EDITORIALS & ARTICLES
27th February 2021
Govt. to monitor OTT content
For the first time, the government, under the ambit of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021, has brought in detailed guidelines for digital content on both digital media and Over The Top (OTT) platforms, while giving itself overriding powers.
EMERGENCY POWERS:
- The new rules lay down a three-tier grievance redressal mechanism.
- However, over and above this framework, the government has equipped itself with “emergency” powers to block public access of any information.
- The rules state, “in case of emergency nature” the Secretary, Ministry of Information and Broadcasting, may “if he is satisfied that it is necessary or expedient and justifiable” give orders to block access.
- Such orders can be released “without giving an opportunity of hearing” to the publishing platform.
- The first level of the grievance redressal system will be at the level of each OTT provider. Each complaint will have to be addressed within 15 days.
- If the complaint is not satisfactorily addressed, then the complainant can scale it up to a self-regulatory body collectively established by the OTTs.
- This body will be headed by a retired judge of the Supreme Court, a High Court, or an independent eminent person from the field of media, broadcasting, entertainment, child rights, human rights or other relevant fields.
OVERSIGHT MECHANISM:
- This self-regulatory body also has “censuring” powers in case of any incriminating content.
- At the third tier, the government has equipped itself with overriding powers in the form of “oversight mechanism”.
- An inter-ministerial committee will perform this function and it will largely have the same powers as the collective self regulatory body of the OTTs.
- Both Ministers also clarified that no new law has been framed. And the government already has power to step in, in case of an emergency under the existing law.
- There have been widespread concerns about digital content, especially on OTT platforms, with 50 Parliament questions on the issues recently.
India, Pakistan agree to adhere to 2003 ceasefire
- In a first joint statement issued by the two sides in years, India and Pakistan recently said they have agreed to a “strict observance of all agreements, understandings and cease firing along the Line of Control (LoC) and all other sectors” with effect from the midnight of February 24-25.
- The decision was announced after discussions between the Directors General of Military Operations (DGMOs) of both sides over the established hotline.
TOWARDS PEACE:
- In the interest of achieving mutually beneficial and sustainable peace along the borders, the two DGMOs agreed to address each other’s core issues and concerns which have [the] propensity to disturb peace and lead to violence.
- It added that they would use existing mechanisms of hotlines and flag meetings to resolve any “misunderstandings”.
- As per the existing mechanism, there is a discussion by officials from the Military Operations directorate every Tuesday but the DGMOs speak only when one side requests for a conversation.
- However, Army sources reiterated that there would be “no let-up” in counter-terror operations as a result of the agreement, adding that the agreement with Pakistan was “an attempt to bring violence levels down.
- India desires normal neighbourly relations with Pakistan and has always been committed to addressing issues, if any, in a peaceful bilateral manner.
INCOIS to go for aerial mapping of ocean floor
The Indian National Centre for Ocean Information Services (INCOIS) is planning to take the help of the National Remote Sensing Centre (NRSC) for aerial mapping of the Andaman and Nicobar Islands and Lakshadweep to get a better picture of the ocean floor, also called ‘bathymetric’ study.
FOR MITIGATING RISKS:
- NRSC has already done a similar high resolution topographic Airborne Laser Terrain Mapping (ALTM) for the entire coastal areas of the country.
- Now, it is in the process of integrating the data for a 3D multi-hazard mapping of both the east and west coastline for a more precise picture of the ocean floor.
- Such a study has become imperative in view of the recent tsunamis of the Indonesian coasts where more than the quake related high waves, damage was due to landslides under the sea beds causing sudden wave surges leading to much damage without giving sufficient time to alert people.
- The research institute, under the Ministry of Earth Sciences, had also identified ‘gaps’ across the coast of Andhra Pradesh and Odisha for installing more tide gauges for better monitoring of the sea and more accurate predictionof impending disasters like cyclones.
- These will be in addition to the 36 already in the Bay of Bengal.
- INCOIS scientists with their counterparts in the Chennai-based National Institute of Ocean Technology and an United States independent scientific agency, Massachusetts-based Woods Hole Oceanographic Institution, have been mining the data recorded by a unique ‘Flux Buoy’ retrieved from the Bay of Bengal off the Kolkota coast recently.
Gadkari urges auto firms to raise localisation to 100%
Union Minister of Road Transport and Highways recently asked automobile manufacturers to increase the localisation of components to 100%, failing which he said the Centre would consider raising basic customs duty on imports.
INCREASING LOCALISATION:
- Union Minister said the present level of localisation of parts in the Indian auto sector was about 70% and “at any cost, we need to stop imports of auto components.
- Union Minister urged both vehicle and auto-component manufacturers to increase localisation of components to the maximum.
