Newspaper notes for UPSC 07-06-18

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RBI raises rates after 4.5 years as crude price surges.

  • The six-member monetary policy committee (MPC) of the Reserve Bank of India (RBI) on Wednesday increased the repo rate by 25 basis points to 6.25%.
  • The MPC arrived at the unanimous decision as the outlook for inflation had become ‘uncertain’ following a surge in international crude oil prices.Crude oil prices have been volatile and this imparts considerable uncertainty to the inflation outlook both on the upside and the downside
  • This is the first rate hike in four-and-a-half years; the last was in January 2014.
  • The RBI increased its inflation projection to 4.8%-4.9% in the first half (H1) of the financial year and 4.7% in the second half, as compared with 4.7-5.1% in H1 and 4.4% for H2.
  • Crude oil prices have been volatile and this imparts considerable uncertainty to the inflation outlook  both on the upside and the downside.

Pre-emptive strike

  • The Monetary Policy Committee of the Reserve Bank of India opted for a hike in key interest rates by 25 basis points — the first such increase in four and a half years.
  • This hike, the first during this NDA government’s tenure, was approved unanimously by the six-member committee.
  • One of the reasons:strengthening dollar or further rate hikes by the Federal Reserve that could strengthen the exodus of global capital from emerging markets such as India, between January and May, outflows from foreign portfolio investors have reached their highest level in 10 years.
  • However, RBI Governor  dismissed suggestions that the rate hike was a bid to stem outflows. The MPC, he asserted, is driven purely by its inflation management mandate.

Monetary Policy Committee

A  6-member  monetary  policy committee  is  to  be  setup  to  decide key policy rates. The  panel  will  have  three  members from  RBI.  They  are  the  governor, deputy governor and another officer.

The  other  three  members  will  be decided  by  the  centre  based  on  the recommendations  of  a  panel  headed by the Cabinet Secretary. Under MPC, the RBI governor has a casting vote and doesn’t enjoy veto power,decisions will be taken on the basis of majority vote. The decision of the Committee would be binding on the RBI.


  • Under the Monetary Policy Framework Agreement, the RBI will be responsible for containing inflation targets at 4% (with a standard deviation of 2%). 2%-4%-6%
  • RBI would have to give an explanation in the form of a report to the Central Government, if it failed to reach the specified inflation targets. It shall, in the report, give reasons for failure, remedial actions as well as estimated time within which the inflation target shall be achieved.
  • MPC decides the changes to be made to the policy rate (repo rate) so as to contain the inflation within the target level specified to it by the Central Government.
  • Each Member of the Monetary Policy Committee has to write a statement specifying the reasons for voting in favour of, or against the proposed resolution, and the same alongwith the resolution adopted by the MPC.

Maternal mortality ratio in the country drops to 130 from 167

  • The latest Sample Registration System (SRS) data indicating the Maternal Mortality Ratio (MMR) has dropped to 130 from 167.
  • The MMR (number of maternal deaths per 1,00,000 live births) has dropped from 167 (in 2011-2013, the last SRS period) to 130 for the country. this  is a 28% drop.

The SRS segments States into three groups:

  • “Empowered Action Group” (EAG) —Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh, Odisha, Rajasthan, Uttar Pradesh/Uttarakhand and Assam;   They have the highest reduction from the last SRS is with the EAG States at 23%, a drop from 246 (2011-2013) to
  • “Southern States” — Andhra Pradesh, Telangana, Karnataka, Kerala and Tamil Nadu; They dropped by 17% to 77.
  • “Others” — the remaining States and union territories. They have dropped by 19%, taking the MMR down from 115 in 2011-2013, to 93

Top three:

  • Kerala remains at the top with an MMR of 46 (down from 61).
  • Maharashtra retains its second position with 61,
  • Tamil Nadu with 66 (79) is in the third position.

Schemes related to MMR :

  • Pradhan Mantri Surakshit Matritva Yojana Abhiyan,  is to provide antenatal care to a large number of pregnant women who suffer from several diseases during their pregnancy.
  • Janani Suraksha Yojana (JSY) & Janani Shishu Suraksha Karyakram (JSSK)
  • National Population Policy 2002 one of the targets is to Achieve 80% institutionalized deliveries, to reduce MMR
  • ‘LaQshya’ will improve quality of care during delivery and immediate post-partum period thus providing Respectful Maternity Care (RMC) to all pregnant women attending public health facilities. This will reduce maternal and newborn morbidity and mortality.

The Atal Bhujal Yojana

  • The Government has proposed Atal Bhujal Yojana (ABHY) aimed at sustainable ground water management with community participation.
  • In select over-exploited and ground water stressed areas in seven States (Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh).
  • ABHY is designed as a Central Sector Scheme with a total outlay of Rs. 6,000 Crore and is proposed to be implemented with World Bank assistance.
  • According to a sample assessment in 2011, groundwater in 19 of India’s 71 districts  about 26%  were critical or exploited, meaning that nearly as much or more water was being pulled out than their reservoirs’ natural recharge ability.

