AFA DAILY CURRENT AFFAIRS ANALYSIS [AFADCAA]
ISRO’s imaging satellite HysIS:
- HysIS, the country’s first hyperspectral imaging satellite for advanced earth observation
- A hyperspectral imaging camera in space can provide well-defined images that can help identify objects on earth far more clearly than regular optical or remote sensing cameras
- The technology will be an added advantage in watching over India from space across sectors including defence, agriculture, land use and mineral exploration. Sources said the new ‘eye in the sky’ can be used to even mark out a suspect object or person on the ground and separate it from the background with applications in transborder infiltration etc.
- The primary goal of HysIS is to study the Earth’s surface in visible, near-infrared and shortwave infrared regions of the electromagnetic spectrum
NPA’s on downhill path:
Introduction: Both gross and net non-performing assets (NPAs) of scheduled commercial banks have come down in the two quarters ending September 30, 2018, since their peak in March 2018, the RBI said on Tuesday. However, the central bank did point out that the profitability of banks was still impacted by a decline in earnings from loan assets and on higher provisioning due to a deterioration in asset quality. Content:
- Both gross and net non-performing assets (NPAs) of scheduled commercial banks have reduced in the two quarters ending September 30, 2018 since their peak in March 2018 –the Reserve Bank of India (RBI)
- However, the RBI did point out that the profitability of banks was still impacted due to a decline in earnings from loan assets and on higher provisioning required due to deterioration in asset quality.
- As a consequence of these measures, the gross NPAs as well as net NPAs of the scheduled commercial banks, after peaking in March 2018, have registered declines for two consecutive quarters – said RBI.
- Public sector banks account for an overwhelming proportion of these gross NPAs but even their contribution had marginally come down since March 2018. Where public sector banks accounted for 86.6% of all gross NPAs of scheduled commercial banks, this fell to 85.9% by September 30, 2018.
Conclusion: The annualised slippage ratio (i.e. the percentage of fresh NPAs as percentage of standard advances at the beginning of the quarter) has also witnessed a declining trend over the past two quarters, which is again reflective of the improving credit discipline.
However, the decline in NPAs, particularly fresh slippages, will reflect in the improved profitability going forward. The RBI said that although weak bank balance sheets had created significant headwinds for credit growth, this had still been picking up on a year-on-year basis. It may lead to overcome the problem encountered.
Economy faces several risks:
Introduction: The RBI has highlighted several risks to the economy, including oil prices, the uncertainty over the effect of the minimum support price (MSP) hike, the revenue impact of lower-than-expected GST collections and the cut in excise duty on fuel. These could pose a challenge to the government’s commitment to meeting the Fiscal Responsibility and Budget Management targets.
- The key downside risks to growth are high international commodity prices — especially of crude oil (although they have eased recently, there are significant uncertainties), spillovers from tightening global financial conditions, geo-political tensions, trade wars, financial turbulence, and the overhang of impairment in domestic banking and corporate balance sheets.
- The decline in the gross saving rate, mainly due to the decline in household gross financial savings, is another cause for concern.
- Food inflation has remained unusually benign so far during the year, there is uncertainty about the exact impact of the announced MSPs on food inflation– says RBI.
- Significant volatility in global crude oil prices and financial markets, a sharp rise in input costs combined with rising pricing power of firms, risk of fiscal slippage at the Centre and/or State levels, and the staggered impact of HRA revisions by the State governments could pose upside risks to the inflation trajectory.
Conclusion: GST collections and the cut in Union excise duties on petroleum products by the Centre as well as 18 State governments pose risks on the revenue side, while higher MSPs combined with the ramping up of food procurement and “unbudgeted” farm loan waivers by States could put pressure on expenditure. Accordingly, concerted efforts towards consolidation will be needed for achieving the revised FRBM targets, i.e., the central government debt to GDP ratio of 40% and the general government debt to GDP ratio of 60% by 2024-25.
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