The Hindu Important News & Editorial Analysis(06/10/18)

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1 The Hindu Important News & Editorial Analysis(06/10/18) India, Russia sign S-400 missile deal after summit India, Russia sign S-400 missile deal after summit U.S. says sanctions waiver will be given only on transaction by transaction basis. Youth ties will add value, says Putin Russian President, Prime Minister Modi interact with young talent from the two countries.

2 Congolese doctor, Yazidi activist get Nobel Peace Prize For efforts to end use of sexual violence as a weapon of war. Denis Mukwege, a doctor who helps victims of sexual violence in the Democratic Republic of Congo, and Nadia Murad, a Yazidi rights activist and survivor of sexual slavery by the Islamic State, were awarded the Nobel Peace Prize for 2018.

3 ICMR recommends vaccine for lions The Indian Council for Medical Research (ICMR) has confirmed that the Canine Distemper Virus (CDV) was responsible for lion deaths in the Gir forest of Gujarat and recommended that the remaining lions be vaccinated to prevent further outbreaks. This goes against recommendations by wildlife biologists that wild animals shouldn t be vaccinated Manipuri activist wins international award Nepram s work has helped women survivors of violence recognizing women human rights workers. A campaigner supporting women survivors of violence in northeastern India was named on Thursday as one of two winners of an annual award recognising women human rights workers. The award recognised the women s bravery in speaking out and defying injustice, violence and extremism in forgotten armed conflict in their regions, said RAW in WAR, a U.K.-based charity supporting women human rights defenders and war victims.

4 Focus on inflation RBI chooses to stick to its core mandate, ignoring other pressures such as on the rupee Reserve Bank of India keeping its benchmark interest rate unchanged at 6.5%. Indicating that rates could either go up or stay steady in the coming months. What is obvious is that, through its surprise decision, the RBI has chosen to stick to its primary mandate of keeping domestic inflation just around 4%, The consensus on the street was that the RBI would raise rates by at least 25 basis points to support the rupee, with some even predicting a hike of 50 basis points. Not surprisingly, rupee weakened past the 74mark to the U.S. dollar for the first time Monetary Policy Committee s decision to keep rates steady was strongly endorsed by its members, with just a lone member voting against the decision. And its dedication to strict inflation targeting was further reiterated during the press conference after the review meeting where RBI officials termed inflation control as their legal mandate.

5 With its strict focus on inflation, the challenge now will be whether the RBI can simultaneously manage the various other risks to financial stability. Address the financial risks posed by the weakening rupee. To be fair, the decision to keep rates unchanged, the RBI s decision could be termed prudent. The RBI s decision to not raise rates may lift the sentiments of consumers and businesses at a time when the economy enters the busy season and festival demand kicks in. Going forward, the biggest challenge facing the RBI will be the prospect of further rate hikes by the U.S. Federal Reserve and central banks in other developed economies, Which could force the central bank to look beyond its inflation mandate. The RBI will clearly have to juggle multiple challenges in the coming months. Internationalisation of the rupee will serve India well The accession of George V to the throne in 1911, enshrining his rule of the British Raj, led to the issuance of a new rupee coin. The colonial rupee leveraged the Mughal rupee s popularity, facilitated by trading communities, migration and the Raj s hegemony-the annexation of Sindh, Ceylon and Burma further encouraged of the rupee in these areas.

6 Even after Independence, Dubai and other Gulf states were using RBI-minted Gulf rupees until Only the devaluation of the Indian rupee in 1966, after the 1965 war, led to such nations switching to their own currencies. Only Nepal and Bhutan regularly conduct bilateral trade with India in rupees. In 1947, the rupee-dollar rate was at 3.30-The aforementioned devaluation in 1966 raised it to 7.50, reaching 32.4 by This decline was precipitated by a variety of factors wars with Pakistan and China, the adoption of Five Year Plans requiring foreign loans, political instability and the Oil Price Shock of Of late, the rupee has been declining given higher oil prices and FII outflows from stocks and bonds. The ongoing U.S.-China trade war, Iran sanctions and further upward movement in oil prices will continue to test the rupee s valuation Reserve Bank of India and the Ministry of Finance do have a number of options for stabilisation, including Overtly intervening in the forex market, Selling nonresident Indian bonds (as last done in 2013) In addition, the rupee s dependency on the U.S. dollar must be reduced India should consider formalising the rupee payment mechanism with friendly countries such as Russia. A lower rupee is a recipe for a higher import burden, spiralling eventually into a currency crisis. The formalisation of the Indian economy, by deterring black money transactions in the rupee, is also much needed. Tax rate rationalisation, with lower tax rates as an end goal, would increase the tax base and increase compliance with tax returns Finally, looking ahead, the internationalisation of the rupee is a worthwhile goal to aim for-while the Chinese yuan is increasingly being positioned for an alternative reserve currency through a variety of multilateral trade

7 China campaigned hard for the inclusion of its currency in IMF s benchmark currency basket in 2015, introducing a range of reforms to ensure that the yuan was considered as freely usable. The RBI, meanwhile, has adopted a gradualist approach-the rupee is currently not even in the top 10 traded currencies. To restore the rupee s multi-lateral nature, we must unshackle its usage Augmenting life This year s science Nobels compel us to relook at evolution, and also at gender parity

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