Here is today’s digest of important newspaper articles and quiz!
FTA talks reach an impasse
The Free Trade agreement being negotiated amongst the Regional Comprehensive Economic Partnership(RCEP) members reached an impasse with the other members asking India to lower tariffs or leave the agreement.
The apprehensions were voiced at the last round of negotiations in February in Brunei, and the 12th round of RCEP talks slated for April 23-29 at Perth in Australia could be a “turning point†in the negotiations with India.
Analysis
What is the RCEP FTA? – RCEP is a group of ASEAN + 6 nations, China, Japan, Australia, South Korea and New Zealand. The agreement will affect nearly 3 billion people. The members’ GDP is over $17 trillion and accounts for over 40% of world trade.
What is the interest of India? – ASEAN+6 Regional Comprehensive Economic Partnership (RCEP) will help in furthering the aims and objectives of India’s own Look-East Policy. It is interesting to note that, compared with the TPP and TTIP groups of countries, India’s trade share with the RCEP group of countries as a percentage of its total trade has increased over the past decade and half, underlining the importance of its trade with key countries in this group.
In real practice, RCEP once formalized, is supposed to emerge as the most effective and largest free-trade bloc in the world. It will bring ten ASEAN countries and other six countries (China, Japan, South Korea, India, Australia and New Zealand) together. These six members have FTAs with the ASEAN currently.
The RCEP will facilitate India’s integration into sophisticated “regional production networks†that make Asia the world’s factory. The RCEP is expected to harmonize trade-related rules, investment and competition regimes of India with those of other countries of the group. Through domestic policy reforms on these areas, this harmonization of rules and regulations would help Indian companies plug into regional and global value chains and would unlock the true potential of the Indian economy.
India enjoys a comparative advantage in areas such as information and communication technology, IT-enabled services, professional services, healthcare, and education services. In addition to facilitating foreign direct investment, the RCEP will create opportunities for Indian companies to access new markets. This is because the structure of manufacturing in many of these countries is becoming more and more sophisticated, resulting in a “servicification†of manufacturing.
What is the China factor? – India is wary of China in the whole arrangement because RCEP would indirectly mean having an FTA with China. At present, while China has clubbed with the ASEAN+1, ASEAN+3 and ASEAN+6, India is clubbed only under the ASEAN+6 framework. Compared with India, the Chinese have always enjoyed closer contact with the ASEAN through a versatile engagement policy that includes building up a variety of economic, political and cultural linkages. Officially, China wants to promote and has asked for ‘ASEAN’s leading role in regional cooperation’ in East Asia under ASEAN+1 or ASEAN+3 frameworks.
What is the noodle bowl situation? – RCEP agreement would complement India’s existing free trade agreements with the Association of South East Asian Nations and some of its member countries. It can address challenges emanating from implementation concerns vis-à -vis overlapping agreements, which is creating a “noodle bowl†situation obstructing effective utilization of these FTAs.In this respect, the RCEP would help India streamline the rules and regulations of doing trade, which will reduce trade costs.
Source: TheHindu, IDSA, TheDiplomat
Provision of fraud in loans: RBI
Banks have to make provision for the entire amount of a loan in transactions where fraud has been detected in a period not exceeding four quarters, the Reserve Bank of India (RBI) has said.
To smoothen the effect of such provisioning on quarterly profit and loss, banks have the option to make the provisions over a period, not exceeding four quarters, commencing from the quarter in which the fraud has been detected.
Analysis
What are NPAs? – According to RBI, terms loans on which interest or installment of principal remain overdue for a period of more than 90 days from the end of a particular quarter is called a Non-performing Asset.
However, in terms of Agriculture / Farm Loans; the NPA is defined as under:
For short duration crop agriculture loans such as paddy, Jowar, Bajra etc. if the loan (installment / interest) is not paid for 2 crop seasons , it would be termed as a NPA.
For Long Duration Crops, the above would be 1 Crop season from the due date.
Source: TheHindu
NSS report on open defecation
According to a Swachhta Status Report by the National Sample Survey (NSS) Office more than half of the rural population still opts for open defecation. The survey was to track the government’s flagship programme, Swachh Bharat Abhiyan. The survey estimates that 52.1 per cent of people in rural India choose open defecation compared to 7.5 per cent in urban India.
The nation-wide rapid survey was conducted during May-June 2015. In the survey, 45.3 per cent rural households reported having a sanitary toilet, while in urban areas, the figure stands at 88.8 per cent. The lowest percentage of households having sanitary toilets was reported in Jharkhand (18.8 per cent), Chhattisgarh (21.2 per cent) and Odisha (26.3 per cent). The States with the highest numbers were Sikkim (98.2 per cent), Kerala (97.6 per cent) and Mizoram (96.2 per cent).
Analysis
What are the drivers of open defecation? – In response to a parliamentary question, the Ministry of Drinking Water and Sanitation said “The main reason for open defecation is behaviour and mindset of the people who have continued the practice for centuries.†It also stated that adequate availability of water for toilets is also a concern.
According to the NSS report, while 87.9 per cent of the urban households were found to have access to water for use in toilets, only 42.5 per cent rural households had this facility. For this situation to improve, under Swachh Bharat Mission (Gramin), the incentive for individual toilet has been increased from Rs. 10,000 to Rs. 12,000, to provide for water, including for storing water for hand-washing and cleaning.
Source: TheHindu
Ban on use of animals in tests for soaps and detergents
The government has banned the use of animals in tests for manufacturing soaps and detergents. People for the Ethical Treatment of Animals (PETA), India, claimed to have received a circular, through an RTI, issued by the Committee for the Purpose of Control and Supervision of Experiments on Animals (CPCSEA), under the Environment Ministry in this regard.
The animal rights group had successfully worked with Bureau of Indian Standards (BIS) to remove tests on animals from the testing standards for household products such as soaps, detergents and other surface active agents.
Analysis
What is PETA? – People for the Ethical Treatment of Animals (PETA) is an American animal rights organization based in Norfolk, Virginia, and led by Ingrid Newkirk, its international president. A nonprofit corporation with 300 employees, it claims that it has 3 million members and supporters and is the largest animal rights group in the world. Its slogan is “animals are not ours to eat, wear, experiment on, use for entertainment, or abuse in any other way.”
Source: TheHindu, Wikipedia
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