EDITORIALS & ARTICLES
28th May 2021
Open Skies Arms Control Pact
Recently, the Biden administration informed Russia that it will not rejoin Open Skies Arms Control Pact.
Open Skies Treaty
- It is an accord between over 30 countries that allows participants to fly unarmed reconnaissance flights over any part of their fellow member states.
- The idea was first proposed in 1955 by former US President Dwight Eisenhower as a means to deescalate tensions during the Cold War.
- The landmark treaty was eventually signed in 1992 between NATO members and former Warsaw Pact countries following the demise of the Soviet Union.
- It went into effect in 2002 and had 35 signatories, including key players US and Russia, along with one non-ratifying member (Kyrgyzstan).
- The OST aims at building confidence among members through mutual openness and thus reducing the chances of accidental war.
Features of Open Skies Treaty
- Under the treaty, a member state can “spy” on any part of the host nation, with the latter’s consent.
- A country can undertake aerial imaging over the host state after giving notice 72 hours before, and sharing its exact flight path 24 hours before.
- The information gathered, such as on troop movements, military exercises and missile deployments, has to be shared with all member states.
- Under the treaty, only approved imaging equipment is permitted on the surveillance flights, and officials from the host state can also stay on board throughout the planned journey.
US left Open Skies Treaty
- The experts in Washington had for over a decade accused Russia of non-compliance with OST protocols and blaming Moscow of obstructing surveillance flights on its territory.
- The US President Donald Trump was also unhappy that a Russian reconnaissance flew over his golf course in New Jersey State in 2017.
- In May 2020, the Trump administration announced its intention of withdrawing from the OST, accusing Russia of “flagrantly and continuously violating the Treaty in various ways for years”.
New Strategic Arms Reduction Treaty (New START)
- The New Strategic Arms Reduction Treaty (New START) was signed in 2010 in Prague by the United States and Russia and entered into force in 2011.
- It replaced the 1991 START I treaty, which expired in 2009, and superseded the 2002 Strategic Offensive Reductions Treaty (SORT).
- The New START is the first verifiable U.S.-Russian nuclear arms control treaty to take effect since START I in 1994.
- Nuclear warhead limit: The New START limits went into effect that capped deployed strategic nuclear warheads and bombs at 1,550 which is down approximately 30 percent from the 2,200 limit set by SORT.
- Missile, bomber and launcher limits: The deployed intercontinental ballistic missiles (ICBMs), submarine-launched ballistic missiles (SLBMs), and heavy bombers assigned to nuclear missions are limited to 700.
- The New START does not limit the number of non-deployed ICBMs and SLBMs, but it does monitor them and provide for continuous information on their locations and on-site inspections to confirm that they are not added to the deployed force.
- The Treaty does not place any constraints on the testing, development or deployment of current or planned U.S. missile defense programs or U.S. long-range conventional strike capabilities.
UAE’s Golden Visa
Recently, the Bollywood actor Sanjay Dutt received his golden visa from the UAE government.
UAE’s Golden Visa
- In 2019, the United Arab Emirates (UAE) implemented a new system for long-term residence visas.
- The visas aimed at enabling foreigners to live, work and study in the UAE without the need of a national sponsor and with 100 per cent ownership of their business.
- The 2019 amendment was brought about in a bid to attract new foreign residents, particularly to the emirate of Dubai, following the economic upheaval caused by the coronavirus pandemic.
Benefits provided under Golden Visa
- It essentially offers long-term residency (5 and 10 years) to people belonging to the following groups i.e. investors, entrepreneurs, individuals with outstanding talents.
- The UAE government has made it clear that they are committed to providing expatriates, investors and essentially everyone looking to make the UAE their home an extra reason to feel secure about their future.
Eligibility under UAE’s Golden Visa
- The interested individuals, who would like to apply for the Golden Visa, may do so through the website of the Federal Authority for Identity and Citizenship.
- For the 10-year visa, investors having no less than AED 10 million worth of public investment, either in the form of an investment fund or a company, can apply.
- At least 60 per cent of the total investment must not be in the form of real estate and the invested amount must not be loaned, or in case of assets, investors must assume full ownership.
- The investor must be able to retain the investment for a minimum of three years as well.
- The 10-year long visa may be extended to include business partners, providing that each partner contributes AED 10 million.
- The long-term visa can also include the holder’s spouse and children, as well as one executive director and one advisor.
- The individuals with specialised talent such as doctors, researchers, scientists, investors and artists can also apply for the visa.
- These individuals may be granted a 10-year visa following accreditations granted by their respective departments and fields and the visa will also be extended to their spouses and children.
- For the 5-year visa, the norms are largely similar for investors with the only difference being the amount of investment required is set at AED 5 million.
- The exceptional high school and university students are eligible for a 5-year residency visa in the UAE.
- The high school students who rank top in the country (a minimum grade of 95 per cent) and students from certain universities with a GPA of 3.75 or higher upon graduation are also eligible.
- The foreign nationals who are looking to set up their business in the UAE may also apply for permanent residency (5 years) through the Golden Business Visa scheme.
Note
- The UAE has also approved an amendment to its residency laws allowing foreign university students to bring their families with them to the UAE.
- In October 2020, Dubai also launched a unique residency programme which permitted overseas working professionals, who were working from home, to live in the UAE while continuing to serve their employers in their home country.
- In September 2020, the Dubai government also launched a five-year renewable Retirement Visa for foreigners aged 55 and over to live in the emirate.
