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About Us

OCTOBER

04

2018

    POLITY

    Island Development Agency

    News: Lagoon villas for Lakshadweep.
    Source: The Hindu

    IDA focuses on Holistic Development of Islands.

    The vision for developing India’s maritime economy while preserving the natural eco-system and addressing the security concerns.

    The need for sustainable development of Islands with people’s participation.

    He informed that Concept Development Plans and Detailed Master Plans are being prepared for identified islands with principles of sustainability, people’s participation, eco-system preservation and determination of carrying capacity as the guiding principles. Such an exercise is being taken up for the first time in the country.

    Ten islands Smith, Ross, Aves, Long and Little Andaman in Andaman & Nicobar and Minicoy, Bangaram, Suheli, Cherium and Tinnakara in Lakshadweep have been identified for development in the first phase.

    ECONOMY

    External Commercial Borrowings (ECBS)

    News: ECB norms for oil firms eased.
    Source: The Hindu

    ECB is basically a loan availed by an Indian entity from a nonresident lender. Most of these loans are provided by foreign commercial banks and other institutions. It is a loan availed of from non-resident lenders with a minimum average maturity of 3 years.

    The significance of ECBs their size in India’s balance of payment account. In the post reform period, ECBs have emerged a major form of foreign capital like FDI and FII.

    During several years, contribution of ECBs was between 20 to 35 percent of the total capital flows into the country. Large number of Indian corporate and PSUs have used the ECBs as sources of investment.

    Bulk of the overseas loans or ECBs into the country are obtained by private sector corporates. For the corporate, ECB is a dependable and easy to obtain fund and helps them to make business/investment expansion.

    External Commercial Borrowings (ECBs) includes commercial bank loans, buyers’ credit, suppliers’ credit, securitized instruments such as Floating Rate Notes and Fixed Rate Bonds etc., credit from official export credit agencies and commercial borrowings from Multilateral Financial Institutions.

    ECBs are being permitted by the Government as a source of finance for Indian Corporate for expansion of existing capacity as well as for fresh investment. Following are the advantages of ECBs.

    Advantages of ECBs

    ECBs provide opportunity to borrow large volume of funds

    The funds are available for relatively long term

    Interest rate are also lower compared to domestic funds

    ECBs are in the form of foreign currencies. Hence, they enable the corporate to have foreign currency to meet the import of machineries etc.

    Corporate can raise ECBs from internationally recognised sources such as banks, export credit agencies, international capital markets etc.

    India has always promoted capital inflows as a part of the development policy. Lack of domestic capital and deficit in the current account compelled the government historically to go after foreign capital. In simple terms, foreign capital is money obtained from foreign countries to make investment domestically.

    SLR, CRR, And LCR

    News: More liquidity for lending.
    Source: The Hindu

    SLR, or statutory liquidity ratio, is a measure of the reserves that commercial banks are required to hold in the form of government bonds, gold, and similar liquid assets. CRR, or cash reserve ratio, is a measure of the reserves that banks need to hold in the form of cash.

    LCR, or liquidity coverage ratio, is a measure of highly liquid assets which can easily be converted into cash that banks are required to hold. All three are policy tools used by the Reserve Bank of India (RBI) to influence the total amount of reserves held by banks at any point in time.

    These reserve requirements, in turn, influence the amount of loans that banks can extend to borrowers. So when the RBI tightens reserve requirements, banks are forced to cut down lending and this causes money supply in the economy to shrink. Money supply rises when reserve requirements are eased by the RBI.

    The RBI last week allowed banks to classify an additional 2% of the value of their SLR investments in government bonds as high-quality liquid assets (HQLAs).

    The move, which could increase the overall amount of assets that can be classified as highly liquid reserves by banks, can increase bank lending and ease the availability of funds in the economy.

    The decision to reclassify SLR assets is part of the RBI’s emergency measures to improve the availability liquidity in the economy. Borrowers like non-banking financial companies (NBFCs) have had to to borrow at higher rates after investors turned cautious after infrastructure lender IL&FS’s default.

    The RBI hopes that increased bank lending can help ease the crisis.

    The injection of fresh money through the banking system can help boost aggregate demand in the economy. It, however, remains to be seen whether banks are willing to risk lending money to NBFCs and other financial companies in the current environment.

    The move to ease reserve requirements is unlikely to have any effect until this happens. Money market rates, however, did witness an immediate drop after the RBI’s emergency measures suggesting that the RBI may be enjoying some success in calming the nerves of investors.

    SCIENCE & TECHNOLOGY

    S 400

    Some facts about the S 400 missile system:

    Very critical to IAF’s India Integrated Command and Control System (IACCS)

    Useful for offensive strategy

    The system consists of four separate missiles

    It has the capability of engaging 36 targets at one simultaneously

    They will cover the entire range and altitude envelope from close quarters to nearly 570 km

    A single unit has 8 launchers, 112 missiles & command & support vehicles.

    Each unit will have up to 32 missiles on launchers at any time.

    The launchers contain the 48N6 missile series

    The missiles have high-explosive fragmentation warhead.

    Tombstone radar goes deep up to nearly 600 km away

    Made by government owned Almaz-Antey, NATO has designated it as SA-21 Growler

    It is considered as a major threat because of its long range

    Can spot enemy air dominance and help ground forces

    Drones too can be destroyed by this

    It is already deployed in Syria by the Russia

    Russia’s First Air Defence Corps got this missile in 2007

    The S 400 is comparable to the Patriot anti-ballistic and anti-aircraft missile system

    China is in the process of deployed this system