1. RAGING RUPEE
SOURCE – HINDU
RELEVANCE – GS MAINS III . INDIAN ECONOMY AND ISSUES RELATING TO PLANNING, MOBILIZATION OF RESOURCES, GROWTH, DEVELOPMENT AND EMPLOYMENT.
- The Indian rupee has turned out to be one of the best-performing currencies in the world with a gain of well over 6% against the U.S. dollar this year to date.
- In fact, the currency hit a two-year high of 63.60 last Wednesday, supported by strong inflows of foreign capital.
- Strong capital inflow has managed to turn the tide.
- According to the Reserve Bank of India, foreign portfolio investors invested $15.2 billion in India’s equity and debt markets this year until the end of July.
- In addition, foreign direct investment in April-May doubled compared to last year.
- Such generous inflow of capital, of course, is in sharp contrast to 2013 when the tightening of policy by the U.S. Federal Reserve had rattled the rupee.
- Another major contributor to the rupee’s strength is the RBI’s hawkish stance, which has pushed down domestic retail inflation to a record low of just around 2%. This has spilled over to influence the external value of the rupee as well.
- Oil prices remaining stable at around the $50 mark too has helped as Indians have had to shell out fewer rupees on oil imports. This is reflected in the improved current account deficit, which stood at 0.7% of GDP in 2016-17 compared to almost 4.8% in 2012-13.
CONCERN FOR THE EXPORTERS
- Notably, worries about the impact of a strong rupee on exports have risen in tandem — particularly in sectors such as pharma and information technology.
- There is little doubt that an appreciating rupee will affect the competitiveness of Indian exporters.
- In fact, it is estimated by UBS that each 1% appreciation in the external value of the rupee causes earnings of Nifty companies to drop by 0.6%.
- The question, however, is whether it is sufficient reason to tinker with the value of the currency in a way that makes it expensive for Indians to import goods.
- After all, any protectionist action, particularly in today’s low-growth global environment where countries look to steal growth from each other, is likely to draw retaliatory action.
- Exporters should instead be pushed to adapt to the uncertainties of doing business across borders.
- And the rupee’s improving external value should be seen, at least in part, as a reflection of the improving quality of the currency.
- The central bank has thus clearly done well for now by not fiddling with the value of the rupee.
- Going forward, tighter monetary policy in the West will invariably exert more pressure on the rupee. The RBI would then have to muster greater will to let the rupee find its natural value.
2. BOKO HARAM KILL 31 FISHERMAN IN NIGERIA
SOURCE – INDIAN EXPRESS
RELEVANCE – GS PRELIMS(memorise the bold words).
- At least 31 fishermen have been killed by Boko Haram jihadists in two separate attacks on islands in Lake Chad in northeastern Nigeria.
- Armed jihadists stormed the fishing islands of Duguri and Dabar Wanzam in the freshwater lake Saturday, attacking fishermen working in the area and shooting and hacking their victims.
KNOW ABOUT BOKO HARAM
- Nigeria’s militant Islamist group Boko Haram – which has caused havoc in Africa’s most populous country through a wave of bombings, assassinations and abductions – is fighting to overthrow the government and create an Islamic state.
- Boko Haram promotes a version of Islam which makes it “haram”, or forbidden, for Muslims to take part in any political or social activity associated with Western society.
- This includes voting in elections, wearing shirts and trousers or receiving a secular education.
- Boko Haram regards the Nigerian state as being run by non-believers, regardless of whether the president is Muslim or not – and it has extended its military campaign by targeting neighbouring states.
- The group’s official name is Jama’atu Ahlis Sunna Lidda’awati wal-Jihad, which in Arabic means “People Committed to the Propagation of the Prophet’s Teachings and Jihad”.
- Boko originally meant fake but came to signify Western education, while haram means forbidden.
- Founded in 2002
- Launched military operations in 2009 to create Islamic state
- Designated a terrorist group by US in 2013
3. H – 1 B VISA RESTRICTION MAY AFFECT US IT PRODUCTION
SOURCE – INDIAN EXPRESS
RELEVANCE – GS MAINS – II . EFFECT OF POLICIES AND POLITICS OF DEVELOPED AND DEVELOPING COUNTRIES ON INDIAN DIASPORA
- The Center for Global Development (CGD) in a report titled ‘The IT Boom and Other Unintended Consequences of Chasing the American Dream’ said that H-1B visa is advantageous for both India and the US.
HIGHLIGHTS OF THE REPORT
- It is really important to make sure that the I-T sectors from both countries are allowed to attract the right kind of people, because they really allow for innovation and growth in both the countries.
- The IT companies might look for other options and move to Canada if the H-1B clampdown will happen.
- Clamping down on the H-1B programme will basically not allow the US IT sector to attract the open talent from places like India. The US might then lose its competitive edge in IT production.
- In India, the prospect of migrating to the US and earning such a high wage …it seemed they really encouraged certain students and workers to acquire skills that would be valued by the H-1B programme.
- The research report examines the relationship between migration and the outsourcing of IT production to India since the early 2000s and says that because of the H-1B programme, US workers are on average better off by about $431 million or $1,345 per additional migrant in 2010.
- Together, the brain-gain to India under the H-1B programme outweighs any brain-drain,” the report said. The increase in IT sector productivity allowed India to eventually go ahead of the US in software export because of the additional knowledge and skills that the workers learned in US before the expiry of the visas.
H – 1 B VISA
- The H-1B visa is an employment-based and non-immigrant visa category for temporary workers.
- It permits US companies to temporarily recruit foreign workers.
- Indian IT giants like TCS, Infosys and Wipro are among the major beneficiaries of this programme.