External Benchmark Rates

The Reserve Bank of India has made it mandatory for all banks to link all new floating rate loans (i.e. personal/retail loans, loans to MSMEs) to an external benchmark with effect from 1^st October 2019. The move is aimed at faster transmission of monetary policy rates.

• Banks can choose from one of the four external benchmarks — repo rate, three-month treasury bill yield, six-month treasury bill yield or any other benchmark interest rate published by Financial Benchmarks India Private Ltd.
  
  • At present, interest rates on loans are linked to a bank’s marginal cost of fund-based interest rate, known as the Marginal Cost of Lending Rate (MCLR).
  • Existing loans and credit limits linked to the MCLR, base rate or Benchmark Prime Lending Rate, would continue till repayment or renewal.
  • Those customers wanting to switch to the repo-linked rate can do so on mutually acceptable terms.
• Adoption of multiple benchmarks by the same bank is not allowed within a loan category.
• The interest rate under the external benchmark shall be reset at least once every three months.

Fixed vs Floating Interest Rate

• The fixed interest rate on loan means repayment of loans in fixed equal instalments over the entire period of the loan. In this case, the interest rate doesn't change with market fluctuations.
• Floating interest rate by name implies that the rate of interest varies with market conditions. The drawback with floating interest rates is the uneven nature of monthly instalments.

Financial Benchmarks India Private Ltd

• It was incorporated on 9^th December 2014 under the Companies Act 2013.
• It was recognised by the Reserve bank of India as an independent Benchmark administrator on 2^nd July 2015.
• The main objective of the company is to act as the administrators of the Indian interest rate and foreign exchange benchmarks and to introduce and implement policies and procedures to handle the benchmarks.
• It is located in Mumbai.

Background

• The transmission of policy rate changes to the lending rate of banks under the current MCLR framework has not been satisfactory.
  
  • RBI in its August Policy, 2019 pointed out that although it had brought down the repo rate by 75 basis points, the weighted average MCLR of banks had come down by only 29 basis points.
• Banks argue that the MCLR formula is calculated based on the cost of funds and thus it comes down only gradually after a repo rate cut.
• There is a strong likelihood that RBI will cut rates further to spur demand.
• The external benchmark was first proposed by the former governor Urjit Patel in 2018. The norms for external benchmark linking of interest rates was scheduled to be operational from April 1, but owing to protest by the banks, the same was deferred.

Key Terms

• Marginal Cost of Lending Rate: It came into effect in April 2016.
  
  • It is a benchmark lending rate for floating-rate loans.
  • This is the minimum interest rate at which commercial banks can lend.
  • This rate is based on four components—the marginal cost of funds, negative carry on account of cash reserve ratio, operating costs and tenor premium.
  • MCLR is linked to the actual deposit rates. Hence, when deposit rates rise, it indicates the banks are likely to hike MCLR and lending rates are set to go up.
• Base Rate: Banks stopped lending on base rate from April 2016.
  
  • Loans taken between June 2010 and April 2016 from banks were on base rate.
  • During the period, base rate was the minimum interest rate at which commercial banks could lend to customers.
  • Base rate is calculated on three parameters — the cost of fund, unallocated cost of resources and return on net worth. Hence, the rate depended on individual banks and they changed it whenever their cost of funds and other parameters changed.
• Benchmark Prime Lending Rate: BPLR was used as benchmark rate by banks for lending till June 2010.
  
  • Under it, bank loans were priced on the actual cost of funds.
  • However, the BPLR was subverted, resulting in an opaque system. The bulk of wholesale credit (loans to corporate customers) was contracted at sub-BPL rates and it comprised nearly 70% of all bank credit.
  • Under this system, banks were subsidising corporate loans by charging high interest rates from retail and small and medium enterprise customers.

Source: TH

Asteroid Impact Deflection Assessment (AIDA)

Asteroid researchers with a view to establishing a planetary defence mechanism against huge asteroid will gather in Italy to discuss the progress of Asteroid Impact Deflection Assessment (AIDA).

• An asteroid hit is widely acknowledged as one of the most likely, among all the causes that may eventually cause the extinction of life on Earth,
• In general, there are two different ways of planetary defence against an asteroid.
  
