in expansion of the Indian bond markets. ·        These bonds are usually traded on the London Stock Exchange (LSE) and not in India.  ·       The first Masala bond was issued by the International Finance Corporation (IFC), the investment arm of the World Bank dubbed as Uridashi Masala Bonds in November 2014. ·        The Housing Development Finance Corporation (HDFC) was the first Indian company to issue rupee-denominated bonds “masala bonds” on London Stock Exchange (LSE) in July 2016. ·        International Financial Corporation was first time issued green masala bonds in August 2015 to raise private sector investments that address climate change in India.   ·       Canada’s British Columbia province was the first foreign government to issue of masala bonds.


Publishes on : 21-Feb-2017 12:30 PM
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bharat ias - India ranks 143rd in 2017 Economic Freedom Index

India ranks 143rd in 2017 Economic Freedom Index

India ranks 143rd in 2017 Economic Freedom Index  Issue: ·       India was ranked 143rd out of 186 economies in the annual Index of Economic Freedom 2017 that measures the degree of economic freedom in the countries of the world. Information: ·       The index was released by top US based Think Tank, The Heritage Foundation. ·        In this edition, India’s overall score was 52.6 points, 3.6 points less than scored in 2016 when it was ranked 123rd.  How countries are ranked? ·       The Index of Economic Freedom ranks countries based on score ranging 0 to 100, with 0 being the least free and 100 the most free ·       The score is based on ten factors of economic freedom, separated into four categories, using statistics from international organizations like World Bank, IMF, Economist Intelligence Unit and Transparency International. ·        Based on the score, countries are grouped in 5 different categories, Free (80–100), Mostly Free (70.0–79.9), Moderately Free (60.0–69.9), Mostly Unfree (50.0–59.9) and Repressed (0–49.9). Key Highlights of 2017 Economic Freedom Index ·        Top 5 countries in this edition of index are Hong Kong (1st), Singapore (2nd) and New Zealand (3rd), Switzerland (4th) and Austria (5th). ·        India with 52.6 points score was ranked 143rd. It was placed in the category of “Mostly Unfree” Economies (points ranging from 50.0-59.9). ·       India’s neighbours, Nepal (125th), Sri Lanka (112th), Pakistan (141st), Bhutan (107th), and Bangladesh (128th) have surpassed India. ·        Only Afghanistan (163rd) and Maldives (157th) were ranked below India. ·       China with a score of 57.4 points ranked 111th which is 5.4 points above 2016 score. ·        United States was ranked 17th with a score of 75.1 points. ·       The world average score was 60.9, highest recorded in the 23-year history of the index. ·        49 countries majority of developing countries and also Norway and Sweden have achieved their highest-ever index scores.  Why India performed low: ·        India’s progress on market-oriented reforms has been uneven. India has combination of advance technology and manufacturing sectors of developed world as well as traditional sectors, characteristic of a lesser developed economy. ·        Extreme wealth and poverty coexist in India as it both modernises rapidly and struggles to find paths to inclusive development for its large population. I   ·       India is a significant force in world trade, but underdeveloped infrastructure, corruption and poor management of public finance undermines its overall development. PM has strengthened India’s bilateral ties with US particularly in defence cooperation.


Publishes on : 21-Feb-2017 12:24 PM
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bharat ias - TPP is dead, but its legacy lives on

