Current Affairs for today- 29th October 2019

October 29 2019

GS Paper II

European Union grants Brexit delay

Context

Just days before Britain had to exit the European Union (EU) on October 31 2019, the Prime Minister Boris Johnson pushes for an election on December 12 2019, in return to adopt his deal. The EU has thereby agreed for a 3-month delay to the already delayed formal departure from the bloc.

Background

BREXIT

What is European Union?

The European Union is a unified trade and monetary body of 28 member countries that allows the free flow of goods and people, except for random spot checks for crime and drugs. The EU transmits state-of-the-art technologies to its members in the beneficial areas of environmental protection, research and development, and energy.

There is no tariff/ duties on the selling of goods between the inter-member states as the taxes are standardized. Since the practitioners of most services like law, medicine, tourism, insurance can operate from any member country and hence led to the reduced costs of airfares, phone calls, internet, etc.

History

The predecessor of the EU was created in the aftermath of World War 2 that led to the formation of European Economic Community (EEC) created in 1958 to foster economic co-operation between six countries initially to strengthen the economic-interdependence to avoid conflict during trade. Since then 22 countries have joined the bloc to create a huge common market (internal market) and has been growing towards its full potential.

It has fruitfully evolved itself into an organisation spanning policy areas, from climate, environment and health to external relations and security, justice and migration and thus created the European Union (EU) in 1993.

There were many treaties that were signed, but the Treaty of Lisbon, 2009 increased the powers of the European Parliament. It gave the EU the legal authority to negotiate and sign international treaties, border control, immigration, judicial cooperation in civil and criminal matters, and police cooperation. It abandoned the idea of a European Constitution but European law is still established by international treaties.

The euro is the common currency for the EU area. It is the second most commonly held currency in the world, after the U.S. dollar. Its value is free-floating and is determined by the foreign exchange trade every day.

Purpose of EU

• Its purpose is to be more competitive in the global marketplace. At the same time, it must balance the needs of its independent fiscal and political members.
• It is the world’s biggest exporter of manufactured goods and services.
• Fosters stability, security and prosperity, democracy, fundamental freedoms and the rule of law at international level.

What Countries Are EU Members?

The EU’s 28 member countries are: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. That will drop to 27 after Brexit causes the United Kingdom to leave the EU in 2020 mostly.

Governance of the EU

Three bodies run the EU. The EU Council represents national governments. The Parliament is elected by the people. The European Commission is the EU staff. They make sure all members act consistently in regional, agricultural, and social policies.

1. The EU Council sets the policies and proposes new legislation. The political leadership, or Presidency of the EU, is held by a different leader every six months.
2. The European Parliament debates and approves the laws proposed by the Council. Its members are elected every five years.
3. The European Commission staffs and executes the laws. Jean-Claude Juncker is the president until October 2019.

Eurozone/ Euroarea

The eurozone consists of the EU member countries that use the euro, but only 19 have so far pledged to convert to Euro. The eurozone was created in 2005.

The European Central Bank is the EU’s central bank. It sets monetary policy and manages bank lending rates and foreign exchange reserves.

According to the IMF, the trader structure of the EU has propelled it to become the 2^nd largest economy in the world after China, standing at $22 trillion while China’s was $25.3 trillion in 2018. Its measurements are declared after comparing the purchasing power parity (PPP) to account for the difference in the standard of living.

News

On June 23, 2016, the United Kingdom voted to leave the European Union through a referendum. The uncertainty of obtaining Brexit dampened business growth for companies that operate in Europe.

Why BREXIT?

• Many in the United Kingdom, as in other EU nations, worried about the free movement of immigrants and refugees. They don’t like the budgetary constraints and regulations imposed by the EU on the free movement of capital and goods.
• The drain caused by the immigration especially from the PIGS (Portugal, Italy, Greece and Spain) economies has affected the balance of the welfare schemes of the UK government.
• Immigration Crisis: In 2015, 1.2 million refugees from Africa and the Middle East poured through Europe’s borders. On New Year’s Eve 2016, gangs of young refugees across Germany robbed, injured, and sexually assaulted more than 1,200 people, primarily women.
• Greek Debt Crisis: In 2011, Greece’s debt crisis threatened the concept of the eurozone itself. It almost triggered sovereign debt crises in Portugal, Italy, Ireland, and Spain. EU leaders assured investors that it would stand behind its members’ debts but also constrained the spending of these countries.
• Red tapism in the Bureaucratic strata of the European Parliament is affecting the sentiments of the British exporters.

Brexit and its effects on India

Cons

1. The immediate impact of Brexit is an increase in risk aversion when it comes to investing, especially in light of the possibility of other countries following suit. This will affect the FPI outflows from foreign portfolio investors.
2. IANS report says that Britain ranks 12^th in terms of India’s bilateral trade with individual countries and also enjoys a trade surplus. India invests more in UK emerging as the 3^rd largest FDI investor. Upon Brexit, there will be changes in the access to the European market and hence affect the business prospects of Indian companies.
3. Nasscom in a recent report held that IT and ITeS industry of India will have a negative impact of close to $108bn. The impact can be seen in medium term (2-3 years)
4. Rupee may depreciate because of the double effect of foreign fund outflow and dollar rise which may increase petrol and diesel prices to an extent.
5. The government then may want to reduce additional excise duty imposed on fuel when it was on a downward trajectory. This may increase fiscal deficit unless revenue increased.
6. India’s Forex (currently a record 363 billion dollars) may diminish if the currency is stored in Euros or Pound (this comes around 20% of total forex).

