RBI brings back bond swapping program 'Operation Twist'

The Reserve Bank Of India (RBI) has decided to conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO) for ₹10,000 crore each on April 27, 2020 considering the current and evolving liquidity and market conditions.

• Such Open Market Operations are known as ‘Operation Twist,’ which was used by the RBI in December, 2019 for the first time.

• Operation Twist is the RBI's simultaneous selling of short-term securities and buying of long term securities through Open Market Operations (OMO) in order to bring down long-term interest rates and bolster short-term rates.
  • Operation Twist was first used in 1961 by the US Federal Reserve (central bank) as a way to strengthen the U.S. dollar and stimulate cash flow into the economy.
• Under this mechanism, the short-term securities are transitioned into long-term securities.

• Impact of Operation Twist:
  • As the central bank buys long-term securities (bonds), their demand rises which in turn pushes up their prices.
  • However, the bond yield comes down with an increase in prices (inverse relationship).
    • Yield is the return an investor gets on his (bond) holding/investment.
  • The interest rate in an economy is determined by yield. If yield is low, interest rates decrease.
  • Thus, lower long-term interest rates mean people can avail long-term loans (such as buying houses, cars or financing projects) at lower rates.
  • This will lead to a boost in consumption and spending in the economy which in turn will revive the growth.

Government Security

• A G-Sec is a tradable instrument issued by the Central Government or the State Governments.
• It acknowledges the Government’s debt obligation. Such securities are:
  • Short term securities
    • They are usually called treasury bills, with original maturities of less than one year- presently issued in three tenors, namely, 91 day, 182 day and 364 day.
  • Long term securities
    • They are usually called Government bonds or dated securities with original maturity of one year or more.
• In India, the Central Government issues both treasury bills and bonds or dated securities while the State Governments issue only bonds or dated securities, which are called the State Development Loans (SDLs).
• G-Secs carry practically no risk of default and, hence, are called risk-free gilt-edged instruments.

Open Market Operations

• Open Market Operations (OMO) is one of the quantitative monetary policy tools which is employed by the central bank of a country to control the money supply in the economy.
  • Other monetary policy tools are such as repo rate, cash reserve ratio and statutory liquidity ratio, etc.
• OMOs are conducted by the RBI by way of sale or purchase of government securities (g-secs) to adjust money supply conditions.
  • RBI carries out the OMO through commercial banks and does not directly deal with the public.
• The central bank sells g-secs to remove liquidity from the system and buys back g-secs to infuse liquidity into the system.

Coronavirus: Govt to mop up ₹1.2 tn; freezes DA, DR hike for employees, pensioners

The Finance Ministry has frozen the Dearness Allowance (DA) increases for the central government staff and Dearness Relief (DR) increases for pensioners for the period between January 2020 and July 2021.

• The move will impact 48 lakh central government employees and 65 lakh pensioners.
• However, DA and DR at current rates will continue to be paid to the employees and pensioners.
  • The 4% DA hike for central government employees announced in March, 2020 . was effective from January 1, 2020.
• Since states generally follow the central government on DA and DR decisions, it is expected that states may announce similar decisions.
• The savings on account of freezing of increase in DA and DR to central government employees and pensioners would be Rs 37,530 crore in the current financial year and 2021-22.
  • This would create room for stepping up expenditure on health and welfare measures amid Covid-19 pandemic. Also, the government finances have been strained due to decline in tax and non-tax revenues.
  • If states follow the Centre, the estimated savings will be Rs 82,566 crore.
• Similar steps taken by the government :
  • Earlier, the Union Cabinet had cleared a 30% salary cut for all MPs, including the Prime Minister and Union Ministers, for a year.
  • It also decided to suspend all MPLADS (Members of Parliament Local Area Development Scheme) funds for two financial years—starting April 1,2020.
    • Under MPLADS, each MP gets Rs 5 crore annually for development work in his/her constituency.

Dearness Allowance and Dearness Relief

• DA and DR is part of the government’s policy to offset the impact of inflation on salaries and pension
  • DA is calculated on the basis of current basic pay of Government employees.
  • DR is calculated on the basis of basic pension of Government pensioners.
• The payments are made twice a year- in January and July according to the formula prescribed by the 7^th Pay Commission. Currently, they are fixed at 17% of the basic pay or pension.
• The DA is calculated based on the All-India Consumer Price Index for the past 12 months.

