03&04 ,December 2017

Vigilant Ace is annual US-South Korean drill designed to enhance their readiness and operational capability and to ensure peace and security on Korean peninsula.South Korea and United States have launched Vigilant Ace, their largest-ever joint aerial drills. The exercise comes after North Korea tested Hwasong-15, its most advanced and powerful Inter Continental Ballistic Missile (ICBM) as part of its weapons programme.

The International Day of Persons with Disabilities is observed every year on December 3 to promote the rights and well-being of persons with disabilities in all spheres of society and development. The 2017 theme is “Transformation towards sustainable and resilient society for all”. The International Day of Persons with Disabilities was instituted by United Nations General Assembly (UNGA) after it had passed a resolution 47/3 in 1992. Since then it is observed annually and originally was called as International Day of Disabled Persons.

On the occasion of World Disability Day (WDD), State Government of Telangana has signed an agreement with Vindhya E-Infomedia Private Limited to set up the world’s first Information and Technology (IT) Campus for differently-abled persons (divyangs) in the state focusing on creating employment opportunities for persons with disabilities (PWDs). The campus will have all amenities like Training, Delivery centres and Residential facility that will cater to various clients both domestic and International. The campus is expected to create 2000 jobs in next 5 years by providing required training and skills. Telangana Government and Vindh E-Infomedia Private Limited are looking at various corporates to participate in this one of its kind initiative and make world more inclusive.

1.US withdraws from UN Global Compact on Migration
Source: The Hindu

The United States has pulled out of UN Global Compact on Migration. It has argued that Obama-era negotiated UN compact process deal contains numerous provisions that inconsistent with country’s immigration and refugee policies and Trump Administration’s immigration principles.

Key Facts:

  • US under Trump administration has pulled out of several global commitments including UNESCO, UN cultural and educational body and 2015 Paris climate change agreement.
  • US participation in Global Compact on Migration process was started in 2016 following Obama Administration’s decision to join UN’s New York Declaration on Migration.
  • US under Trump administration has held that New York Declaration contains numerous provisions that are inconsistent with US immigration and refugee policies and Trump Administration’s immigration principles.
  • Moreover, the global approach in New York Declaration is simply not compatible with US sovereignty.

UN Global Compact on Migration:

  • UN Global Compact on Migration will be the first intergovernmental negotiation agreement under auspices of UN to cover all dimensions of international migration in holistic and comprehensive manner.
  • Its genesis can be found in New York Declaration for Refugees and Migrants adopted in September 2016 by UN General Assembly
  • Under this declaration, signatory UN member countries had decided to develop global compact for safe, orderly and regular migration. The process to develop this global compact for migration was started in April 2017. It was to reach international consensus at the UN in 2018.
  • The purpose of Global compact of migration is to provide significant opportunity to improve governance on migration, address challenges associated with today’s migration, and strengthen contribution of migrants and migration to sustainable development.

2.‘Petro’ cryptocurrency: by Venezuela’s Nicolas Maduro
Source: IE

Venezuelan has launched its own cryptocurrency, called the “Petro,” which will be backed by the country’s vast natural resource reserves. The country has also approved the creation of a BlockchainBase observatory to oversee the development and rollout of the new cryptocurrency.

The purpose of Petro will be to advance the country’s monetary sovereignty, to carry out financial transactions and to defeat the financial blockade against the country.

The value of the new cryptocurrency will be pegged to the country’s vast reserves of oil and gas as well as its mineral wealth, including gold.

With the new cryptocurrency, Venezuela hopes it can overcome the economic blockade which the U.S. has put on the country. The blockade has caused the country’s national currency, the Bolivar, to lose around 57% of its value in the last four weeks.

While it’s great to see yet another country deciding to set up a national cryptocurrency, Venezuela will likely garner some friction from the U.S. over the move. The Trump administration has already been railing against Venezuela and its socialist leadership in-between tirades against Iran and North Korea.

About Crypto Currencies:

  • Crypto Currencies or Virtual Currencies are type of unregulated digital money that is neither issued by central bank/public authority, nor is necessarily attached to fiat currency, but is used and accepted among the members of specific virtual community.
  • They are capable of being transferred, stored or traded electronically. Cryptocurrencies are founded as peer-to-peer (P2P) electronic payment system.
  • They employ cryptographic algorithms and functions to ensure anonymity (privacy) of the users (who are identified by an alphanumeric public key), security of the transactions and integrity of the payment systems. “Decentralised Digital Currency” or “Virtual Currency” is also interchangeably used for a cryptocurrency.
  • They enable transfer of money between parties, without going through banking system. They can be transferred directly between peers and the transactions are confirmed in a public ledger, accessible to all the users.
  • The process of maintaining this ledger and validating the transactions is known as mining and is carried out in a decentralised manner.

