Current Affairs 17 & 18 November, 2024

Daily Current Affairs

Table of content

Banking and Finance

1. Municipal Bonds: Improvement in the financial performance and credit ratings of municipal corporations critical, says RBI report
2. Piyush Goyal says RBI should cut rates, look through food prices
3. PDS leaks costing exchequer ₹69,000 crore a year: Report

National Affairs

1. Pradhan Mantri Awas Yojana — Urban: NHB inks pacts with 116 lending institutions for interest subsidy scheme
2. Gujarat becomes India’s first state to implement a dedicated semiconductor policy
3. PM Modi arrives in Brazil to attend G20 Summit

Agri Business

1. Sweet sorghum farmers waiting for Govt to announce separate ethanol pricing
2. India to bridge link between farmers and industry via agri value chain development scheme
3. Agri commodity prices rule firm despite suspension of futures trading
4. Odisha govt, ICRISAT launch compendium of regenerative agriculture
5. Excess rains spurs use of more herbicides this kharif cropping season

Environment

1. How NCR can cut SO₂ emission from 12 thermal plants by 67%

Banking and Finance

1. Municipal Bonds: Improvement in the financial performance and credit ratings of municipal corporations critical, says RBI report:

RBI Report on Municipal Finances

• The Indian municipal bond market is in a nascent stage, with total municipal bonds outstanding at ₹4,204 crore being just 0.09 per cent of total corporate bonds as of March-end 2024.
• Most municipal bonds are privately placed with select investors, limiting the investor base.
• Improvement in the financial performance and credit ratings of municipal corporations (MCs) is critical for promoting investor confidence and broadening market participation.
• Credit rating agencies have rated MCs as investment grade so far.
• As of March 31, 2024, the outstanding municipal bonds stood at 0.01% of GDP, compared to 0.03% of GDP as of March 31, 2005.
• Municipal bonds delivered an average return of 8.5% during 2023-24, compared to 8.3% and 7.3% on the NIFTY Medium Duration G-Sec Index and NIFTY AAA Medium Duration Corporate Bond Index, respectively.
• Green municipal bonds are being issued to fund environmentally beneficial projects, marking a pivotal move towards sustainable urban development.
• The issuance of municipal green bonds began in the United States in 2014, followed by similar initiatives by cities and municipalities in Europe.

Municipal Bonds Overview

• Municipal bonds, also known as’muni bonds’, are issued by urban local governments and agencies to raise funds for infrastructural projects.
• SEBI issued guidelines in 2015 for urban local bodies to issue municipal bonds.
• Types of bonds include General Obligation Bonds (serviced through tax proceeds) and Revenue Bonds (serviced by revenues from projects).
• Municipal bonds have been in existence in India since 1997, with Bangalore Municipal Corporation being the first to issue them.
• SEBI’s 2015 guidelines made municipal bonds safer for investors.
• Currently, 10 cities in India have issued municipal bonds, with Lucknow and Ghaziabad in Uttar Pradesh issuing their first.

2. Piyush Goyal says RBI should cut rates, look through food prices:

• Union Minister of Commerce and Industry, Piyush Goyal, supports the central bank’s decision to cut interest rates to boost economic growth.
• Goyal argues that food inflation should not be considered in deciding on rates, a theory he believes is flawed.
• Goyal’s views are not government-backed but align with a similar suggestion by the chief economic adviser in his Economic Survey.
• Retail inflation surged to a 14-month high in October, driven by a jump in vegetable prices, threatening an interest rate cut by the Reserve Bank of India (RBI).
• RBI governor Shaktikanta Das emphasized that the public understands inflation more in terms of food inflation than other headline inflation components.
• High food inflation has squeezed middle class budgets, slowing urban spending and threatening economic growth.

Understanding Inflation

• Inflation is a gradual increase in goods and services prices over time, causing a loss of purchasing power.
• The inflation rate is the average price increase of a basket of goods and services over a year.
• Causes of inflation include expansionary fiscal and monetary policy, such as tax cuts.
• Measuring inflation considers all goods and services consumed by households.
• Contrasting with deflation, deflation occurs when prices decline and purchasing power increases.

3. PDS leaks costing exchequer ₹69,000 crore a year: Report

Economic Think Tank Reveals 28% of Grains Leaked by Food Corporation of India (FCI)

• An economic think tank reveals that 28% of grains supplied by FCI and state governments do not reach their intended beneficiaries.
• The paper estimates that 20 million tonnes of rice and wheat fail to reach their intended beneficiaries annually.
• The economic loss to the exchequer is estimated to be over Rs 69,000 crore.
• The paper suggests that the leakage could be diverted to the open market or for exports.
• The introduction of point of sale (POS) machines in fair price shops in 2016 has helped in plugging some of the gap, but leakage remains substantial.
• Arunachal Pradesh, Nagaland, and Gujarat are the top three states in terms of PDS leakage.
• Bihar and West Bengal have achieved significant reductions in PDS leakage over the past decade.
• UP has the highest PDS leakage at 33%.
• The paper calls for improved monitoring and structural reforms to address PDS corruption.