Industries cannot be forced to pay wages during lockdown Chief of par panel on labour

Recently, the Parliamentary Committee on Labour submitted its report on the Industrial Relations Code, 2019.

• The Industrial Relations Code 2019 (IR Code) is the third bill in a series of four being framed to amalgamate and rationalise more than 40 central laws governing labour affairs.
  • Two other bills were : (a) Code on Wages, 2019 and (b) Occupational Safety, Health and Working Conditions Code, 2019.

• Payment of wages unjustifiable: The Committee in its report said that in case of natural calamities, payment of wages to the workers until the re-establishment of the industry may be unjustifiable.
  • The idea behind the recommendations is that the industry should not be forced when the situation is beyond their control.
  • The law has to be reasonable, in such cases it is for the government to step in and extend a helping hand for the industries.
  • According to the Committee Covid-19 would be counted as natural calamity.
• 50% wages: The Industrial Code makes it incumbent upon the employer to pay 50% wages to the workers/employees who are laid off due to shortage of power, coal, raw material etc. for 45 days.
• The Industrial Relations Code, 2019 was introduced in the Lok Sabha and referred to the Standing Committee on Labour in December, 2019.
  • With the ongoing lockdown, the draft report was circulated to the members via email on April 15 and later the final adopted report was accepted by the Speaker.

Industrial Relations Code Bill, 2019

• The Industrial Relations Code, 2019 was introduced in Lok Sabha. It seeks to replace three labour laws:
  • The Industrial Disputes Act, 1947
  • The Trade Unions Act, 1926
  • The Industrial Employment (Standing Orders) Act, 1946.
• Features of the Bill
  • Trade Unions:
    • Under the Code, seven or more members of a trade union can apply to register it.
    • Trade unions that have a membership of at least 10% of the workers or 100 workers, whichever is less, will be registered.
    • Further, the central or state government may recognise a trade union or a federation of trade unions as Central or State Trade Unions respectively.
  • Negotiating Unions:
    • The Code provides for a negotiation union in an industrial establishment for negotiating with the employer.
    • If there is only one trade union in an industrial establishment, then the employer is required to recognise such trade union as the sole negotiating union of the workers.
    • In case of multiple trade unions, the trade union with the support of at least 75% of workers will be recognised as the negotiating union by the government.
  • Lay-off and Retrenchment:
    • The Code defines lay-off as the inability of an employer, due to shortage of coal, power, or breakdown of machinery, from giving employment to a worker. It also provides for employers to terminate the services of a worker, i.e., retrenchment.
    • Employers of industrial establishments with at least 100 workers are required to take prior permission of the central or state government before lay-off, retrenchment or closure of an establishment.
    • The central or state government can modify this threshold number of workers by notification. Any person who contravenes this provision is punishable with a fine between Rs 1 lakh and Rs 10 lakh.
  • Resolution of Industrial Disputes:
    • The central or state governments may appoint conciliation officers to mediate and promote settlement of industrial disputes.
    • These officers will investigate the dispute and hold conciliation proceedings to arrive at a fair and amicable settlement of the dispute.
    • If no settlement is arrived at, then any party to the dispute can make an application to an Industrial Tribunal set up under the Code.

FCI's surplus rice stocks to be converted into ethanol to make hand sanitisers

Recently, the Central government has allowed the conversion of surplus rice to ethanol.

• Ethanol produced from this will be used for utilisation in making alcohol-based hand sanitizers and blending in petrol.
• Ethanol is one of the most variable alternatives amongst biofuels.

• The National Biofuel Coordination Committee (NBCC) took the decision which will lead to utilisation of part of a huge stockpile of 30.57 million tonnes (MT) of rice which is almost 128% more than the buffer stock and strategic requirement norms.
  • At present, the Food Corporation of India (FCI) has huge rice stock from previous years excluding the unmilled paddy lying with millers on behalf of FCI.
• Using surplus rice for ethanol will address the concern of about 750 million litres of grain-based distillery capacities lying idle, due to the lack of feedstock.
  • In India, the total capacity of grain-based distilleries is close to 2 billion litres, of which around 38% (750 million litres) was lying unused.
• The National Policy on Biofuels, 2018 allows conversion of surplus quantities of food grains to ethanol when there is a projected oversupply of food grains.