3.What’s behind the bitcoin boom?
Source: The Hindu

As the price of the bitcoin leapt past $10,000 this week marking a tenfold gain in 2017, many investors seemed to nurse a ‘missed-out’ feeling. Bitcoin has no valuation measure. Its price is therefore decided mainly by demand-supply dynamics

Scarcity premium:

Satoshi Nakamoto, the creator of bitcoin, while creating the original algorithm to ‘mine’ blocks of bitcoins (new bitcoins are created when you use computers to solve complex mathematical problems set by the system), set a finite limit on the bitcoins that could be mined for all time to come. He also ensured that the algorithm got more complex over time and that the bitcoin yield shrank in geometric proportion with each new block

This has effectively set a hard limit of 21 million on total bitcoin supply, of which an estimated 16.7 million (80 per cent) has already been mined. Mining new blocks now entails gigawatts of electricity and computing power

There’s uncertainty about the existing bitcoin supply. About a million bitcoins are said to have been spirited away by Nakamoto himself, a few million have gone missing due to lost hard disks and forgotten passwords, and a good number are out of circulation because they’re stockpiled by investors

This scarcity factor and the lack of a fair value measure makes the bitcoin a great playground for speculators, but a very uncomfortable one for long-term investors

Highly volatile:

Bitcoin returns for the last five years are drool-worthy. The rupee-equivalent price of a bitcoin has zoomed from under Rs 600 in November 2012 to more than Rs 6.8 lakh by November 2017, a cool 300% annualized return. In the same period, the BSE Sensex has produced a staid 11.5% despite a bull market

  • Times as volatile as Sensex: Bitcoin, on its bad days, has proved five times as volatile as the Sensex. On its worst day in the last five years, its price tanked by 28% in dollar terms. At its most euphoric, it shot up by 41% in a single session. Also, 10% single-day losses were not unusual for the bitcoin, with 36 such occasions in the last five years

Uncertain events:

  • In 2014, thousands of bitcoins were stolen from the leading exchange Mt Gox which had to be shuttered. The event saw a two-year lull in the bitcoin bull market. In August, a breakaway faction Bitcoin Cash, ‘forked’ off from the main bitcoin blockchain
  • This week, global bitcoin exchanges reported outages and flash crashes unable to handle the sharp surge in traffic

Due to such volatility, though it has proved a blockbuster investment, the bitcoin hasn’t really made headway as a global alternative to conventional money

Regulatory approval:

When originally introduced, virtual currencies, backed by the ultra-democratic blockchain technology, were expected to offer a border-less alternative to fiat currencies but trading volumes in cryptocurrencies have tended to become quite concentrated in a few regions lately. They’ve also proved quite sensitive to governmental actions.

Exchanges banned: After galloping fivefold between January and September 2017, bitcoins suffered a 30% blip this September after the Chinese government, wary of capital flight, ordered the shut-down of leading bitcoin exchanges

Japan: In April, markets cheered Japan’s decision to officially recognise bitcoins as legal tender and license 11 exchanges

Trading volumes have also flown from one region to another depending on how favourably disposed regulators have been towards bitcoins. Chinese exchanges dominated bitcoin trading a couple of years ago with a more than 80% volume share. But after the clampdown, Japanese and U.S. exchanges now control over two-thirds of volumes.

In India, the RBI is still undecided on the issue of how and if at all it will regulate virtual currencies. Meanwhile, it has issued disclaimers that it hasn’t authorised bitcoins as a medium of exchange, warning investors of potential ‘financial, operational, legal, customer protection and security-related risks’ if they dabble in them.

4.First phase of Chabahar port inaugurated in Iran

Source: The Hindu

While the first phase of Chabahar (Shahid Beheshti Port) has been completed, India, Iran and Afghanistan are committed to developing the port into a massive project that can handle a cargo of 80 million tonnes — the existing capacity is just 2.5 million tonnes.

It is Iran’s only oceanic port located on the Gulf of Oman, southeast of Iran near Pakistani border. It has been jointly developed by India, Iran and Afghanistan.

What was Need for the development of  Chabahar port ?

  • The Chabahar port allows India to strategically bypass Pakistan and reach land-locked Afghanistan and Central Asian countries, contributing to bilateral and regional trade and economic development.
  • India views Chabahar port as strategic response to China’s development of Gwadar port in Pakistan (some 78 kilometers away) and its aggressive pursuit of Belt and Road Initiative (BRI).
  • Chabahar port will be also key for Indian goods to get access Central Asian markets and also provide alternate access to landlocked Afghanistan to regional and global markets.
  • The project is important as connects trade corridors that pass through Iran to sea route. It is also politically significant as it connects Iran with eastern and northern neighbours and at a later stage to European states.

 How to make Chabahar commercially and strategically viable?