Food Corporation of India (FCI) Overview

• State-owned organization responsible for procurement, storage, and distribution of food grains in India.
• Established in 1964 under the Food Corporations Act.
• Objectives include price support, distribution, buffer stocks, and market intervention.
• Utilizes nationwide network of warehouses and godowns for efficient grain distribution.
• Collaborates with state government agencies for grain purchase for central store.

National Affairs

1. Pradhan Mantri Awas Yojana — Urban: NHB inks pacts with 116 lending institutions for interest subsidy scheme:

National Housing Bank Signs Memorandums of Understanding for Interest Subsidy Scheme

• National Housing Bank (NHB) has signed Memorandums of Understanding (MoUs) with 116 Primary Lending Institutions (PLIs) for the implementation of the Interest Subsidy Scheme (ISS) under the Pradhan Mantri Awas Yojana — Urban 2.0 (PMAY-U 2.0).
• The MoUs were signed at the National Workshop on Pradhan Mantri Awas Yojana (U) 2.0, attended by Union Minister Manohar Lal.
• PMAY-U 2.0, launched by Prime Minister Narendra Modi on September 17, 2024, will provide financial assistance to 1 crore urban poor and middle-class families in the next five years.
• Minister Manohar Lal urged banks and financial institutions to ensure a more humane interface between borrowers and lending institutions.
• The scheme is the biggest in the world to address the housing shortage in the country.

Pradhan Mantri Awas Yojana – Urban (PMAY-U) Mission Overview

• Launched on 25th June 2015 by the Ministry of Housing and Urban Affairs.
• Aims to address urban housing shortage among EWS/LIG and MIG categories, including slum dwellers.
• Aims to provide a pucca house to all eligible urban households by 2022.
• Initiated Affordable Rental Housing Complexes (ARHCs) to provide affordable rental housing for urban migrants/poor in both industrial and non-formal urban economies.
• Ministry: Ministry of Housing and Urban Affairs
• Minister: Shri Manohar Lal Khattar

2. Gujarat becomes India’s first state to implement a dedicated semiconductor policy:

Gujarat’s Semiconductor Policy 2022-2027: A Step towards Viksit Bharat@2047

• Gujarat’s first ‘Gujarat Semiconductor Policy 2022-2027’, led by Chief Minister Bhupendra Patel, aims to solidify Gujarat’s semiconductor self-reliance.
• The policy supports the ‘Gujarat State Electronics Mission’ and includes projects like Micron’s ATMP plant, Tata Electronics Private Limited’s AI-enabled semiconductor fabrication facility, CG Power and Renesas’ Outsourced Semiconductor Assembly and Test facility, and Kaynes Semicon’s facility.
• The policy provides additional financial assistance, including a 40% subsidy for capital expenditure and incentives for semiconductor businesses.
• The policy also includes up to 75% land acquisition subsidy for semiconductor units in Dholera, India’s first Greenfield Smart City.
• The initiative has drawn significant investments from four major companies, with a cumulative commitment of Rs 1.24 lakh crore.
• The state-level initiative complements the central government’s ‘India Semiconductor Mission’, launched in 2021, to boost domestic semiconductor production.

Facts about Gujarat

Area	196,024 km²
Population	72,653,000
Capital	Gandhinagar
Governor	Acharya Devvrat

3. PM Modi arrives in Brazil to attend G20 Summit:

Prime Minister Narendra Modi Arrives in Brazil for G20 Summit

• Prime Minister Narendra Modi arrived in Brazil on November 18, 2024, as part of his three-nation visit.
• He held bilateral talks with President Bola Ahmed Tinubu and interacted with the Indian community in Nigeria.
• The Ministry of External Affairs announced Modi’s arrival in Rio de Janeiro, Brazil, and shared pictures of his welcome at the airport.
• Modi will attend the 19th G20 Summit in Brazil as a member of the Troika, alongside Chinese President Xi Jinping and US counterpart Joe Biden.
• In Guyana, Modi will visit from November 19 to 21, marking the first-ever visit of an Indian prime minister to Guyana in over 50 years.
• Modi expressed his anticipation for meaningful discussions and further bilateral cooperation with other leaders.
• His departure statement emphasized the importance of Brazil building upon India’s legacy and overcoming divisions over the Ukraine conflict.

G20: Intergovernmental Forum

• Comprises 19 sovereign countries, EU, AU.
• Addresses global economy issues.
• Focuses on international financial stability, climate change mitigation, sustainable development.
• Held annual meetings by Heads of State and Government.

Membership

• 21 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, UK, US, EU, African Union.
• The African Union (AU) became the 21st member of the G20 in September 2023

Agri Business

1. Sweet sorghum farmers waiting for Govt to announce separate ethanol pricing:

• A proposal by private seed company Advanta Enterprises for financial support of about ₹23.5 crore for sweet sorghum biofuel project is still unmaterialised.
• The government has to address inter-ministerial issues including ethanol pricing.
• Advanta Enterprises secured consent from 8 sugar mills with a combined distillery capacity of 1,170 KLPD to undertake the project through contract farming in 2,709 acres area.
• Some mills, like Shreenath Mhaskoba Sakhar Karkhana and Khandoba Distilleries, propose a tentative buying price of ₹65.50/litre for the ethanol to be produced from sweet sorghum.
• Advanta expects 70% of the project cost will be recovered from selling ethanol.
• The government is yet to fix rates of ethanol for the current Ethanol Supply Year (November-October).
• There is a need for a nodal department for ethanol which should be the interface with all stakeholders.
• Advanta has named Indian Institute of Millets Research (IIMR) and National Sugar Institute as technology partners, but no funds are allocated from the project cost.
• Advanta has projected that about Rs 15 crore will be spent on procurement of sweet sorghum stalk from farmers at Rs 250/quintal.