Major Criticism

• This move has been criticised on the grounds that how can the government waste food stock for fuel when the considerable number of the population doesn’t have food and is suffering from malnutrition.
• On 26^th March 2020, the government decided to give 5 kg wheat or rice and 1 kg of preferred pulses free of cost to 800 million people, under the National Food Security Act, 2013 (NFSA) in the wake of the Covid-19 pandemic.
  • However, many poor people are unable to get the benefit out of it, due to loopholes in the PDS network.
  • For example, a large chunk of ration card holders may not be eligible for the free grains, as they are not covered under the NFSA.
  • The NFSA, based on the 2011 census, had not factored in the population increase in over nine years, leaving a huge number of people out of its ambit.

National Policy on Biofuels, 2018

• It categorises biofuels in various categories to enable extension of appropriate financial and fiscal incentives under each category.
  • Basic Biofuels or First Generation (1G): Bioalcohols, Biodiesel, etc.
  • Advanced Biofuels or Second Generation (2G): Ethanol, Municipal Solid Waste (MSW) to drop-in fuels, etc.
  • Third Generation (3G): Butanol.
  • Fourth Generation (4G) : Fuel from genetically engineered crops.
• It expands the scope of raw material for ethanol production by allowing use of sugarcane juice, sugar containing materials like sugar beet, sweet sorghum, starch containing materials like corn, cassava, damaged food grains like wheat, broken rice, rotten potatoes which are unfit for human consumption.
• Objective:
  • To achieve 20% ethanol-blending and 5% biodiesel-blending by the year 2030.
  • It also expands the scope of feedstock for ethanol production and has provided for incentives for production of advanced biofuels.

Antiviral nano-coatings to be upscaled for making triple layer medical masks & N-95 respirator receives support to combat COVD 19

Recently, the Department of Science and Technology (DST) has approved the use of antiviral nano-coatings on anti-Covid-19 masks.

• These coatings have been approved for Triple Layer Medical masks and N-95 respirator, as a part of the Mission on Nano Science and Technology (MNST or commonly known as Nano Mission).

• The antiviral nano-coating has been developed using N9 blue silver which will be modified to form nanocomplexes with Zinc (Zn, atomic number-30) compounds to achieve a synergistic effect. Subsequently, it will be applied as coatings on facemasks and other Personal Protection Equipment (PPEs).
  • Nano-coatings have 99.99% effectiveness and these can work on multiple levels at the same time like antiviral, bacterial and fungal and self-cleaning.
  • These can be applied to various surfaces such as glass, metal, stone, textiles and plastics by spraying or dipping.
  • N9 blue nanosilver is a highly potent antimicrobial agent and has been developed at SMITA Research Lab, Indian Institute of Technology (IIT) Delhi.
  • Silver (Ag, atomic number-47) is known to have strong antimicrobial activity against bacteria, viruses and fungus.
    • In experiments, strains of bacteria and viruses have shown either resistance or sensitivity when exposed to silver which confirms silver resistance and toxicity in them.
• After the evaluation of shelf life of the coatings and their efficacy under different conditions such as temperature, humidity and time, the masks and PPEs will be prepared and provided to the medical workers for field trials.
• The use of highly effective antimicrobial nanoparticles on masks, PPEs, etc is a useful application providing an extra layer of protection for the high risk settings, such as for the medical workers.

Mission on Nano Science and Technology

• It was launched by the Government of India in May 2007 as an "umbrella capacity-building programme" to build upon the promotional activities in the highly promising and competitive area of Nano Science and Technology.
• The DST is the nodal agency for its implementation.
• Objectives:
  • Basic research promotion.
  • Infrastructure development.
  • Nano applications and technology development.
  • Human Resource development.
  • International collaborations.
• Due to its efforts, India is amongst the top five nations in the world in terms of scientific publications in nano science and technology.
• In 2014, recognizing its success, the Union Cabinet accorded approval for continuation of the Nano Mission in its Phase-II during the 12^th Plan period (2012-17) with an allocation of ₹650 crore.
• The Nano Mission has resulted in useful products like nano hydrogel based eye drops, pesticide removal technology for drinking water, water filters for arsenic and fluoride removal, nanosilver based antimicrobial textile coating, etc.
• It has orchestrated national dialogues to promote R&D in development of standards for nanotechnology and for laying down a National Regulatory Framework Road-Map for Nanotechnology (NRFR-Nanotech).

