CAA WEEK 1 DECEMBER, 2019.Indd
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Disclaimer The current affairs articles are segregated from prelims and mains perspective, such separation is maintained in terms of structure of articles. Mains articles have more focus on analysis and prelims articles have more focus on facts. However, this doesn’t mean that Mains articles don’t cover facts and PT articles can’t have analysis. You are suggested to read all of them for all stages of examination. CURRENT AFFAIRS ANALYST WEEK-1 (DECEMBER, 2019) CONTENTS Section - A: MAINS CURRENT AFFAIRS Area of GS Topics in News Page No. Exchange Traded Fund 06 India’s solar energy challenges 08 ECONOMY National Digital Health Blueprint 2019 11 Understanding GST in present economic context 13 INTERNATIONAL South China Sea – Confl ict, Issues, Problems and 17 RELATION challenges INTERNAL Anti-Tank Guided Missiles 21 SECURITY POLITY & Countrywide NRC- Its Implications 23 GOVERNANCE SOCIAL ISSUES Begging in India: A Menace to the Society 25 Section - B: PRELIMS CURRENT AFFAIRS Area of GS Topics in News Page No. ECONOMY Leaked NSSO data 29 National Milk Day 2019 30 ENVIRONMENT Emissions Gap Report 2019 31 DISASTER 1st International Conference on “Landslides Risk 32 MANAGEMENT Reduction & Resilience-2019” GOVERNMENT Atal Beemit Vyakti Kalyan Yojana 33 SCHEME GEOGRAPHY Char Dham Programme 34 Global diplomacy index 2019 35 Lokpal 38 POLITY & GOVERNANCE Transgender Persons Bill, 2019 39 What is Rule 12, used by the Centre to revoke President’s 40 Rule in Maharashtra POLITY & World Migration Report 2020 and the trend of migration 41 GOVERNANCE globally Coalbed methane (CBM) 42 SCIENCE & Golden Rice: To Combat Vitamin A Defi ciency for Public TECHNOLOGY 43 Health ********** SECTION: A (MAINS) CURRENT AFFAIRS CURRENT AFFAIRS WEEK - 1 (DECEMBER, 2019) WEEKLY EXCHANGE TRADED FUND CONTEXT Edelweiss AMC recently got the government’s permission to launch India’s fi rst bond ETF (exchange traded fund) which will invest in central public sector undertakings. BACKGROUND ETFs offer low expense ratios and fewer broker commissions than buying the stocks individually. Soon, Bond ETFs will be another investment vehicle available to retail investors providing access to ETFs can contain all types of investments bonds of state-run enterprises. including stocks, commodities, or bonds; some offer domestic holdings only, while others are Bond ETFs are similar to how equity ETFs invest international. in line with indices covering specifi c baskets like the Nifty50, Nifty Next 50 and Nifty Quality 30, What are Bond ETFs? among others Bond ETFs are a type of ETF that exclusively While bond ETFs are not new in India, they have invests in bonds. Bond ETFs invest in various not been very popular. At present, only three GSec fi xed-income securities such as corporate bonds, ETFs are available, all with miniscule assets and treasuries, municipal, international, high-yield, etc. poor trading volumes. Bond ETFs are passively managed and trade, The entry of newer bond ETFs comes at a time much like stock ETFs on major stock exchanges. when traditional bond funds are only just emerging This helps promote market stability by adding from a painful period of multiple credit defaults. liquidity and transparency during times of Investors are wary. stress. Bond ETFs claim to be different from traditional Bond ETFs allow ordinary investors to gain passive bond funds by offering high liquidity, exposure to benchmark bond indices in an transparency and lower costs. inexpensive way. The cost angle is the most distinguishing facet of Investors of bond ETFs are exposed to the risk of bond ETFs. Being passively managed products, interest rate changes. these charge a much lower fee than actively managed bond funds. Sometimes even less than Bond ETFs are typically of two types: They either 0.5%. track a specifi c maturity bucket like short, medium or long term or they track a target maturity where In the debt segment, there is not much the fund they invest in bonds with similar maturity as the manager can do to enhance returns. Any strategy product. that can optimise costs is the need of the hour. ! Target Maturity Bond ETFs: They provide Globally, Bond ETFs have reported a healthy predictable returns like Fixed Maturity Plans growth over the last decade. The size of Global (FMPs), if they are held till maturity. Bond ETFs now accounts for over $1 trillion assets under management (AUM) out of total $4 trillion Other type of ETFS AUM across various ETFs. Market ETFs: Designed to track a particular index The key objectives of launching Bond ETF are: like the NIFTY. ! To suffi ce borrowing needs of CPSEs Sector and industry ETFs: Designed to provide ! To increase retail participation exposure to a particular industry, such as oil, pharmaceuticals, or high technology. ! To deepen the bond market and increase liquidity Commodity ETFs: Designed to track the price of a commodity, such as gold, oil, or corn. What are ETFs? Style ETFs: Designed to track an investment style An exchange-traded fund (ETF) is a marketable or market capitalization focus, such as large-cap security, meaning it has an associated price that value or small-cap growth. allows it to be easily bought and sold. Foreign market ETFs: Designed to track non- ETFs are in many ways similar to mutual funds; Indian markets, such as US’s Dollar 30 or Dow however, they are listed on exchanges and ETF Jones Industrial Average (DJIA). shares trade throughout the day just like Inverse ETFs: Designed to profi t from a decline in ordinary stock. the underlying market or index. 