No longer seeing eye to eye

  • In his Shangri-La Dialogue in Singapore PM spoke of India and the U.S.’s “shared vision” of an open and secure Indo-Pacific region.
  • It seemed clear that India  and USA no longer see eye-to-eye on this issue, and several others as well.


  • PM referred to the Indo-Pacific, a term coined by the U.S. for the Indian and Pacific Oceans region, as a natural geographical region, not a strategic one, while U.S. Defence Secretary called the Indo-Pacific a “priority theatre” and a “subset of [America’s] broader security strategy” for his military command, now renamed the Indo-Pacific Command.
  • India’s referred good relations with the U.S., Russia and China in equal measure, while USA vowed to counter China’s moves in the Indo-Pacific. Also U.S. National Defence Strategy released this January, which puts both China and Russia in its crosshairs as the world’s two “revisionist powers”.
  • Reasons: The divergence in their positions, admittedly, are due more to a shift in New Delhi’s position over the past year than in the U.S.’s.
  • A year ago, the Indian government seemed clear in its intention to counter China’s growing clout in its neighbourhood, especially post-Doklam, challenge the Belt and Road Initiative (BRI), and back a Quadrilateral grouping of India, the U.S., Japan and Australia to maintain an open Indo-Pacific. Today, the Doklam issue has been buried, the BRI isn’t as much a concern as before, and the government’s non-confrontational attitude to the Maldives and Nepal indicates a softened policy on China in the neighbourhood.
  • India also aims a closer engagement with China and a relationship reset after the Wuhan meeting.
  • The Quad formation, has also been given short shrift. India rejected an Australian request to join maritime exercises along with the U.S. and Japan this June.Navy Chief Admiral said that there was no plan to “militarise” the Quad. Contrast this with India’s acceptance of military exercises with countries of the Shanghai Cooperation Organisation (SCO), the Russia-China led grouping it will join in Qingdao.
  • India also makes its intentions clear to continue energy deals with Iran and Venezuela in defiance of American sanctions.
  • Trade protectionism is clearly the other big point of divergence between India and the U.S., which have in recent months taken each other to the World Trade Organisation on several issues.
  • The biggest challenges to a common India-U.S. vision are now emerging from the new U.S. law called Countering America’s Adversaries Through Sanctions Act and the U.S.’s withdrawal from the Iran nuclear deal with the threat of more secondary sanctions. Both actions have a direct impact on India, given its high dependence on defence hardware from Russia and its considerable energy interests in Iran.
  • In particular, India’s plans to acquire the Russian S-400 missile system will become the litmus test of whether India and the U.S. can resolve their differences.
  • Building a relationship with the Trump administration in the past year has been tricky for both South Block (MEA) and the Indian Embassy in Washington, as more than 30 key administration officials have quit or have been sacked.

Defend the deal

  • The Joint Comprehensive Plan of Action, reached among the five permanent members of the UN Security Council, besides Germany, the European Union and Iran, in 2015, curtailed Tehran’s nuclear programme in return for the lifting of international sanctions.
  • S. withdrew from the nuclear deal last month, and threatened to impose new sanctions on Iran, its survival is in question
  • Consequence: Iran sent a notification to the UN that it would launch a plan to increase its uranium enrichment capacity.
  • For now, the other signatories say they remain committed to the agreement,they are yet to come up with a framework to salvage the deal.
  • The latest Iranian announcement is perhaps aimed at pressuring European powers to come up with guarantees that the deal’s benefits will be in place even with U.S. sanctions.
  • According to the deal, Iran can enrich uranium, but under tight restrictions. Iran now says it would open a centre for the production of new centrifuges at its Natanz facility. This  could be seen as a provocative step by the remaining parties to the agreement.
  • Both Iran and Europe would do well to shift their focus to preserving the integrity of the agreement.If Europe remains politically committed to the agreement as it claims, there have to be proper measures to circumvent the impact of U.S. sanctions.
  • Iran has made it clear that the U.S. withdrawal should not affect its oil exports and access to the SWIFT international bank payments messaging system. The way forward is to continue a dialogue to find an economic and legislative package that would shield European companies and Iranian economic interests from U.S. sanctions.

Society  for  WorldwideInterbank Financial Telecommunication (SWIFT)  a  messaging  network  that connects  banks  and  other  financial institutions across the world.

When uranium is mined, it consists of approximately 99.3% uranium-238 (U238), 0.7% uranium-235 (U235), and < 0.01% uranium-234 (U234). These are the different uranium isotopes. Isotopes of uranium contain 92 protons in the atom’s center or nucleus. (The number of protons in the nucleus is what makes the atoms “uranium.”) The U238 atoms contain 146 neutrons, the U235 atoms contain 143 neutrons, and the U234 atoms contain only 142 neutrons. The total number of protons plus neutrons gives the atomic mass of each isotope — that is 238, 235, or 234, respectively.

The nuclear fuel used in a nuclear reactor needs to have a higher concentration of the U235 isotope than that which exists in natural uranium ore.  U235 when concentrated (or “enriched”) is fissionable in light-water reactors. the U235 isotope is enriched to 3 to 5% (from the natural state of 0.7%) and is then further processed to create nuclear fuel.