BRO builds 484-meter permanent bridge connecting Kasowal enclave in Punjab with rest of the country

The Border Roads Organisation (BRO) has constructed a permanent bridge on the Ravi river to connect Kasowal enclave in Punjab along the India - Pakistan border to the rest of the country.

• The 484-meter bridge was built under the Project Chetak of BRO.

• Project Chetak
  • This project of the BRO was raised in June 1962 at Dehradun for construction of Joshimath-Malari-Rinkin road.
  • In 1980, the project was re-raised for expanding and improving the road networks and ditch-cum-bunds.
  • The jurisdiction of the project is spread across the states of Rajasthan, Haryana and Punjab.
• Ravi River
  • It is one of the five tributaries of the Indus River that give the Punjab (meaning “Five Rivers”) its name. Other tributaries are: Jhelum, Chenab, Beas and Sutlej.
  • Transboundary River: It rises in the Himalayas in Himachal Pradesh (India) and flows to the Pakistani border and along it for more than 80 km before entering Pakistan’s Punjab province.
  • Sharing of Water: The Indus Waters Treaty in 1960 allocated the water of the Eastern rivers - Sutlej, Beas and Ravi - to India for unrestricted use. Pakistan has rights of unrestricted use of the waters of the Indus and its western tributaries (Jhelum and Chenab).
    • India has also been permitted to make from the Western River, domestic non-consumptive uses, uses for run-of-the river hydroelectric plants and specified agricultural use and construction of storage works.
  • Important Projects: Ujh Multipurpose Project (River Ujh is a tributary of the Ravi), Shahpurkandi Dam Project

Border Roads Organisation

• It was conceived and raised in 1960 by Pandit Jawaharlal Nehru for coordinating the speedy development of a network of roads in the North and the North Eastern border regions of the country.
• It works under the administrative control of the Ministry of Defence.
• It has diversified into a large spectrum of construction and development works comprising airfields, building projects, defence works and tunneling and has endeared itself to the people.

Coronavirus Rattles Commodity Markets - World Bank Group

According to the World Bank’s April 2020 Commodity Markets Outlook, Covid-19 is expected to bring most commodity prices down substantially in 2020.

• However, it also says that the outlooks are “exceptionally uncertain” and depend on the severity and duration of the pandemic and when mitigation measures are taken.

• Worst Hit
  • Energy and metals commodities are the most affected by the sudden stop to economic activity and the serious global slowdown that is anticipated.
  • Commodities associated with transportation, including oil, have experienced the steepest declines.
• Agricultural prices are likely to stay broadly stable in 2020 because of relatively stable demand and all-time high levels of staple production and stock.
  • However, supply chain disruptions and government steps to restrict exports or stockpile commodities raise concerns that food security may be at risk in places.
• Gold prices were up 6.9% in the last quarter (January- March,2020) – its sixth consecutive quarterly rise.
  • The strong investor demand propped gold up despite weak jewelry demand in India and China.
• Oil Prices: These are expected to average at $35 per barrel in 2020.
  • The decline in crude oil prices has been exacerbated by uncertainty around production agreements among the Organization of the Petroleum Exporting Countries (OPEC) and other oil producers.
• Impact on Importers and Exporters: They are likely to see some long-term shifts in their markets due to the pandemic. These include
  • Increasing transport costs due to enhanced border checks and thus impact on supply chains.
  • Substituting for imports with domestic goods: Companies might prefer to source from closer by for instance.
• Other Observations: Changing consumer behaviour, for instance, people may choose to work remotely, travel less, and this could impact permanent drops in demand for oil, favourably impacting the accounts for oil importers.
  • The reduction in emissions of the harmful gases caused by the restrictions may also increase public pressure for greener transport and lowered fossil fuel use.