TPP is dead, but its legacy lives on

TPP is dead, but its legacy lives on  Context 
The Trans-Pacific Partnership was dead long before Donald Trump signed his executive order. But its damaging aspects, like stringent IP provisions, have just migrated to other agreements.   Issue: TPP’s damaging provisions with respect to access to medicines   What is TPP? Twelve countries that border the Pacific Ocean signed up to the TPP in February 2016, representing roughly 40% of the world’s economic output. Aim: The pact aimed to deepen economic ties between these nations, slashing tariffs and fostering trade to boost growth. Members had also hoped to foster a closer relationship on economic policies and regulation The agreement was designed so that it could eventually create a new single market, something like that of the EU But all 12 nations needed to ratify it, before it could come into effect Member states: Japan ,Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru. Abandoning TPP was a key element of the election campaign of the new US president elect Donald Trump & as soon as he entered office, US pulled out of TPP  How big a deal was TPP? Pretty big. The 12 countries involved have a collective population of about 800 million – almost double that of the European Union’s single market. The 12-nation would-be bloc is already responsible for 40% of world trade. The deal was seen as a remarkable achievement given the very different approaches and standards within the member countries, including environmental protection, workers’ rights and regulatory coherence not to mention the special protections that some countries have for certain industries  Without the US does TPP definitely fail? To take effect, the deal would have had to be ratified by February 2018 by at least six countries that account for 85% of the group’s economic output. The US would need to be on board to meet that last condition. Some countries, including New Zealand, have suggested some sort of alternative deal may be possible without the US. But Japan’s Prime Minister Shinzo Abe has said a TPP without the US – and its market of 250 million consumers – would be “meaningless”  Is this the same thing as TTIP? No. The Transatlantic Trade and Investment Partnership, now generally known as TTIP, is a deal to cut tariffs and regulatory barriers to trade between the US and member states of the EU. Negotiations here are at an earlier stage. But given President Trump’s hostility towards trade deals in general it’s unlikely to be plain sailing for that one either.  TPP’s damaging provisions: IPR The agreement’s damaging ambitions were most evident in the proposed provisions concerning intellectual property Explicit provision for Biologics: The TPP provided explicit protections for ‘biologics’ (drugs manufactured in a living organism, rather than through chemical synthesis), the first trade agreement to do so Extended data exclusivity: The agreement mandated the protection of clinical test data submitted for marketing approvals, with pharmaceutical data obtaining five to eight years of protection. This provision, called ‘data exclusivity’ or ‘marketing exclusivity’, prevents a generic company from relying on the clinical test results of the originator in order to prove the efficacy of its drug Argument given: It was justified using the argument that clinical trials are the most expensive part of drug development and hence there is a necessity to provide drug developers the ability to limit access to that data so as to incentivise research Weaker patent standards: Such standards would allow a greater number of secondary or ever-greening patents on pharmaceuticals Harsher intellectual property enforcement   The Legacy of TPP Although US has pulled out of TPP, but the lines along which it was being negotiated reflects poorly on the US trade policy vis-à-vis public health and Intellectual property (IP). TPP can have further damaging impacts, Impact on other agreements: The potentially damaging provisions of TPP can migrate to other global agreements like RCEP. Countries involved in RCEP are now trying to conclude the talks as soon as possible. RCEP includes several of IP provisions included in TPP. This should be of great concern for access to medicines globally, as countries involved in the RCEP negotiations include key generic drug-producing countries, including India Pressure on India’s patent regime likely to continue: U.S. withdrawal from the TPP may change the U.S.’s approach to trade and intellectual property more in form than in substance, by switching from trade agreements that include several countries to bilateral free trade agreements (FTAs). In this process, the U.S. is more than likely to continue its vigorous campaign against perceived “violators” of U.S. intellectual property. The pressure exerted by the Obama administration on the public health safeguards in Indian patent law over the past eight years are likely to continue, if not worsen. Subversive US Trade Policy to continue: Despite the public health impact of the TPP’s provisions, it is unlikely that these concerns will guide U.S. trade or foreign policy. President Trump’s remarks in early January emphasized his desire to end “global freeloading” stating that “foreign price controls reduce the resources of American drug companies to finance drug and R&D innovation… our trade policy will prioritize that foreign countries pay their fair share for U.S.-manufactured drugs, so our drug companies have greater financial resources to accelerate development of new cures.”  Conclusion in the light of ever increasing efforts of the developed world to limit the access to medicines, India needs a far greater government commitment to the use of the public health safeguards in the indigenous patent law to survive this era and ensure the health of the country’s citizens    ...

Publishes on : 20-Feb-2017 12:39 PM
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bharat ias - SEBI to form panel to facilitate crowdfunding

SEBI to form panel to facilitate crowdfunding

SEBI to form panel to facilitate crowdfunding  Context Constitution of an advisory committee by SEBI on financial technology issues  What has happened? The Securities Exchange Board of India (SEBI) is forming an advisory committee on financial technology or fintech-related issues, which would look at safeguards that can be put in place to facilitate crowdfunding of ‘genuine’ ventures and mobilise more household savings into the financial markets  Membership of the committee The committee shall have representatives and experts from different sections of fintech industry  SEBI Chairman’s views Enabling access in small towns: To harness technology to enable persons in small towns with small amounts to invest in a retirement fund, we are going to form an advisory committee on fintech that will be led by some very strong business leaders from the industry “If you want to raise money in the bond market, one has to file a draft red herring prospectus, make lots of disclosures, get a credit rating and appoint a debenture trustee,” he said, adding that even England and New Zealand that have allowed crowdfunding of ventures have imposed ‘restrictions.’  Holding discussions SEBI is holding fresh discussions with representatives of start-ups and venture capital funds to assess why a single start-up hasn’t been listed yet on the special platform created by the regulator for mature ventures looking to go public    ...