2. India to bridge link between farmers and industry via agri value chain development scheme:

Union Agriculture Ministry Shifts PPPAVCD Implementation to Investment Division

• The Union Agriculture Ministry has shifted its implementation from the extension division to the investment division due to limited implementation in other states.
• The government plans to push PPPAVCD similarly to the Agri Infra Fund scheme.
• The success of PPPAVCD will depend on the State government’s interest in controversial issues like marketing of agriculture produce.
• Private sector interest is seen due to challenges in sourcing quality raw material and its timely availability.
• No financial incentive for the private sector, only access to quality raw material in their units.
• Farmers will receive support through various government schemes.
• Clusters of 500-10,000 farmers will be formed under PPPAVCD, providing access to new technology and innovative practices.
• The main objective is to facilitate large-scale integrated projects led by private sector players, FPOs, agri startups, and cooperatives in agriculture and allied sectors.
• The major focus will be on pulses, oilseeds, maize, millets, and horticulture produce, with paddy and wheat excluded.

3. Agri commodity prices rule firm despite suspension of futures trading:

Suspension of Derivatives Trading in Key Agriculture Commodities in India

• The suspension of futures trading in seven key agriculture commodities has led to a surge in prices due to the absence of a transparently discovered reference price.
• The suspension was initiated in 2021 by market regulator SEBI to combat inflation and has been extended twice in the last two years.
• Independent studies by the Birla Institute of Management Technology and Shailesh J Mehta School of Management, IIT Bombay, found that retail consumers have paid higher prices for these commodities post-suspension.
• The study highlights the importance of futures contracts for price discovery and risk management for farmers and value chain participants.
• The government should use these tools to help farmers manage their price risk and boost market confidence.

4. Odisha govt, ICRISAT launch compendium of regenerative agriculture:

Odisha’s Government and ICRISAT Launch ‘Compendium of Regenerative Agriculture’

• Launched in partnership with ICRISAT, the ‘Compendium of Regenerative Agriculture’ outlines five principles for sustainable farming: minimising soil disturbance, maximizing crop diversity, maintaining soil cover, keeping living roots year-round, and integrating livestock.
• The compendium will be a tool for scaling regenerative agriculture practices, particularly for millets, pulses, and oilseeds.
• The compendium emphasizes holistic farming techniques that enhance soil health, increase carbon sequestration, and build climate resilience.
• Over 400 attendees attended the event, highlighting the growing momentum for regenerative agriculture in the country.
• CII-ICRISAT discussions also took place, with M Raghunandan Rao stating that mechanisation of agriculture would increase efficiencies and value addition, and that sustainability discussions should prioritize farmers.

5. Excess rains spurs use of more herbicides this kharif cropping season:

Indian Herbicide Sales Rise Despite Excess Rains

• Excess rains in July-September led to increased use of herbicides by Indian farmers to control weed growth.
• Agrochemical makers reported increased sales of herbicides during the kharif cropping season.
• However, sales of insecticides and fungicides were impacted during this period.
• The demand for herbicides is growing faster than other agrochemicals due to labor shortages and rising wages.
• Agritech firm BigHaat saw significant demand and growth in herbicides due to the excess rains.
• The shift from manual to chemical-based weeding methods due to rising labour costs has led to increased demand for pre and post emergent herbicides.
• The herbicide market in India is entering a promising phase, with an anticipated growth of 3.82 per cent CAGR from 2024 to 2028.
• Herbicides currently account for a 40% market share within the broader agrochemicals industry in India.
• The use of herbicides in India is lower compared to global trends.
• The crop protection industry in India is expected to reach ₹355 billion by 2027.

Environment

1. How NCR can cut SO₂ emission from 12 thermal plants by 67%:

“Fue Gas Desulphurisation Systems (FGD) could reduce annual SO2 emissions by 67% in coal-based thermal power plants near Delhi,” says Centre for Research on Energy and Clean Air (CREA).

• The study reveals that 12 coal-based thermal power plants within a 300-km radius of Delhi could fully install FGD, reducing annual SO2 emissions by approximately 67%.
• Only Mahatma Gandhi thermal power station in Haryana and Dadri thermal power plant in UP have fully installed FGD.
• The remaining 10 plants have missed four deadlines for FGD installation, with the latest deadline for four plants now being Dec 2024.
• The Talwandi Sabo TPP, Rajpura TPP, and Panipat TPS are expected to achieve the highest reduction of 83% after FGD installation.
• The health and economic benefits of FGD far outweigh the costs, as thermal power plants emit more pollutants than paddy straw burning.