Commodity Markets Outlook

• It provides market analysis for major commodity groups - energy, metals, agriculture, precious metals, and fertilizers.
• The report forecasts prices for 46 key commodities, including oil.
• It is published by the World Bank in April and October.

How oil price crash impacts sugar, what it means for India?

Recently, the prices of raw sugar for May delivery in New York crashed to 9.75 cents/pound, the lowest since June, 2008.

• Earlier, the oil prices of West Texas Intermediate grade crude fell to an unprecedented minus $40.32/ barrel in interlay trade in New York (the USA).

• Impact of Covid-19 lockdown on Sugar: Subdued economic activity and lockdowns imposed by many countries to combat the Covid-19 pandemic has reduced the demand of many commodities including sugar.
• Impact of crude oil prices on production of Sugar: Usually, when oil prices are high, mills (especially in Brazil) tend to divert cane for making ethanol (alcohol of 99%-plus purity) that is used for blending with petrol.
  • With recent fall in oil prices, mills will not find it attractive to divert cane for ethanol. The juice from crushing sugarcane can be crystallised into sugar or fermented into ethanol.

Challenges/Issues

• Impact of low demand in sugar and low oil prices on India: Dip in sugar consumption, together with higher Brazilian output, is bad news for both Indian sugar mills and cane farmers.
  • Excess stocks of sugar due to low demand and high dumping from Brazil will add to the woes of both farmers and industries.
• India is already grappling with high dues to farmers by the sugar industry.
  • Slow down in exports and not much domestic lifting of sugar by institutional consumers has significantly undermined the ability of mills to make cane payments.
• Reduced offtake of alcohol: The lockdown has also reduced offtake of alcohol, be it potable liquor or ethanol for blending with petrol.

Scope of Opportunity

• India can supply sugar to Indonesia’s increased import requirements.
  • Higher Import Projections: Indonesian refiners are projected to import 3.3 mt of raws this year, up from 2.6 mt in 2019.
  • Absence of Alternatives: Indonesia buys mostly from Thailand, which is experiencing a bad drought that could lead to its production falling.
  • Reduced Duty: Indonesia also slashed the duty on Indian raw sugar from 15% to 5% in March.

Sugarcane

• Temperature: Between 21-27°C with hot and humid climate.
• Rainfall: Around 75-100 cm.
• Soil Type: Deep rich loamy soil. It can be grown on all varieties of soils ranging from sandy loam to clay loam given these soils should be well drained.
• Yield: The yield of sugarcane is high in southern states compared to northern states because of favourable climatic conditions, i.e dry weather with low humidity, bright sunshine hours, cooler nights with wide diurnal variations and very little rainfall during ripening period.
• Top Sugarcane Producing States: Uttar Pradesh > Maharashtra > Karnataka > Tamil Nadu > Bihar.
• India is the second largest producer of sugarcane after Brazil.
• It needs manual labour from sowing to harvesting.
• It is the main source of sugar, gur (jaggery), khandsari and molasses.
• Scheme for Extending Financial Assistance to Sugar Undertakings (SEFASU) and National Policy on Biofuels are two of the government initiatives to support sugarcane production and the sugar industry.

Kaleshwaram — the making of an engineering marvel

• The Kaleshwaram Lift Irrigation Scheme of Telangana is a multi-purpose irrigation project on the Godavari River in Kaleshwaram, Bhupalpally, Telangana.
• The project starts at the confluence point of Pranahita River and Godavari River.
• Originally called Pranahita-Chevella project in erstwhile Andhra Pradesh, it was redesigned, extended and renamed as Kaleshwaram project in Telangana in 2014.

Godavari River

• The Godavari is India's second longest river after the Ganga.
• Source: Trimbakeshwar, Maharashtra.
• Areas drained: It flows east for 1,465 kilometres, draining the states of Maharashtra, Telangana, Andhra Pradesh, Chhattisgarh, Odisha, and Karnataka, ultimately emptying into the Bay of Bengal through its extensive network of tributaries.
• Tributaries: The major tributaries of the river are classified as the left bank tributaries which include the Purna, Pranhita, Indravati and Sabari river and the right bank tributaries are Pravara, Manjira, Manair.
• Kumbh Mela is held at Nasik (on the Godavari), Prayagraj (at the confluence of Ganga, Yamuna, and the mythical Saraswati), Haridwar (on the Ganges), Ujjain (on the Shipra) every four years by rotation.
• Sadarmatt Anicut across river Godavari is one among the two irrigation projects in the International Commission on Irrigation and Drainage (ICID) Register of Heritage Irrigation Structures.