Publishes on : 20-Feb-2017 12:34 PM
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bharat ias - Getting back home, safely

Getting back home, safely

Getting back home, safely Context Despite extensive experience in conducting evacuation operations of its citizens abroad, India still needs to institutionalize best practices Issue: Capacity building in conducting evacuation operations A stark improvement the extraordinary evacuation conducted in April 2015 under Operation Raahat& compares it with the shoddy evacuation scenario of 850 Indian nationals during civil war in South Yemen in 1986.  Significance of capacity building The increasing size and complexity of the diaspora requires the government to expand capacity and improve procedures. Size of diaspora: More than 11 million Indians now reside abroad and 20 million travel internationally every year Political instability:As political instability rattles the West Asian region, which hosts more than seven million Indians, the government can no longer rely on heroic efforts by individual officials or quick-fix solutions What needs to be done? Learning from the experience: The government will need to build on its rich experience in conducting more than 30 evacuation operations since the 1950s. Policy-oriented research: By supporting policy-oriented research at universities and think tanks to document the memory of senior officials, the government would also facilitate the transmission of their expertise to younger officials Avoiding a jugaad: The government must avoid the jugaad approach. Every evacuation case is unique, given the specific nature and location of the crisis, but this should not preclude an analytical attempt to formulate a blueprint that lists core tasks for all operations Preparing a manual: An inter-ministerial committee should prepare a manual with guidelines that establish a clear chain of command and division of competencies; identify regional support bases, assembly points and routes for evacuation; develop country-specific warden systems to communicate with expatriates; and establish evacuation priority and embarkation criteria  Embarkation: Itis the process of loading a passenger ship or an airplane with passengers or military personnel, related to and overlapping with individual boarding on aircraft and ships Training India’s diplomats: India’s diplomatic cadre must be given specific training to operate in hostile environments To achieve this, the government could instruct the police or army to train Indian Foreign Service probationers to operate in war zones; conduct frequent evacuation simulations and emergency drills; and create rapid reaction teams of Indian security personnel to be deployed to protect diplomatic staff and installations abroad Working closely with countries having a sizeable expatriate population: The success of future operations will also rely on New Delhi’s willingness to work together with friendly governments. India will have to invest in cooperative frameworks that facilitate coordination among countries that have large expatriate populations in West Asia, in particular Nepal, Bangladesh and Sri Lanka, and among leading powers with evacuation capacity in the Indian Ocean region. Assigning a greater role to army: The government will have to assign a greater role to its armed forces, in particular by strengthening the Navy and Air Force’s capacity to operate in tandem with civilian authorities Developing a NEO doctrine: It should, for example, direct the military to develop a non-combatant evacuation (NEO) doctrine, designate the Integrated Defence Staff as the nodal organisation to improve inter-services and civil-military coordination, direct the services to conduct more multilateral NEO exercises, and adapt military modernization plans to increase capacity for out-of-area deployment and evacuation. Using technology Inter-ministerial coordinating mechanism: To minimize redundancies, the government must institutionalize a permanent inter-ministerial coordinating mechanism for emergency evacuations, incentivise inter-agency cross-posting of officials dealing with diaspora affairs, and encourage State governments to create regional contingency plans.  Establishing a permanent civil reserve fleet: To avoid cost inflation and delays, the government must establish a permanent civil reserve air fleet that pools aircraft from all Indian airlines based on pre-established requisition and reimbursement procedures. Monitoring the diaspora: The government will have to invest in new technologies to better monitor the diaspora’s profile and mobility. This can be achieved by Encouraging more diplomatic missions to provide online consular registration forms Developing an online registration system for overseas travelers Utilizing social media By making the Aadhaar card compulsory to facilitate biometric identity verification and reduce identity fraud during evacuation  Managing public opinion during crisis: The government must expand efforts to manage public opinion and be able to conduct a quiet diplomacy that is crucial to safely extricate Overseas Indians from conflict zones. To reduce domestic pressures, ·          It should embed media representatives more frequently in such missions Reassure the diaspora by ensuring that high-level political representatives are personally engaged Avoid raising expectations by clearly distinguishing Indian citizens from people of Indian origin Conclusion India has extensive experience in conducting evacuation operations, but to secure the lives and assets of Indians abroad, the government must avoid an ad hoc approach and seek to institutionalize best practices, improvecoordination and capabilities, both diplomatic and military    ...

Publishes on : 17-Feb-2017 11:23 AM
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