Pros

1. Brexit has driven away fears of a US Fed rate hike and could lead to lower commodity prices.
2. Caused worry for the commodity producers over the concerns about China’s slowing economic growth. It may foil the market and the prices may turn bleak.
3. Devaluation of rupee might enhance India’s export competitiveness.
4. More Indian tourists can afford to visit Britain in the coming days as the currency value has fallen.
5. More Indian students can afford to study in Britain for higher education as the fees may seem cheaper.

 

 

GS Paper II

Second round of Smart Cities, AMRUT may roll out in 2020

Context

The 2^nd round of the Centre’s flagship urban development schemes- The Smart Cities Mission and the Atal Mission for Rejuvenation Urban Transformation (AMRUT) were being considered to be rolled out in 2020.

Currently, 65% of the urban population has been covered and the next target is for 35%.

Purpose of AMRUT

500 cities and all cities/towns with a population of more than 1,00,000 have been covered under this scheme.

1. Ensure that every household has access to a tap with the assured supply of water and a sewerage connection.
2. Increase the amenity value of cities by developing greenery and well maintained open spaces (e.g. parks) and
3. Reduce pollution by switching to public transport or constructing facilities for non-motorized transport (e.g. walking and cycling) and the indicators have been prescribed by the Ministry of Housing and Urban Affairs (MoHUA) in the form of Service Level Benchmarks (SLBs).
4. Rejuvenation of water bodies specifically for drinking water supply and recharging of groundwater.
5. Construction and improvement of drains and stormwater drains in order to reduce and eliminate flooding.
6. Water supply systems including augmentation of existing water supply, water treatment plants and universal metering.
7. Development of green space and parks with special provision for children, senior citizens and Divyang friendly components.

Purpose of Smart Cities Mission

1. Promoting mixed land use in area-based developments–planning for ‘unplanned areas’ containing a range of compatible activities and land uses close to one another in order to make land use more efficient. The States will enable some flexibility in land use and building bye-laws to adapt to change;
2. Housing and inclusiveness – expand housing opportunities for all;
3. Creating walkable localities –reduce congestion, air pollution and resource depletion, boost local economy, promote interactions and ensure security. The road network is created or refurbished not only for vehicles and public transport, but also for pedestrians and cyclists, and necessary administrative services are offered within walking or cycling distance;
4. Preserving and developing open spaces – parks, playgrounds, and recreational spaces in order to enhance the quality of life of citizens, reduce the urban heat effects in Areas and generally promote eco-balance;
5. Promoting a variety of transport options – Transit Oriented Development (TOD), public transport and last-mile para-transport connectivity;
6. Making governance citizen-friendly and cost-effective – increasingly rely on online services to bring about accountability and transparency, especially using mobiles to reduce the cost of services and providing services without having to go to municipal offices. Forming e-groups to listen to people and obtain feedback and use online monitoring of programs and activities with the aid of cyber tour of worksites;
7. Giving an identity to the city – based on its main economic activity, such as local cuisine, health, education, arts and craft, culture, sports goods, furniture, hosiery, textile, dairy, etc;
8. Applying Smart Solutions to infrastructure and services in area-based development in order to make them better. For example, making Areas less vulnerable to disasters, using fewer resources, and providing cheaper services.

 

 

GS Paper I, Paper II

Countdown begins for J&K transition

Background

Darbar Move is the name given to the bi-annual shift of the secretariat and all other government offices of the Jammu and Kashmir from one capital to the other. From May to October, governmental offices are housed in the state’s summer capital Srinagar and the remaining six months in its winter capital, Jammu.

• The tradition started during the Dorga rule in 1872 by Maharaja Ranbir Singh. Though there has always been a clamour in discontinuing the practice, the economic benefits it brings to Jammu has resisted any reforms.
• The government has notified October 31, 2019, the birth anniversary of Sardar Patel, as the date when the new UT of J&K will come into effect. The Darbar move is the first seasonal shifting since the revocation of the special status to J&K.
• With the aim to ensure a smooth transition of the downgrade of the State status to Jammu and Kashmir to the subsequent bifurcation into the Union Territories of J&K and Ladakh respectively, the Chief Justice of J&K High Court has administered the oath and appointed the two new Lieutenant-Governors in Srinagar and Leh accordingly.
• Ladakh will not have any assembly and shall directly be controlled by the Union Home Ministry through the Lieutenant-Governor. However, in the case of J&K, the assembly seats have been raised from 107 to 114.

The J&K Reorgnisation Act, 2019 passed on August 6, 2019, says that:

1. After 31st October 2019, the 153 State laws shall be repealed.
2. 106 Central laws will be applicable to J&K, along with 166 State Acts, including the Governor’s Act.