Pranahita River

• Pranahita river is the largest tributary of the Godavari river covering about 34% of its drainage basin.
• It is a confluence of various other smaller tributaries like Wardha, Penganga and Wainganga Rivers.

Benefits of the Project

• It would bring drinking water and irrigation to the backward areas of Telangana.
• It will also help to restore the ground water level to its original state by the way of shifting from usage of groundwater for irrigation to usage of surface water.
• The project will also support Mission Kakatiya and Mission Bhagiratha schemes designed to provide drinking water to many villages and improve the capacities of tanks.

Mission Kakatiya

• It is a flagship programme launched by the Government of Telangana which aims at rejuvenation of water tanks and other water storage structures to provide assistance and help to the small and marginal farmers of the state.

Mission Bhagiratha

• It is a project for safe drinking water for every village and city household in Telangana State.
• It aims to provide piped water to 2.32 crore people in 20 lakh households in urban and 60 lakhs in rural areas of Telangana.
• The project will supply clean drinking water to all households in the state through water sourced from River Godavari and River Krishna.

Assam's 'Ambubachi Mela' cancelled over Covid-19 scare

In the wake of the Covid-19 pandemic, the annual Ambubachi Mela in Assam will not be organised this year.

• The fair is organised from 21^st to 25^th June, every year.

• The festival marks the annual menstruation of the presiding Goddess in the Kamakhya Temple, Guwahati, Assam.
  • The temple’s sanctum sanctorum houses the yoni (female genital) symbolised by a rock.
• Kamakhya is one of 51 shakti peethas or holy sites for the followers of the Shakti cult, each representing a body part of the Sati, Lord Shiva’s companion.
• The temple is situated on the Nilachal Hills, whose northern face slopes down to the Brahmaputra river.
• According to the legends, it was built by the demon king Narakasura but records are available only from 1565 when Koch king Naranarayana rebuilt the temple.

Importance

• Cultural: The ritualistic fair celebrates the Goddess’ period due to which taboo associated with menstruation is less in Assam compared to other parts of India.
  • The attainment of womanhood of girls in Assam is celebrated with a ritual called Tuloni Biya, meaning small wedding.
• Social: The fair is also an occasion to promote menstrual hygiene among the visitors through the use of sanitary pads.
• Financial: Assam records a footfall of at least 5 lakh devotees during the fair mainly from West Bengal, Bihar, Uttar Pradesh and Jharkhand. Foreigners also visit which boost the state tourism and the revenues associated.

Bengaluru Airport plans to revive Devanahalli chakota

The Bangalore International Airport Limited (BIAL) will plant 500 Devanahalli Pomelo trees as part of its Corporate Social Responsibility (CSR). The plantation drive is also part of the 50^th anniversary of World Earth Day.

• Devanahalli pomelo, a citrus variety, is almost on the brink of extinction.

• Devanahalli Pomelo has a Geographical Indication (GI) tag. It is grown in Devanahalli taluk, Banglore (Karnataka) and is popularly known as chakota.
• The Devanahalli pomelo has a unique, sweet taste, unlike other local varieties which have a bitter taste.
• The establishment of the Kempegowda International Airport brought in different livelihood opportunities for people to change their practices and focus shifted away from its cultivation. The absence of an organised market for the fruit was another factor behind decline in the plantation of the variety.
  • BIAL owns and operates Kempegowda International Airport.
• Pomelo is a parent of the grapefruit and is also known by its scientific name Citrus Maxima. The fruit is rich in Vitamin C.
  • While each pomelo tree grows 24 inches per season, it can live from 50-150 years and reach a height of 25 feet.
  • Each tree annually yields an average of 300 to 400 fruit. Each fruit, typically, weighs 2 to 2.5 kg and is identified by distinctive pink or red juicy carpels.