What is the Security Council?

The UN Charter established six main organs of the United Nations, including the Security Council. It gives primary responsibility for maintaining international peace and security to the Security Council, which may meet whenever peace is threatened. Five permanent members: China, France, Russian Federation, the United Kingdom, and the United State.

Its powers include the establishment of peacekeeping operations, the establishment of international sanctions, and the authorization of military action through Security Council resolutions; it is the only UN body with the authority to issue binding resolutions to member states.These permanent members can veto any substantive Security Council resolution, including those on the admission of new member states or candidates for Secretary-General. The Security Council also has 10 non-permanent members, elected on a regional basis to serve two-year terms.

Additional Reading :

Global Peace Index

The Australia-based Institute for Economics and Peace (IEP), world’s leading think tank that develops metrics to analyse peace and quantify its economic value, released the 12th edition of the Global Peace Index (GPI), or measure of global peacefulness.

  • India has moved up four places to the 137th rank among 163 countries on the 2018 Global Peace Index, due to a reduction in the level of violent crime driven by increased law enforcement.
  • The best performer of South Asia, Bhutan, slipped from 13th to 19th position, while Bangladesh’ peace index deteriorated sharply. Bangladesh moved from 84th to 93rd position.
  • Peace continues to record a “gradual, sustained fall” across the world, the report noted. “The results of the 2018 GPI find that the global level of peace has deteriorated by 0.27% last year, marking the fourth successive year of deteriorations.
  • Syria remained the least peaceful country in the world, a position that it had held for the past five years.
  • Iceland continues to remain the most peaceful country in the world, a position it has held since 2008.

Co-op banks can become small finance banks, says RBI

  • The Reserve Bank of India has decided to allow urban co-operative banks (UCB) to convert into small finance banks (SFB), a move aimed at bringing these entities into mainstream banking.
  • UCBs had been facing financial trouble till a few years ago, prompting the RBI to stop issuing fresh licences. But their performance has improved recently while their numbers have come down due to mergers and closures. UCBs currently face regulation by both the RBI and the respective State governments. By turning into SFBs, they will be regulated only by the RBI.

The law on SC/ST promotions

  • Responding to the government’s complaint that promotions were at a “standstill” because of verdicts by the High Courts of Delhi, Bombay, and Punjab & Haryana, the Supreme Court said the government was “not debarred” from making promotions so long as they were “in accordance with the law” Which law ?
  • The law that currently applies is the one laid down by the five-judge Bench  in M Nagaraj & Others vs Union Of India & Others (October 19, 2006).
  • In that case The court dealt with a challenge to constitutional amendments aimed at nullifying the impact of judgments including that in the famous Mandal case, on reservations in promotions for Scheduled Caste and Scheduled Tribe employees.

Questions before Supreme Court and Articles 16(4A) and 16(4B):

  • The petition challenged the constitutional validity of: 77th, 81st, 82nd, and 85th Amendments
  • In Indra Sawhney and Others vs Union of India and Others (Mandal case), in which the Supreme Court observed that reservation under Article 16(4) — which allows the state to make provisions for “reservation of appointments or posts in favour of any backward class of citizens” — did not apply to promotions.
  • This affected SC and ST employees, and in order to ensure that reservations in promotions continued, Clause 4A was introduced: “Nothing in this article shall prevent the State from making any provision for reservation in matters of promotion… in favour of the Scheduled Castes and the Scheduled Tribes which, in the opinion of the State, are not adequately represented in the services under the State.”
  • Clause 4B was inserted to ensure that while calculating the quota for a particular year — capped at 50% by Indra Sawhney — the unfilled or ‘carried forward’ quota from the earlier year was not clubbed with the regular quota of that year.
  • In both Indra Sawhney and S Vinod Kumar And Anr vs Union Of India And Ors (October 1, 1996), ruled that relaxation of qualifying marks and standards of evaluation for reservation in promotion were not permissible under Article 16(4) in view of the command contained in Article 335 (“Claims of SCs/STs shall be taken into consideration, consistently with the maintenance of efficiency of administration, in the making of appointments…”). To restore the relaxations, the 82nd Amendment added a proviso to Article 335/

The Nagaraj judgment

  • The petitioners argued that the four amendments were aimed at reversing the judgments in Indra Sawhney and other cases, that Parliament had arrogated to itself judicial powers, and had, therefore, violated the basic structure of the Constitution.
  • The court upheld the constitutional validity of the 77th, 81st, 82nd, and 85th Amendments.
  • It, however, ruled that if the state “wish(ed) to exercise their discretion and make (a) provision (for reservation in promotions for SCs/STs), the State has to collect quantifiable data showing backwardness of the class and inadequacy of representation of that class in public employment in addition to compliance of Article 335”. Also, “even if the State has compelling reasons… (it) will have to see that its reservation provision does not… breach the ceiling-limit of 50% or obliterate the creamy layer or extend the reservation indefinitely”.

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