6 www.iasscore.in CURRENT AFFAIRS WEEKLY WEEK - 1 (DECEMBER, 2019) Actively managed ETFs: Designed to outperform ! The liquidity in bond ETFs will depend on how an index, unlike most ETFs, which are designed to actively market makers buy and sell units on track an index. the exchange in bulk. Exchange-traded notes: In essence, debt ! This will allow the investor to fetch a purchase securities backed by the creditworthiness of the or sale price closer to the fair value of the ETF, issuing bank; created to provide access to illiquid as indicated by its net asset value (NAV). markets and have the added benefi t of generating Increasing participation: In India, retail virtually no short-term capital gains taxes. participation in corporate bond market is shallow Alternative investment ETFs: Innovative due to structural challenges like poor accessibility, structures, such as ETFs that allow investors to lack of transparency and awareness. Bond ETFs can trade volatility or gain exposure to a particular address these challenges and can play an important investment strategy, such as currency carry or role in increasing retail investor participation in covered call writing. corporate bond market. Benefi ts Disadvantages Lower Costs: An investor who buys an ETF doesn’t Several ETFs in India are plagued by crippling have to pay an advisory/management fee to the illiquidity. In the absence of trading volumes, fund manager and taxes are relatively lower in investors often end up buying or selling at a steep ETFs. premium, or discount to the prevailing NAV. Lower Holding Costs: As commodity ETFs are While lower cost enhances the return potential of widely traded in, there isn’t any physical delivery ETFs, absence of liquidity can effectively wipe of commodity. The investor is just provided with out cost benefi ts. Conventional bond funds do an ETF certifi cate, similar to a stock certifi cate. not face these issues. Exposure to debt market: Bond ETFs are a cost- ! If evidence is to go by, the initial liquidity in effective way for investors to take debt-market these products will be low, restricting investor’s exposure. ability to move in and out at a desired price. Tax considerations: ETFs tend to be very tax ! If the ETFs are not able to amass a decent effi cient and ideal for holding in taxable accounts. corpus size, poor liquidity will continue. C Since ETFs don’t sell shares very often and their Bond ETFs cannot assure return to investors any portfolio turnover is very low, it is very rare for more than conventional bond funds, except them to generate a taxable distribution for their certain categories of bond ETFs such as target shareholders. maturity bond ETFs which have a defi ned maturity ! IETFs also have the option of making an “in- date. kind” distribution to shareholders if they want Unlike actively managed bond funds, bond ETFs will to sell themselves and want the cash. not be in a position to gain from opportunities ! However, if the ETF’s portfolio generates emerging from movements in interest rates or dividend income, this income is taxable. credit spreads. Transparency: The entire portfolio held by the bond ETF is disclosed on a daily basis to Conclusion investors. To conclude, ETFs offer both tax effi ciency as well ! This is unlike conventional bond funds which as lower transaction and management costs. Bond disclose portfolios at the end of every month. ETFs combine the best of both bonds and debt ! funds. Indians invest a substantial portion of their Further, since bond ETFs are listed on exchanges, savings in fi xed income instruments such as small they provide live price updates after every savings schemes, fi xed deposits, bonds and various trade. types of fi xed income mutual funds. If liquidity is Liquid: Being listed on the exchanges, bond ETFs suffi ciently high, bond ETFs may be a good fi rst also claim to offer liquidity—ability to buy and sell stop for those looking to move from bank fi xed units instantly—for the investor. deposits. ********** www.iasscore.in 7 CURRENT AFFAIRS WEEK - 1 (DECEMBER, 2019) WEEKLY INDIA’S SOLAR ENERGY CHALLENGES CONTEXT The Prime Minister recently committed to setting up 450 gigawatts (GW) of non-fossil fuel power by 2022.