- MInister said India is fully competent in all the things. He requested automobile manufacturing companies to take it very seriously otherwise for imports of components India will think in the direction of increasing customs duty on them.
- Society of Indian Automobile Manufacturers sought government support for localisation of electronic components, especially semiconductors which are currently facing a global shortage, stating it would need huge investments.
What rise in bond yield means for investors and govt
- Rising yields on government securities or bonds in the United States and India have triggered concern over the negative impact on other asset classes, especially stock markets, and even gold.
- The yield on 10-year bonds in India moved up from the recent low of 5.76% to 6.20% in line with the rise in US yields, sending jitters through the stock market, where the benchmark Sensex fell 2,300 points last week.
- With over Rs 70.55 lakh crore of government securities (G-Secs) outstanding and the government planning to borrow more from the market through G-Secs, the movement of yields will continue to be watched in the coming months.
WHY DO BOND YIELDS RISE?
- Bond yield is the return an investor gets on that bond or on a particular government security.
- The major factors affecting the yield is the monetary policy of the Reserve Bank of India, especially the course of interest rates, the fiscal position of the government and its borrowing programme, global markets, economy, and inflation.
- With the pandemic upsetting the calculations, Finance Minister has pegged the fiscal deficit for 2021-22 at 6.8% of GDP (the original target was 3.5%), and aims to bring it back under 4.5% by 2025-26.
- A fall in interest rates makes bond prices rise, and bond yields fall — and rising interest rates cause bond prices to fall, and bond yields to rise.
- In short, a rise in bond yields means interest rates in the monetary system have fallen, and the returns for investors (those who invested in bonds and govt securities) have declined.
HOW HAS THE RISE IN YIELD AFFECTED STOCK MARKETS?
- The sudden rise in domestic and global bond yields recently moderated the enthusiasm of equity market participants around the world.
- The “taper tantrum” of 2013 showed the relationship between bond yields and stock markets — a sudden rise in bond yields caused markets to slide, as mass bond selling was witnessed.
- Bond yields are inversely proportional to equity returns; when bond yields decline, equity markets tend to outperform, and when yields rise, equity market returns tend to falter.
- Traditionally, when bond yields go up, investors start reallocating investments away from equities and into bonds,as they are much safer.
- As bond yields rise, the opportunity cost of investing in equities goes up, and equities become less attractive.
- Also, a rise in bond yields raises the cost of capital for companies, which in turn compresses the valuations of their stocks. That is something that investors see when RBI cuts or raises the repo rate.
- A cut in the repo rate reduces the cost of borrowing for companies, leading to a rise in share prices, and vice versa.
HOW WILL THE BORROWING PROGRAMME AND ECONOMY BE IMPACTED?
- When bond yields rise, the RBI has to offer higher cut-off price/yield to investors during auctions.
- This means borrowing costs will increase at a time when the government plans to raise Rs 12 lakh crore from the market.
- However, RBI is expected to stabilise yields through open market operations and operation twists.
- Besides, as government borrowing costs are used as the benchmark for pricing loans to businesses and consumers, any increase in yields will be transmitted to the real economy.
WILL HIGH YIELDS IMPACT THE FLOW OF FOREIGN PORTFOLIO INVESTMENT (FPI) FUNDS?
- Yes. Bond yields play a big role in FPI flow. Traditionally, when bond yields rise in the US, FPIs move out of Indian equities.
- Also, it has been seen that when the bond yield in India goes up, it results in capital outflows from equities and into debt.
- A higher return on treasury bonds in the US leads investors to move their asset allocation from more risky emerging market equities or debt to the US Treasury, which is the safest investment instrument.
- So, a continued rise in yields in developed markets may put more pressure on Indian equity markets, which may witness an outflow of funds. Even a rise in domestic bond yields would see allocation moving from equity to debt.
ARE RISING YIELDS A GLOBAL PHENOMENON?
- Yields have already risen across the world, and they are almost certain to rise further in the US, especially if the Biden administration gets its $1.9 trillion package over the line. A slow but steady rise will allow other asset classes to adjust.
- A rapid increase in the US yields will likely spark nerves in the buy-everything aficionados.
- Bond yield in the US, which was at 0.31% in March 2020, touched 1.40% recently. In the UK, 10-year bonds rose 40 basis points in February to touch 0.76% this week.
WHAT SHOULD INVESTORS KEEP IN MIND?
- Bond yields move on account of various factors, and investors will have to keep an eye on both domestic and global developments while investing in them.
- If inflation and interest rates in the economy are key factors that determine yields, they are in turn affected by various other factors such as economic growth, sovereign rating, money supply, government borrowing, global liquidity and geopolitical developments.
- With the RBI now allowing retail participation in G-Secs, investors need to be watchful of developments before taking a decision.
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