To make it a commercially and strategically viable option, Indian policymakers will have integrate Chabahar project with its larger connectivity project — the International North South Transport Corridor (INSTC)

INSTC:

  • The INSTC, initiated in 2000 by Russia, India and Iran, is a multi-modal transportation route linking the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran, and onward to northern Europe via St Petersburg in Russia
  • The INSTC envisages the movement of goods from Mumbai, India to Bandar Abbas, Iran, by sea, from Bandar Abbas to Bandar-e-Anzali, an Iranian port on the Caspian Sea, by road, from Bandar-e-Anzali to Astrakhan, a Caspian port in the Russian Federation, by ship across the Caspian Sea, and thereafter into the Russian Federation and further into Europe by Russian Railways

Significance: INSTC and Chabahar Port will complement each other for optimizing Indian connectivity with Russia and Eurasia. The multiple transport corridors intersecting the region can be easily accessed from the south. According to some estimates, the Chabahar route plus INSTC could boost trade to a total of US$ 170 billion from India to Eurasia (60.6 billion in export and 107.4 billion in import

Background:

The story of India’s involvement in the development of Chabahar Port began when Hassan Rouhani, Iran’s National Security Advisor under President Syed Mohammad Khatami, held discussions with his Indian counterpart, Brajesh Mishra, in 2002

A few months later in January 2003, when Iran’s President Khatami visited India as the chief guest for the Republic Day celebrations, he and then-Prime Minister Atal Bihari Vajpayee signed on an ambitious roadmap of strategic cooperation. Among the key projects agreed on was Chabahar, which held the potential to link the South Asian subcontinent to the Persian Gulf, Afghanistan, Central Asia and Europe

New Delhi declaration: In the New Delhi Declaration they signed, the two leaders recognised that their “growing strategic convergence needs to be underpinned with a strong economic relationship”. In boosting the economic content of ties, the focus was on building transport corridors and deepening energy cooperation.

5.GST effect: shaky Budget in offing?
Source: The Hindu

‘With no clear number for targeted GST collections, is the Centre raking in as much as it should?’

Revenue uncertainty due to the implementation of the Goods and Services Tax could pose very real problems for the government when the time comes for it to prepare the Budget for financial year 2018-19, according to tax analysts and government officials alike

Reforms:

The GST Council, in its latest meeting on November 10, announced several moves to ease the compliance burden on businesses, including

  • Deferring return filing deadlines for both small and large businesses
  • Allowing small businesses to file quarterly returns
  • Removing the need to file the GSTR-2 and GSTR-3 forms, and
  • Expanding the Composition Scheme to include more businesses

The Council also drastically reduced the tax rate on more than 200 goods, including most of the items in the highest 28% tax bracket

Uncertainty due to GST:

In a normal year, businesses are well-versed with the tax processes, and so know their tax liability, so the collections are usually in line with what is anticipated. However, this year, the uncertainty surrounding GST procedures and the leeway the government has given in terms of extended deadlines has meant that the indirect tax collections for the particular period are still being updated

Impact:

  • Change in GDP figures: This means the GDP growth figure stands to change considerably in the next revision when the final GST collection data comes in
  • Estimate of Potential GST collections could go wrong: The bigger issue is the uncertainty could pose a problem for the government in estimating the potential GST collections for the entire 2018-19 financial year as it doesn’t have a trend to base its projections
  • Effect on budget: Now that we have advanced the Budget-making date to actually November — by the middle of November they must start the process, so that it’s complete by the middle of December — government will have only four months’ data of GST, and even that data will not be complete. This is a problem. Government doesn’t have complete data, it hasn’t verified  input tax credit claims, so we really doesn’t know what the net effect is going to be
  • Drastic rate reductions: Another issue is the Budget-making process will not be able to incorporate the recent and drastic rate reductions, since they came into effect on November 15. So, a full month’s data with the new rates will be available too late to incorporate in the Budget. The frequent changes in rates have made determination of ‘ideal’ revenue from GST even more difficult
  • The government will not have the benefit of using last year’s Budget Estimates of indirect tax revenue to gauge collections in the next year, either

6.Watch out for ransomware in 2018: report
Source: The Hindu

Cybersecurity giant McAfee Inc. prediction in its latest report- Threats Predictions: Ransomware attacks in cyberspace are likely to increase and become more sophisticated in 2018, targeting high net worth individuals and corporates. The report also warns individual home users that greater inter-connected home devices will surrender consumer privacy to corporates.

Cyber sabotage:

  • The report identified five key trends to watch next year, said the pivot from the traditional would see ransomware technologies applied beyond the objective of extortion of individuals, to cybersabotage and disruption of organisations.
  • 2017 witnessed a major explosion in ransomware attacks such as the ‘WannaCry’ epidemic in which attackers limit user access to their own systems till a certain ransom is paid to unlock them.
  • The evolution of ransomware in 2017 should remind us of how aggressively a threat can reinvent itself as attackers dramatically innovate and adjust to the successful efforts of defenders.

‘Arms race’:

  • There was an ‘arms race’ between attackers and defenders, and “human intelligence amplified by technology will be the winning factor”.
  • As consumers increasingly network their homes, the report warns that connected home device manufacturers and service providers will seek to overcome “thin profit margins by gathering more of our personal data — with or without our agreement —turning the home into a corporate store front”.



Leave a Reply