  • Blowing up the asteroid before it reaches Earth,
  • Deflecting it off its Earth-bound course by hitting it with a spacecraft.
• The Asteroid Impact Deflection Assessment (AIDA) project seeks to explore the defence mechanism through deflection.
  
  • It is a joint mission of the National Aeronautics and Space Administration (NASA) and the European Space Agency (ESA).
  • It is an ambitious double-spacecraft mission to deflect an asteroid in space.
  • Target of AIDA
    
    • The target is the smaller of two bodies in the “double Didymos asteroids”. These are in orbit between Earth and Mars.
    • Didymos is a near-Earth asteroid system.
    • Its main body measures about 780 m across; the smaller body is a “moonlet” about 160 m in diameter.

• The project aims to deflect the orbit of the smaller body through an impact by one spacecraft.
  
  • NASA is building the Double Asteroid Impact Test (DART) spacecraft for this.
• Then a second spacecraft will survey the crash site and gather the maximum possible data on the effect of this collision.
  
  • ESA’s contribution is a mission called Hera, which will perform a close-up survey of the post-impact asteroid.
  • Hera will also deploy a pair of CubeSats for close-up asteroid surveys. This would allow researchers to model the efficiency of the collision.
• Flying along with DART will be an Italian-made miniature CubeSat, called LICIACube, to record the moment of impact.

• The Double Asteroid Impact Test (DART) spacecraft will be launch in 2021. It is planned to collide with the target in September 2022.

CubeSats

• CubeSats are a class of research spacecraft called nanosatellites.
• CubeSats are built to standard dimensions (Units or “U”) of 10 cm x 10 cm x 10 cm.
• They can be 1U, 2U, 3U, or 6U in size, and typically weigh less than 1.33 kg (3 lbs) per U.

Source: IE

Ban on Single-Use Plastics

The Union government in a bid to free India of single-use plastics by 2022, has laid out a multi-ministerial plan to discourage the use of single-use plastics across the country.

• The nationwide ban on plastic bags, cups, plates, small bottles, straws and certain types of sachets is set to begin from October 2 to eliminate single-use plastics from cities and villages that rank among the world's most polluted.
• The ban will be comprehensive and will cover every sector from manufacturing to the usage and import of such items.
• The Nodal Ministry for the scheme is the Ministry of Environment, Forests and Climate Change (MoEF&CC) ensured with the task of:
  
  • Enforcing the ban on single-use plastics, &
  • Finalizing the pending policy for Extended Producer Responsibility (a policy approach under which producers are given a significant responsibility financially and/or physically for the treatment or disposal of post-consumer products) for milk products.

Single-use Plastics

• Single-use plastics, or disposable plastics, are used only once before they are thrown away or recycled.
• These items are things like plastic bags, straws, coffee stirrers, soda and water bottles and most food packaging.
  • The single-use plastic products also prevent the spread of infection. Instruments such as syringes, applicators, drug tests, bandages and wraps are often made to be disposable.
  • Also, single-use plastic products have been enlisted in the fight against food waste, keeping food and water fresher for longer and reducing the potential for contamination.
• However, there can be challenges when it comes to disposing of some single-use products.
  • Petroleum-based plastic is not biodegradable and usually goes into a landfill where it is buried or it gets into the water and finds its way into the ocean.
  • In the process of breaking down, it releases toxic chemicals (additives that were used to shape and harden the plastic) which make their way into our food and water supply.
• The ultimate goal is that all these products can be collected and converted into energy or recycled.

Other Stakeholders

• National Highway Authority of India (NHAI) will ensure that the plastic waste is collected and transported responsibly along National Highways.
  
  • The collected plastic waste will be used for road construction.
  • Roads constructed using water plastic are durable against extreme weather conditions and are also cost-effective.
• The Department of Industrial Promotion (Ministry of Commerce & Industry) will ensure that all cement factories use plastic as fuel.
• The Ministry of Railways will organize massive shramdaans (voluntary work) on October 2 for the collection of plastic waste at railway stations and along the rail tracks.
  
  • It will also run advertising radio spots on all trains.
• Food and Consumer Affairs Ministry has decided to put-forth a blanket ban on all types of single-use plastic that is used in the ministry & the PSUs including Food Corporation of India (FCI).
• Ministry of Tourism is set to ensure & create awareness on single-use plastic at iconic tourist spots.
• Ministry of Textiles has pushed for greater production of jute bags to replace plastic bags.