- The programme, called Retire in Dubai, is open to all retirees as long as they earn a monthly income of at least $5,500, have savings of $275,000, or own a property in Dubai worth $550,000.
Currency Swap Agreement
Recently, Bangladesh’s central bank has approved a $200 million currency swap facility to Sri Lanka.
- It is an agreement in which two parties exchange the principal amount of a loan and the interest in one currency for the principal and interest in another currency.
- At the inception of the swap, the equivalent principal amounts are exchanged at the spot rate.
- During the length of the swap each party pays the interest on the swapped principal loan amount.
- At the end of the swap the principal amounts are swapped back at either the prevailing spot rate, or at a pre-agreed rate such as the rate of the original exchange of principals.
Currency Swap Arrangement between Bangladesh and Sri Lanka
- Bangladesh Bank has in principle approved a $200 million currency swap agreement with Sri Lanka.
- The facility will help Colombo tide over its foreign exchange crisis.
- Sri Lanka, staring at an external debt repayment schedule of $4.05 million this year, is in urgent need of foreign exchange.
- The two sides have to formalise an agreement to operationalise the facility approved by Bangladesh Bank.
Significance of Currency Swap Agreement
- A country provides dollars to a foreign central bank and also provides the equivalent funds in its currency to the former, based on the market exchange rate at the time of the transaction.
- These swap operations carry no exchange rate or other market risks, as transaction terms are set in advance.
- The absence of an exchange rate risk facility provides the country the flexibility to use these reserves at any time in order to maintain an appropriate level of balance of payments or short-term liquidity.
- A currency swap is an agreement to exchange fixed or floating rate payments in one currency for fixed or floating payments in a second currency plus an exchange of the principal currency amounts.
- The re-denomination from one currency to another currency is done to lower the borrowing cost for debt and to hedge exchange risk.
- Currency swap allows a customer to re-denominate a loan from one currency to another.
Proposals for Initial Public Offerings (IPO)
Recently, five companies filed their draft red herring prospectus (DRHP) for an initial public offering (IPO) with the Securities and Exchange Board of India (SEBI).
- In 2020-21, as many as 69 companies raised close to Rs 75,000 crore through public issues, including IPOs.
Reasons for rush in Initial Public Offerings (IPO)
- The sudden surge in the number of prospectus filings with SEBI to list and raise funds from the equity market comes on the back of strengthening benchmark indices.
- A good earning season, liquidity in the market, a decline in coronavirus cases and hopes of an uptick in vaccination and opening up of the economy are leading to a rise in benchmark indices.
- The experts say that companies and their merchant bankers are looking to capitalise on the excess liquidity in the market, the rise in indices and good investor sentiment.
- A bull market offers a high probability of listing gains, which is not only a big draw for many IPO investors but also leads to companies launching their issues.
- A strong market means that a good company can command a higher valuation for its shares than in a subdued market environment.
- The market regulator SEBI has fine-tuned the primary market norms, enabling issuers to float IPOs and list their shares in a short period.
Significance of money raised through an IPO
- The equity on offer from a large number of companies is a mix of some fresh equity and mostly offer for sale (OFS) by existing investors or promoters.
- The market participants say that an IPO is a good way for providing an exit to existing private equity and venture capital investors who would have supported the company during the initial years of its growth.
- The money raised by offering fresh equity in an IPO goes to the company for its expansion and growth but the money raised through OFS goes to the investor offering his equity for sale.
Why should investors be cautious?
- It is important to take a careful look at the company, its promoter, its management and financials before making an investment.
- A good peer review is a must and investors should compare their growth and PE multiple (ratio of market price to earnings per share) before taking a call.
- The retail investors should instead look for fundamentally strong companies in high-growth sectors that have a proven track record.
- The experts say that promoters and merchant bankers nowadays don’t leave anything on the table for retail investors as they go for the maximum possible valuation.
- An investor must be cautious in such situations i.e. discounting future growth and showing a rapid increase in prices.
- The investor should invest in fundamentally strong stocks rather than trying to make quick money only through listing gains in any and every IPO.
SeHAT OPD Portal
Recently, the Union Minister of Defence has launched the ‘SeHAT OPD’ Portal.
SeHAT OPD portal
- It is Services e-Health Assistance & Tele-consultation (SeHAT) OPD portal.
- It provides tele-medicine services to the serving Armed Forces personnel, veterans and their families.
- It is developed by Department of Military Affairs (DMA), Armed Forces Medical Services (AFMS), Integrated Defence Staff (IDS) and Centre for Development of Artificial Computing (C-DAC) Mohali.
- It is a Defence Services online OPD service that enables patients to consult doctors.
- It is first of its kind patient-to-doctor telemedicine system that will serve as a Tri-Service tele-consultation facility
- It will help reduce the load on hospitals and patients will be able to get contactless consultations in an easy and effective manner.
- It is based on the lines of e-Sanjeevani a similar free OPD service run by the MoHFW for all citizens.
- It is a patient to doctor system, initially for a general OPD consultation and proposed to be extended to specialist OPD consultation subsequently.
Centre for Development of Advanced Computing (C-DAC)
- It is the premier R&D organization of the Ministry of Electronics and Information Technology (MeitY).
- It is working on strengthening national technological capabilities in the context of global developments in the field and responding to change in the market need in selected foundation areas.
- It represents a unique facet working in close junction with MeitY to realize nation’s policy and pragmatic interventions and initiatives in Information Technology.
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