Global Initiatives

• Concerns are growing worldwide about increasing plastic pollution, with a particular focus on the oceans, where nearly 50% of single-use plastic products end up killing marine life and entering the human food chain.
  
  • In this regard, the European Union has planned to ban single-use plastic items such as straws, forks, knives and cotton buds by 2021.
• China's commercial hub of Shanghai is gradually restraining the use of single-use plastics in catering services. Its island province of Hainan has vowed to completely eliminate single-use plastic by 2025.
• On World Environment Day, 2018 the world leaders vowed to “Beat Plastic Pollution” & eliminate its use completely.

Way Forward

• In India, with rising e-commerce purchases, the use of plastic has significantly increased. These companies need to cut back on plastic packaging that makes up nearly 40% of India's annual plastic consumption.
  
  • In this regard, Amazon Inc's initiative to replace all single-use plastic in its packaging by June 2020 with paper cushions is a welcome step.
• In the absence of robust testing and certification agencies in India, to verify the claims made by producers, spurious biodegradable and compostable plastics are entering the marketplace. There is an urgent requirement of establishing such labs and agencies.
• Since 70% of the total plastic waste in India is from urban areas, there is a need for urban local bodies to start a massive shramdaan exercise to collect and segregate waste into recyclable and non-recyclable categories, which can then be recycled accordingly.
• In spite of the notification of the Plastic Waste Management (PWM) Rules, 2016, and amendments made two years later, most cities and towns are not prepared to implement the provisions of the rules. Provisions should be taken into consideration for strict implementation of the rules.
• An effective ban on single-use plastic can happen if an alternative is available in the market. Cloth or jute bags, locally tailored and produced, can be a viable alternative.

Source: TH

Megalithic Sword Unearthed in Kozhikode

The State Archaeology Department in Kozhikode recently has unearthed a Megalithic era iron sword, a chisel and a few decorated pottery from a rock-cut cave at Pothuvachery in Kannur district of Kerala.

• The sword is 105 cm long, & is said to be 2,500 years old.
• The recovery of the implements revealed the technological advancement of the Megalithic people.

Megalithic Culture

• Megaliths refer to large stone structures that were constructed either as burial sites or as commemorative sites.
• The burial sites are the sites with actual burial remains, such as dolmenoid cists (box-shaped stone burial chambers), cairn circles (stone circles with defined peripheries), and capstones (distinctive mushroom-shaped burial chambers found mainly in Kerala).
• Commemorative megaliths include memorial sites.
• In India, archaeologists trace the majority of the megaliths to the Iron Age (1500 BC to 500 BC), though some sites precede the Iron Age, extending up to 2000 BC.
• Megaliths are spread across the Indian subcontinent.
• The majority of megalithic sites are found in Peninsular India, concentrated in the states of Maharashtra (mainly in Vidarbha), Karnataka, Tamil Nadu, Kerala, Andhra Pradesh, and Telangana.

Rock-cut cave

• Natural caves were the earliest caves used by local inhabitants.
• Most of the rock-cut structures were closely associated with various religions and religious activities.
• As manifested by archaeological evidence, the Mesolithic period (c. 6000 BC) marked the first use and modifications of the early caves.
• The overhanging rocks embellished with petroglyphs or the rock-cut designs that were created by carving, chiselling and abrading part of rock surfaces forms the early instances of such rock caves.
• The Bhimbetka rock shelters inside the tiger reserve ‘Ratapani Wildlife Sanctuary’ exemplifies the settlement of human life in these rock shelters during the Stone Age in India.
• In the beginning, remarkable Buddhist and Jain rock-cut structures were excavated by the Buddhist monks for prayer and residence purposes. The best example of this is Chaityas (prayer halls) and Viharas (monasteries).

Source: TH

Global Liveability Index

Indian cities have not fared too well in the Economist Intelligence Unit’s Global Liveability Index for 2019.

• New Delhi with 118^th rank has regi stered the biggest decline in Asia whereas Mumbai also fell two places since last year to rank 119^th.
• The decline in Mumbai’s rank was mainly due to a downgrade in its culture score.
• New Delhi has fallen in the index because of downgrades to its culture and environment score as well as fall in the stability score owing to rising crime rates.
• The list is topped by Vienna (Austria) for the second consecutive year.
• Asian cities overall have scored slightly below the global average.
• Among the ten least liveable cities globally, three are from Asia which are:
  
  • Port Moresby in Papua New Guinea (135^th)
  • Pakistan’s Karachi (136^th)
  • Bangladesh’s Dhaka (138^th)
• Among the BRICS countries, Suzhou from China was ranked highest at 75, while India’s capital New Delhi was ranked lowest at 118^th.

Global Liveability Index

• The Economic Intelligence Unit considered 140 cities for rankings.
• The ranking is based on a particular country’s scores in five broad categories, namely:
  
  • Stability
  • Healthcare
  • Culture and Environment
  • Education
  • Infrastructure
• Each factor in a city is rated as acceptable, tolerable, ncomfortable, undesirable or intolerable.

Source:TH

Travel and Tourism Competitiveness Index

India has moved up six places to rank 34^th on the World Travel and Tourism Competitiveness Index 2019, released by the World Economic Forum.

• India was ranked 40^th in 2018.
• Spain, France, Germany, Japan and the United States are the world’s most travel-ready nations.
  
  • Japan remains Asia's most competitive travel and tourism economy, ranking 4th globally.
  • China is the largest travel and tourism economy in Asia-Pacific and 13th most competitive globally.
• Published biennially, Travel & Tourism Competitiveness Report and Index benchmarks the Travel & Tourism (T&T) competitiveness of 140 economies.
  
  • The 140 economies are ranked in four sub-indexes:
    
    • Enabling environment,
    • Travel and tourism policy and enabling conditions,
    • Infrastructure, and
    • Natural and cultural resources.

Source: BS

Ladakh Festival

Recently, Minister of State for Culture & Tourism has visited Ladakh Festival which is celebrated every year in Leh and its nearby villages.

• The festival is for one week which includes events like archery, polo, and Masked dances from the monasteries.
• It also includes dances by cultural troupes from the villages.

Masked Dances

• Cham Dance is a famous masked dance from Ladakh which is the major attraction of the festival.
  
  • It is also performed on Tsechu Festival which is the yearly spiritual festival carried out in many monasteries in Ladakh.
  • It is said to bring good luck to the people viewing this dance.
  • This dance which is accompanied by music played by monks using traditional Tibetan instruments is usually performed by a few selected sects of Buddhism.

Source: PIB

India: 10th largest Gold Reserve in the World

According to the World Gold Council, India has gold reserves totalling 618 tonnes, the 10^th largest gold reserve in the world.

• U.S has the highest gold reserves with 8,133.5 tonnes of total gold reserves, followed by Germany with 3,366.8 tonnes and the International Monetary Fund (IMF) with a holding of 2,451.8 tonnes,
• India’s gold reserves have grown substantially in the past couple of decades from 358 tonnes in 2000 to the current 618 tonnes.
• India’s entry into the list of top ten countries comes at a time when the quantum of monthly purchases is the lowest in over three years.

World Gold Council

• The World Gold Council(WGC) is the market development organisation for the gold industry.
• Headquartered in London, the WGC covers the markets which comprise about three-quarters of the world's annual gold consumption.
• WGC seeks to stimulate and sustain demand for gold, provide industry leadership, and be the global authority on the gold market.
  • It intervenes in global markets to make gold more accessible, devising solutions to broaden the understanding and use of gold as an investment asset.

Source: TH

North Eastern Regional Agricultural Marketing Corporation Limited (NERAMAC)

Recently, Ministry of Development of North Eastern Region has inaugurated a marketing complex in Guwahati, for North Eastern Regional Agricultural Marketing Corporation Limited (NERAMAC).

• The NERAMAC Limited was incorporated in the year 1982 as a marketing organization in the field of Agri-Horti sector of the North-eastern region, under the administrative control of the Ministry of Development of North Eastern Region (DoNER).
• It was set up to support farmers/producers of North East getting remunerative prices for their produce and thereby bridge the gap between the farmers and the market and also to enhance the agricultural, procurement, processing and marketing infrastructure of the Northeastern Region of India.
• NERAMAC is continuously making all efforts for the development of the farmers of the region and double their income by the end of 2022.

Source: PIB